Latest / HPK Provident Advisors: The Weekly Bull / Markets, Rates, And Staying Invested

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Markets, Rates, And Staying Invested · HPK Provident Advisors: The Weekly Bull

• 0:04
  SPEAKER_00: Welcome to Friday Live.
• 0:06
  SPEAKER_00: Every Friday, some of the partners of HPK Profiting get together and discuss what we're seeing going on in the markets, the economy, and some financial planning topics.
• 0:13
  SPEAKER_00: So with me today, Mr.
• 0:15
  SPEAKER_00: Brian Peluso, our CFP and Social Security expert.
• 0:19
  SPEAKER_00: Brian, good to have you.
• 0:20
  SPEAKER_00: Always a pleasure.
• 0:21
  SPEAKER_00: I love doing the Friday Lives.
• 0:23
  SPEAKER_00: So I hear you're having some fantastic weather in the Pittsburgh region today.
• 0:27
  SPEAKER_01: Yeah, Western Pennsylvania has been fantastic.
• 0:29
  SPEAKER_01: It's been uh, you know, right around 50 degrees, uh raining and uh overcast.
• 0:36
  SPEAKER_01: It's just been fantastic.
• 0:38
  SPEAKER_01: Well, you know, we had we had the NFL, yeah.
• 0:40
  SPEAKER_01: Last weekend we had the NFL draft in the uh here in Pittsburgh.
• 0:44
  SPEAKER_01: The weather was spectacular, and it's just gone downhill from there.
• 0:49
  SPEAKER_01: So uh it should be all right next week.
• 0:51
  SPEAKER_01: But you know, it's tough, grass grows too much, it rains, it's cool, and I don't get out there and do it.
• 0:57
  SPEAKER_01: So neighbors might start complaining.
• 1:01
  SPEAKER_00: Yeah, I may have been that neighbor in Pontavita Beach as well.
• 1:06
  SPEAKER_01: Well, yeah, hey, if we didn't have the weather to complain about, what would there to be be to complain about, Mike?
• 1:12
  SPEAKER_00: Right.
• 1:12
  SPEAKER_00: I mean, we can't complain about the market right now.
• 1:14
  SPEAKER_00: We have the best voluntary since 2020, April, I believe.
• 1:19
  SPEAKER_00: Holy smokes, yeah, yeah.
• 1:21
  SPEAKER_00: I mean, uh, I think the SP was up 10.5%.
• 1:24
  SPEAKER_00: Uh, semis had like an 18-day winning streak up 37%.
• 1:30
  SPEAKER_00: Ridiculous.
• 1:30
  SPEAKER_00: Like eight, I think AMD was up 80% in the month.
• 1:34
  SPEAKER_00: Oh my!
• 1:35
  SPEAKER_01: I didn't even realize that.
• 1:37
  SPEAKER_01: Uh, you know, and we talked about that a little bit last week.
• 1:39
  SPEAKER_01: You know, we went from the beginning of the year, there was some of the indices were down double digits in the beginning of the year, and everybody had a yeah, that was only a month ago.
• 1:49
  SPEAKER_00: I mean, we're pretty much in correction territory for the SP 500, and I mean, we're leading up to that, we were up a couple percent on the year.
• 1:58
  SPEAKER_00: Um, but that was pretty much without the mag 7.
• 2:03
  SPEAKER_00: So it was really the rest of the market carrying us in international markets, and something we really haven't seen in recent years.
• 2:10
  SPEAKER_00: Um, since the bottom, though, we've really had uh, you know, the mag 7 is really stepped back to the game.
• 2:17
  SPEAKER_00: Um even this week we had a bunch of their earnings.
• 2:21
  SPEAKER_00: Wednesday we had uh, let's see, Alphabet, Amazon, Meta, and Microsoft.
• 2:30
  SPEAKER_00: Although stock performance was kind of mixed out of the bunch.
• 2:34
  SPEAKER_00: Um overall, the earnings were good.
• 2:36
  SPEAKER_00: Yesterday we got Apple, which was also another strong report.
• 2:40
  SPEAKER_00: Um, but definitely earnings season is is uh given the stock market a catalyst to make new highs.
• 2:48
  SPEAKER_00: I think we're tracking about 15% for the year on earnings for the quarter, I should say.
• 2:53
  SPEAKER_00: And uh it's been overall pretty broad and healthy.
• 2:57
  SPEAKER_00: Um, although definitely a little more emphasis on the technology sector in terms of the weight in earnings growth.
• 3:04
  SPEAKER_00: But as you can see, we're making all-time highs.
• 3:06
  SPEAKER_00: We're back into overbought territory.
• 3:09
  SPEAKER_00: That doesn't necessarily mean the rally is over.
• 3:12
  SPEAKER_00: It's usually a good sign that momentum's keeping up, but we could be due for a consolidation period in the coming uh days and weeks.
• 3:20
  SPEAKER_00: Um, I think a healthy level would get back to kind of this breakout region around uh 7,000, uh just below.
• 3:27
  SPEAKER_00: Uh that would be a normal healthy consolidation in an overall bull market.
• 3:33
  SPEAKER_00: Um, outside of that, uh, we had an FOMC meeting this week.
• 3:37
  SPEAKER_00: I a little sad.
• 3:40
  SPEAKER_00: I mean, it's it's Jerome Powell's last press conference.
• 3:44
  SPEAKER_00: I feel like I grew up watching him.
• 3:46
  SPEAKER_00: He's been the Fed chair for a good part of my professional career.
• 3:51
  SPEAKER_00: Um, he was certainly, in my opinion, more entertaining than Janet Yellen.
• 3:56
  SPEAKER_00: We'll see what Kevin Worsh brings to the table.
• 3:59
  SPEAKER_00: Um, I didn't, I think a lot of it was talking about the presser was talking about, you know, Fed independence, um, what Powell's role is going to be as a governor and how long he'll stay on.
• 4:11
  SPEAKER_00: Um but besides that, I mean, the biggest uh change in the language was in the minutes.
• 4:19
  SPEAKER_00: Um, three members are now pretty much taking off the cutting bias.
• 4:25
  SPEAKER_00: Um, so we're at a more neutral level to potentially the next move might actually be a rate hike.
• 4:32
  SPEAKER_00: Um, so I thought that change in tone was appropriate.
• 4:36
  SPEAKER_00: Um, you know, the economic backdrop has been pretty resilient of late.
• 4:42
  SPEAKER_00: And um, you know, inflation's too high.
• 4:46
  SPEAKER_00: And with energy prices, I mean, cruised down a little bit today, but we're still what at$100 a barrel, I think.
• 4:55
  SPEAKER_01: Yeah, it's uh I don't know what the barrel is, but the gas pump's pretty yeah.
• 5:01
  SPEAKER_00: I mean, the national average I think is 430 right now.
• 5:05
  SPEAKER_01: On the Pennsylvania average is gonna be higher than that with some taxes.
• 5:08
  SPEAKER_00: So we got the PCE deflator.
• 5:10
  SPEAKER_00: The headline number came in at 3.5%, a little lower than consensus on an annualized basis, but much higher than last month.
• 5:17
  SPEAKER_00: Uh 0.66 for the month, pretty high, uh, almost double the last month's.
• 5:22
  SPEAKER_00: And then core, we're sitting at 3.2.
• 5:24
  SPEAKER_00: Um, that's a rise from last month's 3%.
• 5:28
  SPEAKER_00: So way too high.
• 5:30
  SPEAKER_00: Um, with energy prices high, we're likely to see the headline continue to move higher.
• 5:34
  SPEAKER_00: And then that does seep into core at some point.
• 5:37
  SPEAKER_00: Uh, GDP for the quarter, but this is just a preliminary agreed, but it came in at 2%.
• 5:43
  SPEAKER_00: Annualized, that's 2.7%.
• 5:45
  SPEAKER_00: So uh a little weaker than we thought, but um overall, not a bad number.
• 5:51
  SPEAKER_00: And then today we got ISM manufacturing.
• 5:54
  SPEAKER_00: It did actually come in line with the prior month, but um, it's been four or five months of um expansionary territory there, so that's a good thing.
• 6:04
  SPEAKER_00: Um, although prices paid, we're starting to see it tick up a little bit.
• 6:08
  SPEAKER_00: So, you know, that's gonna probably make cutting rates a little difficult to justify for the new Fed chair, um, who I believe will start the middle next month.
• 6:20
  SPEAKER_00: So I haven't uh listened to a lot of his stuff.
• 6:23
  SPEAKER_00: I know when he was a previous governor, he was a little on the hawker side.
• 6:27
  SPEAKER_00: Um, I think there's an underlying bias because Trump appointed him that he's gonna be uh more prone to cutting interest rates, but we'll have to see.
• 6:37
  SPEAKER_00: Um it's time to learn about the new fetch hair.
• 6:43
  SPEAKER_01: Uh well, it certainly will be interesting.
• 6:45
  SPEAKER_01: It certainly will be interesting.
• 6:46
  SPEAKER_01: You know, thankfully we only had we were talking about the beginning of the year, we only had a few folks that I I you know, I get the sense there's a lot of investors that kind of have a trigger finger, like, uh something's coming, something's coming.
• 6:59
  SPEAKER_01: Oh, it's here.
• 7:00
  SPEAKER_01: I knew it.
• 7:00
  SPEAKER_01: I knew it.
• 7:01
  SPEAKER_01: It was here, and now it's time to get into cash and you know, get out of fluctuating investments.
• 7:08
  SPEAKER_01: Uh we only had a couple folks that did that at the beginning of the year, and and but again, I I I get the sense that there are some people that are saying it's coming, it's coming, and any downturn is the time, whatever the time is in their mind, didn't they?
• 7:22
  SPEAKER_01: Say, This is it, I knew it, I knew it.
• 7:24
  SPEAKER_01: Um but uh what everybody should recognize is every year there is a moment where you think this is it, this is it, this is the big calamity.
• 7:36
  SPEAKER_01: Every year has that.
• 7:37
  SPEAKER_01: There are significant drawdowns on average each year.
• 7:42
  SPEAKER_01: Um and uh, you know, hopefully there are recoveries.
• 7:47
  SPEAKER_01: Uh so I would just caution everybody to uh be very thoughtful and methodical about any downturn is whatever the calamity is that you've been expecting.
• 7:59
  SPEAKER_01: Um because this year is a great uh case so far that uh we didn't continue that trend.
• 8:06
  SPEAKER_01: Who knows what happens for the rest of the year?
• 8:08
  SPEAKER_01: Maybe by the end of the year, everything's negative and terrible.
• 8:10
  SPEAKER_01: Don't know.
• 8:11
  SPEAKER_01: Uh, but we do know is the folks um that pulled their money out at the beginning of the year when the markets, when they have various indices, were down, uh high, single, even double digits, uh did not participate in the recovery.
• 8:25
  SPEAKER_01: So you got to be exactly right twice when you're doing that.
• 8:28
  SPEAKER_01: You got to be right on the way out and you gotta be right on the way in.
• 8:31
  SPEAKER_01: Uh and it's very difficult to get either one of those entry or exit points exactly right, which brings back, uh uh brings us really back to diversification, to making sure that the various buckets of money, if you will, in your life have appropriate time frames.
• 8:48
  SPEAKER_01: You know, for the folks that uh were investing in cash, um worked with uh a lot of people recently that taxes were a little bit better than they thought.
• 8:57
  SPEAKER_01: So they had some Idle Cash that didn't need to go to pay taxes.
• 9:01
  SPEAKER_01: And uh, but they have a plan for it.
• 9:04
  SPEAKER_01: They have a plan to in the next, you know, four or five, six, seven months, they have a plan for that money to either make a purchase, uh something for their business.
• 9:16
  SPEAKER_01: Um, and so you put that in cash.
• 9:18
  SPEAKER_01: Not great news, you know, the cash yields, the CD rates aren't great.
• 9:22
  SPEAKER_01: Uh, but that's an appropriate place for that pot of money.
• 9:26
  SPEAKER_01: Um, it's the people that have their longer term money, it's the retirement money.
• 9:30
  SPEAKER_01: Hey, I don't really need this for the next 10, 15, 20 years, whatever it is.
• 9:34
  SPEAKER_01: Uh, flipping in and out based on when you think um, you know, the the the moment is that everything's gonna unwind.
• 9:43
  SPEAKER_01: Very difficult and historically has proven to really drag on overall performance.
• 9:48
  SPEAKER_01: So that's my little dissertation on that.
• 9:51
  SPEAKER_00: No, very accurate.
• 9:52
  SPEAKER_00: There's the reason why the average retail investor does what, a half, maybe a third of what the indexes do.
• 10:01
  SPEAKER_01: Um, it's significantly less.
• 10:03
  SPEAKER_01: I don't know what the the percentage is.
• 10:06
  SPEAKER_01: You know, why is that?
• 10:08
  SPEAKER_01: Um, is because people jump in and out at the wrong time.
• 10:11
  SPEAKER_01: Yeah, emotion gets in the way.
• 10:13
  SPEAKER_01: And this year's another great example, and you know, maybe we could pull up these numbers at some point in time, but uh there are many of the asset managers that have uh um this one-page uh description of how if you miss the 10 best days in a certain time period, let's call it 10 years, you missed the 10 best days significantly hurt your performance.
• 10:33
  SPEAKER_01: You missed the 20 best days in my hypothetical 10-year example.
• 10:38
  SPEAKER_01: You missed the 20 best days that really hurt your performance, you know, then missed the 30 best days.
• 10:43
  SPEAKER_01: What's interesting about the um, you know, missing the best days, I would submit to you, it's really more important to um go down less on the big down days, but uh it's fascinating to look at how many of the and any given time period, let's call it 10 years, any given time period, how many of the best days uh are near the worst days.
• 11:07
  SPEAKER_01: So oftentimes in in this observation in this study, you have a very dramatic down day.
• 11:14
  SPEAKER_01: It's not long after that that it's gonna be one historically speaking, um, that one of the best days of that time period comes.
• 11:22
  SPEAKER_01: So let's say you got 10 years, and you're looking, say, what was the worst day in the 10 years?
• 11:27
  SPEAKER_01: And you look at that day.
• 11:28
  SPEAKER_01: There's a good chance that it's not long after that worst day that one of the best days in that 10-year time period comes along.
• 11:36
  SPEAKER_01: That's why it makes it so difficult to say, hey, I want to be on in on the best day, and I want to be out on the worst day.
• 11:42
  SPEAKER_01: Because if you get it right and you feel good, you say, Well, uh, I think Monday's gonna be terrible.
• 11:47
  SPEAKER_01: I want to all my money out of the market.
• 11:48
  SPEAKER_01: Let's say you're right that it's absolutely terrible.
• 11:51
  SPEAKER_01: Now the question is, when do you get back in?
• 11:53
  SPEAKER_01: When is one of those big recovery days?
• 11:55
  SPEAKER_01: People miss it all the time.
• 11:56
  SPEAKER_01: It's impossible.
• 11:57
  SPEAKER_01: That's why nobody can predict the future.
• 11:59
  SPEAKER_01: That's why it's impossible.
• 12:01
  SPEAKER_01: We're not implying that people are bad investors who don't have, you know, a correct, you know, they take in all this information and unsettled by some of the things they say.
• 12:11
  SPEAKER_01: We we certainly don't say that you shouldn't do that.
• 12:15
  SPEAKER_01: We understand why you do.
• 12:16
  SPEAKER_01: Do you have to recognize mathematically very, very difficult to be out on the worst day and then right back in on the next best day.
• 12:25
  SPEAKER_00: And so many of these drawdowns in the past decade have reverted into patterns like this V-shaped recovery where it goes down fast and it comes back just as fast.
• 12:33
  SPEAKER_00: Um, and this one's particularly interesting because usually it's um in in in the recent uh past, it's usually retail that are the ones saying, okay, time to buy the dip.
• 12:46
  SPEAKER_00: And institutional is like, no, let's let's wait.
• 12:50
  SPEAKER_00: This has actually been opposite.
• 12:52
  SPEAKER_00: We had institutional and CTA buying, and retail really hasn't joined the party.
• 12:56
  SPEAKER_00: So uh that might result in you know that FOMO, given this latest market thrust, another leg higher before consolidating.
• 13:06
  SPEAKER_00: Um, no one likes to miss out on on gains.
• 13:09
  SPEAKER_00: So we'll have to see if that plays out.
• 13:12
  SPEAKER_01: Well, I and I think uh there's you know, uh retail not jumping in as much.
• 13:16
  SPEAKER_01: I I my personal opinion is I think the gas prices really do affect that.
• 13:20
  SPEAKER_01: I mean, it's what you see on the news every day.
• 13:22
  SPEAKER_01: It's a it's your reality.
• 13:23
  SPEAKER_01: Uh, filled up this morning.
• 13:25
  SPEAKER_01: Um, I think that gives some people a little bit of pause.
• 13:28
  SPEAKER_01: There's a lot of negative news.
• 13:29
  SPEAKER_01: You've got you know, what's going on in the Middle East there?
• 13:32
  SPEAKER_01: And uh, you know, the talk about the oil prices, and that hesitation uh I think kind of clouds people from looking at their bigger picture and say, okay, you know, you know, I I'm gonna retire 10, 15 years from now.
• 13:46
  SPEAKER_01: What will it look like?
• 13:47
  SPEAKER_01: You know, how will I feel about this day today, 15 years from now?
• 13:50
  SPEAKER_01: You won't remember this day today.
• 13:52
  SPEAKER_01: You won't remember being at the gas pump.
• 13:54
  SPEAKER_00: Uh well, if you have any questions, I consider myself a gasoline expert at this point, traveling country, filling up every day.
• 14:02
  SPEAKER_00: You need to know any insights on what regions, what states have lower lower gasoline prices, just let me know.
• 14:09
  SPEAKER_01: Well, being here in western Pennsylvania, we're not that far from Ohio and we're not that far from West Virginia.
• 14:15
  SPEAKER_01: And so we are going to start seeing the people that are willing to travel into West Virginia.
• 14:20
  SPEAKER_01: The northern part of West Virginia is about an hour south of us, roughly an hour south of us.
• 14:24
  SPEAKER_01: So we're gonna start seeing people that say, Hey, uh, you know, I took a ride down to first big town south of Pittsburgh, Morgantown, for example.
• 14:32
  SPEAKER_01: I took a ride down to uh Morgantown, I did a little shopping, but I filled up with guests.
• 14:35
  SPEAKER_01: And we're gonna start seeing that, I think.
• 14:37
  SPEAKER_01: People jumping um you know, state borders for people like us that are close to I'm a convenience person.
• 14:45
  SPEAKER_00: I am afraid I am too.
• 14:48
  SPEAKER_00: And and apparently, I mean, we're we're pretty insulated from this whole um oil issue going on globally.
• 14:56
  SPEAKER_00: It's much worse in Europe.
• 14:58
  SPEAKER_00: Um they're a lot more affected by the Strata Hormoose, um, whereas we're a little more protected.
• 15:04
  SPEAKER_00: So they may have more of the, you know, maybe I'm not gonna take that drive in the summer months.
• 15:11
  SPEAKER_01: Yeah, I guess uh I I don't know these things, but from limited experience, I guess August, uh kind of early, mid-August is big vacation time there.
• 15:20
  SPEAKER_01: So hopefully get that straight down.
• 15:21
  SPEAKER_01: But again, like I said last week, wow, what a surprise.
• 15:23
  SPEAKER_01: We're getting close to the summer and gas prices go up.
• 15:26
  SPEAKER_01: It's always something.
• 15:27
  SPEAKER_01: This is pretty this is pretty dramatic.
• 15:29
  SPEAKER_01: I mean, percentage basis, you know, the gross seller basis.
• 15:32
  SPEAKER_01: Yeah, I mean, this is a big move in the increase of price of gas, but I get that.
• 15:36
  SPEAKER_01: But uh, hey, summer's coming, the price of gas goes up.
• 15:39
  SPEAKER_00: Anyway.
• 15:40
  SPEAKER_00: So, as we typically do, we talk about our blog posts a little bit.
• 15:44
  SPEAKER_00: Um, anything you want to hit on specifically in the things we posted this week?
• 15:48
  SPEAKER_00: A lot on retirement.
• 15:49
  SPEAKER_00: Um, kind of just being aware of the budget.
• 15:52
  SPEAKER_00: Um, you're now relying on investment or social and or social security for uh your income needs, and and that feels a little different than when you know you have the steady paycheck coming in.
• 16:05
  SPEAKER_00: Um, so just be aware of your uh you know, essential purchases versus things that are more of a luxury.
• 16:14
  SPEAKER_01: Yeah, that you know that really ties into you know all the financial planning.
• 16:17
  SPEAKER_01: We kind of model that out.
• 16:18
  SPEAKER_01: Financial plan is like any other plan, it's a very dynamic living thing.
• 16:22
  SPEAKER_01: It's not the final answer.
• 16:24
  SPEAKER_01: It's never the final answer, but it's a good guidebook.
• 16:26
  SPEAKER_01: Um it's a good map uh into the beginning of retirement throughout retirement, understanding and just being clear on what your regular sources of income are, which could be a pension, less and less people have those, uh, and social security.
• 16:40
  SPEAKER_01: Uh, those are things you can be comfortable are coming every month.
• 16:44
  SPEAKER_01: Uh, then you've got your variable sources of income.
• 16:47
  SPEAKER_01: That would be withdrawals from a portfolio.
• 16:49
  SPEAKER_01: Well, it's variable because portfolio goes up and down over time.
• 16:52
  SPEAKER_01: We certainly hope that the portfolio grows, even though you're taking money out of it.
• 16:56
  SPEAKER_01: But that's a variable source.
• 16:58
  SPEAKER_01: And so being very clear on your variable sources of income, your assured sources of income, Social Security and pension.
• 17:09
  SPEAKER_01: Um, and there are ways that we can take some of the variable money, say an IRA, for example, and make it more assured.
• 17:17
  SPEAKER_01: There are certainly ways that we can do that.
• 17:19
  SPEAKER_01: That depends on individual circumstance and preferences, quite honestly.
• 17:23
  SPEAKER_01: So understanding your assured sources of money, hey, I know this is coming in.
• 17:27
  SPEAKER_01: Uh, I'm really, really comfortable it's coming in.
• 17:30
  SPEAKER_01: Everybody wants to debate on Social Security.
• 17:32
  SPEAKER_01: If you're collecting Social Security or about to, I do believe, my opinion, uh, that you're gonna get Social Security the way it has been advertised to you.
• 17:39
  SPEAKER_01: If you're 23 years old, I do not think you're gonna get Social Security the way they're advertising.
• 17:43
  SPEAKER_01: But anyway, so your assured sources of uh uh of income, your variable sources of income, and then you match that with your um um your living expenses, right?
• 17:57
  SPEAKER_01: What you need to keep the lights on, keep yourself fed and clothed, and then your variable sources, which are discretionary things.
• 18:03
  SPEAKER_01: And um, that's gonna be, you know, vacations and movies and traveling to see family and friends and grandkids and things like that.
• 18:11
  SPEAKER_01: So yeah, it in its uh simplest version, not that I'm making it sound parti uh particularly simple, that's the financial planning process is understanding what I know is coming in, what I think could come in, understanding what I know I have to pay, and understanding what I think I would like to spend, and kind of matching that all together and say, where's the happy medium?
• 18:33
  SPEAKER_01: Does this all work?
• 18:34
  SPEAKER_01: Uh, but you know, it hey, it's a it certainly is a transition.
• 18:39
  SPEAKER_01: It's a transition because your assured sources of income are much higher in your working days.
• 18:45
  SPEAKER_01: Uh, because if you say I got a good job and they like me and I think I'm gonna stay, I'm feel pretty good and get another paycheck next week.
• 18:51
  SPEAKER_01: Well, you know what the paycheck is.
• 18:53
  SPEAKER_01: You know what it is every week, right?
• 18:55
  SPEAKER_01: And uh there's a pretty high likelihood that your social security, which is an assured pot of uh source of money, is gonna be lower than those paychecks.
• 19:05
  SPEAKER_01: So that's you know, that's kind of jumping into the cold water of retirement and you lose your breath real quick until you get acclimated and say, okay, wait a minute, let's I know I'm gonna catch my breath.
• 19:15
  SPEAKER_01: Uh now I'm gonna start waiting a little bit.
• 19:18
  SPEAKER_01: Yeah, it's cold, but now I'm ready to swim through my retirement.
• 19:21
  SPEAKER_01: Terrible analogy, but uh but it's true.
• 19:25
  SPEAKER_01: I mean, you know, jump in cold water, that first, you know, when you lose your breath, you say, Oh my gosh.
• 19:30
  SPEAKER_01: Uh, and that's that's but that you know again, the financial planning helps to warm up that wire.
• 19:36
  SPEAKER_01: So at least you have um some understanding.
• 19:40
  SPEAKER_01: You know, like people say, the devil you know better than the devil or you don't.
• 19:43
  SPEAKER_01: So at least you know the challenges going in.
• 19:46
  SPEAKER_00: Therein is the financial planning for retirement.
• 19:49
  SPEAKER_00: And I know it's it's very specific to everyone's particular circumstance, but do you have a general rule you give to clients that like, you know, you can comfortably take out four percent and never have to worry about running out of money.
• 20:02
  SPEAKER_00: Do you have a specific number or it's just kind of more of a base by case by case scenario?
• 20:07
  SPEAKER_01: You know, I know it's uh through all you know, all the studying that I done I've done and I continue to do, and many people recognize this.
• 20:14
  SPEAKER_01: There is what's called the 4% rule.
• 20:16
  SPEAKER_01: 4% rule says you start with a pot of money, if you take 4% out for any time period, 2010, 20, 30, you live 50 years, you retire for 50 years, you got a pot of money, you take out four percent uh on a regular basis, uh, you should be good.
• 20:33
  SPEAKER_01: What most people don't recognize, and here here's the problem with the quote unquote four percent rule, and there was an academic dissertation that was done on this decades ago, uh, that it was suggest that you do this.
• 20:44
  SPEAKER_01: But understand the parameters of that.
• 20:47
  SPEAKER_01: So it's four percent, market goes up, market goes down, and all these other things.
• 20:50
  SPEAKER_01: But what it is saying is if you have a million dollars, you take out four percent for any number of years, 20, 30, 40, 50 years.
• 20:59
  SPEAKER_01: At the end of that time period after taking out four percent, you're still gonna have a million dollars, potentially.
• 21:05
  SPEAKER_01: That's potentially.
• 21:06
  SPEAKER_01: That was an academic study.
• 21:07
  SPEAKER_01: And so for a long time in our industry, they said 4%.
• 21:10
  SPEAKER_01: You should be comfortable taking out 4%.
• 21:12
  SPEAKER_01: I certainly work with plenty of people that say, I don't want a million dollars sitting around on my deathbed.
• 21:18
  SPEAKER_01: I want a dollar.
• 21:20
  SPEAKER_01: On my last day, I want to spend my last dollar.
• 21:22
  SPEAKER_01: So the 4% rule doesn't work for them.
• 21:24
  SPEAKER_01: It does work, but it doesn't fit into their life because they're saying, I want to take more.
• 21:30
  SPEAKER_01: I want to take more in the early years when my knees still feel good enough to walk around Greece and Italy and Turkey and all these beautiful historical places.
• 21:38
  SPEAKER_01: I want to spend more early.
• 21:40
  SPEAKER_01: I want my withdrawal rate to be higher earlier so that I can enjoy it while I have the health and the energy.
• 21:48
  SPEAKER_01: So there are certainly people we do planning for that their withdrawal rate is much higher than the 4%.
• 21:54
  SPEAKER_01: And if they go online and say, oh my gosh, I'm taking out 6%, this is awful because online says.
• 22:00
  SPEAKER_01: Four percent is the number.
• 22:01
  SPEAKER_01: Well, there's a couple things built into that.
• 22:03
  SPEAKER_01: One, it's that consistency over time.
• 22:05
  SPEAKER_01: Two, do you want exactly what you started with?
• 22:08
  SPEAKER_01: Do you want it on your deathbed?
• 22:11
  SPEAKER_01: A lot of people say, no, I don't want that.
• 22:14
  SPEAKER_01: I want to spend it.
• 22:15
  SPEAKER_01: Um, so no, I don't.
• 22:17
  SPEAKER_01: It's very, it is very customized.
• 22:19
  SPEAKER_01: It's you know, it's customized on um what people's interests are, what their needs are uh throughout their retirement.
• 22:27
  SPEAKER_01: There are a lot of also a lot of studies that say you're gonna spend significantly less throughout your retirement.
• 22:33
  SPEAKER_01: Um so from 65 to 75, there's one study.
• 22:37
  SPEAKER_01: We should bring this up as well.
• 22:38
  SPEAKER_01: Don't quote me on these numbers.
• 22:39
  SPEAKER_01: It's right around you'll spend um in that decade, you'll spend 15% less from 65 to 75, from 75 to 85, you'll spend another, uh, you'll decrease that spend that spending by another 19%, then 85 and beyond, you'll you know, spend less.
• 22:56
  SPEAKER_01: Uh now when I tell people that, they say, wait a minute, what about what uh if I go in a home?
• 23:01
  SPEAKER_01: If I go into a a retirement home or a long-term care facility and it costs me$19,000 a month, yeah, that that certainly could happen.
• 23:09
  SPEAKER_01: And uh, but there are things you know that we do ahead of that.
• 23:12
  SPEAKER_01: Um, so but on average, spending decreases throughout your lifetime.
• 23:18
  SPEAKER_01: So um boy, Mike, that was uh really open to can of worms there.
• 23:22
  SPEAKER_00: No, no, I'm why I just skipped the April of Social Security Month.
• 23:27
  SPEAKER_00: We're running a little low on time.
• 23:30
  SPEAKER_01: So, well, yeah, well, we could get it.
• 23:32
  SPEAKER_01: Hey, social every month is Social Security Month to me.
• 23:36
  SPEAKER_01: Um so no, yeah, we that that in my opinion, that really should be customized.
• 23:42
  SPEAKER_01: That that withdrawal rate, uh, the timing of the withdrawals, uh, which part of your money it comes from, what percentage of what?
• 23:50
  SPEAKER_01: Let's say you are gonna live by the 4% rule.
• 23:53
  SPEAKER_01: If I take up 4%, I'm gonna have what I started when I die.
• 23:55
  SPEAKER_01: Okay, great.
• 23:56
  SPEAKER_01: Uh, but where does it come from?
• 23:59
  SPEAKER_01: What is the tax impact of you taking out of this bucket or this bucket or this bucket?
• 24:05
  SPEAKER_01: Uh, that also affects the longevity of your money.
• 24:08
  SPEAKER_01: That's really what we're talking about.
• 24:10
  SPEAKER_01: What's the longevity of the what you have built for your retirement?
• 24:14
  SPEAKER_01: Um, so where you take it from and when you take it uh certainly affects um where you take it, when you take it, how you take it into your possession to spend.
• 24:25
  SPEAKER_01: Um, all of that affects the quote unquote 4% of the there are a lot of people that uh there's some news studies now that say the 4% because of volatility.
• 24:35
  SPEAKER_01: Um uh, you know, the market has been up, but the volatility is also up.
• 24:39
  SPEAKER_01: That swings the dramatic ups and downs that has been up.
• 24:43
  SPEAKER_01: Um if you're taking money out of a portfolio in one of these dramatic downturns, it's has a bigger effect on the longevity of your pot of money.
• 24:51
  SPEAKER_01: Um, but there are a lot of people that say the 4% rule should be lower, less than 4% a year.
• 24:58
  SPEAKER_01: So that would be a um, you know, a cut in somebody's paycheck.
• 25:02
  SPEAKER_01: But again, once you start integrating uh where you're taking it from, tax impact of uh where you're taking it from, when you take your social security.
• 25:11
  SPEAKER_01: Um so it no, I don't have a hard and fast rule.
• 25:16
  SPEAKER_01: It it really is um uh specific to the individual.
• 25:23
  SPEAKER_01: Um all the way down to risk tolerances, you know, how much time they spend looking at the the markets and how much anxiety they have over that, um, what they want to do, how they, you know, it how they plan to use the capital that they have built for their paycheck for the rest of their life.
• 25:44
  SPEAKER_01: I refuse to live by the 4% rule.
• 25:46
  SPEAKER_01: Some people are a heck of a lot more, some people are a heck of a lot less.
• 25:49
  SPEAKER_01: And working with us through the financial planning, we have very good reasons for that, for each of those.
• 25:55
  SPEAKER_00: So, bottom line, go to our website and to get your specific answers, book a appointment with Mr.
• 26:00
  SPEAKER_00: Peluso over here.
• 26:02
  SPEAKER_01: Yeah, you know, we walk through all those things and understand the individual and what resources they have available to them, and now and in the future.
• 26:09
  SPEAKER_01: Uh, that's the idea.
• 26:11
  SPEAKER_01: And then most importantly, adjust along the way.
• 26:15
  SPEAKER_01: Life tends to throw curveballs at everybody.
• 26:17
  SPEAKER_00: And there's a lot of content on our website.
• 26:19
  SPEAKER_00: We do most of our blog posts, come out here.
• 26:22
  SPEAKER_00: We have our investment philosophy, a little bit about ourselves, um, and then obviously the contact tab and resources if we have any events going on, which we haven't had a a webinar or seminar in a little bit, but um something we occasionally do.
• 26:37
  SPEAKER_00: Absolutely.
• 26:38
  SPEAKER_01: And uh next week, I I think we we touched on this on uh one of our blogs, um estate documents, wills, trusts, powers of attorney, that kind of thing.
• 26:50
  SPEAKER_01: Uh I can't begin to tell you how many conversations I have with folks that say, hey, I got it all covered.
• 26:55
  SPEAKER_01: It's in my will.
• 26:58
  SPEAKER_01: So um, you know, those are things that really need to be thought about and acted upon.
• 27:03
  SPEAKER_01: And we don't give uh tax or legal advice.
• 27:06
  SPEAKER_01: This is my observations.
• 27:08
  SPEAKER_01: Uh, these are my observations, but uh we we should really dig into that.
• 27:12
  SPEAKER_01: Uh, I've heard several times this week, not to worry, it's in my will.
• 27:16
  SPEAKER_01: Uh, you know, and for the folks that I was talking to, that's just that's really not going to accomplish uh everything they want to get done and um in the most efficient best way.
• 27:31
  SPEAKER_01: So oftentimes it it's worth the investment now um for the comfort throughout the future of that things will happen the way you want them to happen.
• 27:42
  SPEAKER_01: So, anyway, let's let's dig into that another.
• 27:45
  SPEAKER_00: And there's plenty of economic data that we'll talk about next week.
• 27:48
  SPEAKER_00: We get the job openings and the rest of the job numbers, non-farm payroll.
• 27:52
  SPEAKER_00: I think it's supposed to come in at around 65,000.
• 27:56
  SPEAKER_00: Big deceleration from uh the previous month, but kind of in that uh three-month average range.
• 28:03
  SPEAKER_00: So we'll see if we come in above or below.
• 28:05
  SPEAKER_00: And then I believe unemployment rates are supposed to kind of stick around 403 level.
• 28:10
  SPEAKER_00: Um, so that'll certainly have an impact on the Fed's next decision, whether up or down on rates.
• 28:18
  SPEAKER_00: Sounds great.
• 28:19
  SPEAKER_00: That's what I got.
• 28:20
  SPEAKER_00: All right.
• 28:21
  SPEAKER_00: Well, I'm gonna flip on the disclosures and keep an eye out for our blog posts, and we'll be back on next Friday by 1230 Eastern Time.
• 28:28
  SPEAKER_00: Have a great weekend.
• 28:29
  SPEAKER_00: Be safe.
• 28:29
  SPEAKER_01: Security is offered through LPL Financial LLC, member FINRA and SIPC.org.
• 28:35
  SPEAKER_01: Advisory services offered through LPL Financial LLC, a registered investment advisor.
• 28:40
  SPEAKER_01: Brian Peluso, Michael Kutch, and David Harper are registered representatives of LPL Financial LLC.
• 28:47
  SPEAKER_01: Content discussed is for informational purposes only and not intended as an offer or solicitation to buy or sell any security or investment strategy.
• 28:55
  SPEAKER_01: Any opinions expressed are those of the authors and do not necessarily reflect the views of LPL Financial or its affiliates.
• 29:02
  SPEAKER_01: All investments involve risk, including the possible loss of principal.
• 29:06
  SPEAKER_01: This communication may include links or references to third party websites.
• 29:10
  SPEAKER_01: These links are provided as a convenience only.
• 29:12
  SPEAKER_01: LPL Financial and its representatives are not responsible for the accuracy or content of such sites.
• 29:18
  SPEAKER_01: Brian, Mike, and David and HBK Provident Advisors may only transact business in states where they are properly registered or exempt from registration.
• 29:27
  SPEAKER_01: Please contact us directly for information regarding licensing and registration status.
• 29:32
  SPEAKER_01: Past performance is not indicative of future results.
• 29:36
  SPEAKER_01: You should consult with your financial advisor, tax professional, and or attorney regarding your specific situation before making any investment decision.