Excel in Retirement

Where financial planning becomes understandable. David brings interesting stories each week to listeners of his Excel in Retirement show along with actionable ideas that may help listeners avoid pitfalls that many people face in their retirement. David C. Treece began his career in the financial services industry in 2011. He is an independent financial adviser. He has passed the Series 65 securities exam, and he is health and life insurance licensed in several states. David’s financial advisory firm focuses on retirement income planning.David worked for two other financial advisors before founding his firm in 2018. David launched Clients Excel because he has a desire for his clients to have a second to none experience when it comes to their financial planning for retirement. David relentlessly strives to be the best at helping people prepare for retirement.The bedrock of David’s ethos is treating others as he would want to be treated.David works tirelessly to continually bring pertinent content to our clients and friends through our weekly newsletter and podcast. Through these, David brings informative content that may aid you in preparing for retirement. Through his financial planning work, David’s hope is that his clients are empowered to have a confident financial future.David and his wife, Mallory, have a daughter named Amelia and rescue dog named Oscar. They also have a backyard flock of chickens that Amelia loves to tend. David and his family are active in their church in Spartanburg. He is also a volunteer mentor with JumpStart, which is a ministry for people who have been recently released from prison.

All Episodes

Excel in Retirement

How Index Funds Work Ep. 108

July 20, 2022 • David C. Treece • Episode 108

We sometimes become quite loyal to the companies we are invested in. It may be a company we worked for or it may be an investment we inherited from our parents. Oftentimes, people in this scenario have a high concentration of their portfolio in one stock or one industry sector.

The problem with this type of investing is that sometimes companies or sectors falter and this could leave us overexposed and feeling distraught. Just as if Thriller or Boogie Woogy were to break, Amelia would be disappointed. We don’t want to be overly allocated in one sector in the event that the investment underperforms.

If we’re invested in stocks, it makes sense to have numerous companies, but often a lower cost way that requires less rebalancing is to use index funds.

An example of an index is the S&P 500. The index was created in 1957 and it was designed to represent 500 large US companies. Today there are many different types of indexes to allocate to.

We can use index funds to allocate to bonds, commodities, real estate, technology, emerging markets, international markets and the list goes on. With index funds we are diversified amongst the companies inside of the index and this prevents us from being over exposed to one company. Also what this does is it allows us to be diversified, thereby not being disappointed if a company underperforms.

When the market turns down as it has this year, it's a great time to evaluate how your portfolio has performed under stress and assess whether you need to rebalance to get your holdings in line with your priorities. Perhaps an index fund may be appropriate for you. If you need assistance with rebalancing and accessing whether your allocations are in line with your goals and objectives please call our office at 864.641.7955.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

SPEAKER_00: 0:00

Welcome to the Excel in Retirement Show, where financial planning becomes understandable. Your host, David C. Treese, is a licensed financial advisor who specializes in retirement income planning. David's desire for each of his clients is to have financial confidence, protection and growth. We believe this is achievable with the right plan in place. Together, we'll build a plan specific to your financial goals. We work with clients all over, and we'd love to connect with you. Go to clientsexcel.com to connect with us. If you'd like to speak with us, call our office at 864-641-7955. Thanks for listening. Now to the show.

UNKNOWN: 0:54

Music

SPEAKER_01: 0:56

Welcome back to episode 108 of the Excel in Retirement show. I appreciate you listening. Thank you for carving out a few minutes to spend here with us. A common question I'm getting this year is, David, how are your clients doing compared to the overall market? And that is a great question and it is a fair question. And it's one I love answering because here's a good answer for it. Our clients are okay. One reason they're okay is, now remember, Remember, most of our clients are in retirement or are near retirement. And so many of them have a portion of their portfolio that is in investments that cannot lose value. It can only go up. And they have their income taken care of through this type of investment. So then the other portion of their portfolio is in investments that can go up and down with the overall market. The idea with this portion of their money is to help them maintain their lifestyle over the long term. What this allows them to do is to not worry when we have uncertainty like we have in the markets this year. If we have 90 or 100% of our money in equities, boy, we're having a tough time this year. And if that's the case, we probably have room to worry a little bit. But that is always helpful. So if our clients are invested conservatively, and let's say they're down 10, maybe 15%, but that's only with 50% of their money, they're really down a lot less over all, mathematically, and that allows our clients to be in a nice, comfortable position even in crazy markets like these. Okay, Amelia is our four-year-old. We have two daughters. We have a four-year-old and then about a three-month-old baby. And Amelia likes the cheapest toys we can buy her. Seriously. Santa brought her an expensive dollhouse one year and she has a kitchen set and the list could go on. These high dollar expensive things that we bought for her. But do you know what her favorite two toys are? One is a riding toy that she zips around the house on perpetually and nearly crashes into stuff with She's kind of like her dog Oscar in that respect. He almost always catches the squirrels in the backyard, but he never quite accomplishes his goal. Amelia almost always crashes, but she never really does. I have no idea why it works out that way. This riding toy, though, cost us$20, and she has ridden it for a couple years now. The other toy that she adores is a puppy that I believe her grandmother, or her cookie as she likes to be called, gave her. And this puppy dances around and sings Michael Jackson's Thriller. And so she can tap the ear to this puppy and it dances. And she loves it. She calls it Thriller Puppy. This isn't a phase either. As I was saying just a second ago, she has been on this toy. The riding toy is named Boogie Woogie, I think is what we call it. And this is a long-term pattern. She loves these two toys. I'm I refilled my business card holder here in my office this morning And the cards came in this colorful, multicolored box. And I thought, I bet Amelia will love this box when it's empty. Let's forget Christmas gifts this year. We'll just go to the recycling center and get her some gems this year. I'm telling you, that could really save us a lot of money. If something were to happen to one of those toys, to Boogie Woogie or to Thriller Puppy, she would be really upset and distraught. And we would hear about it for quite a while, I suspect. While we don't get quite as enamored with our investments, sometimes we become quite loyal to the companies that we're invested in. It may be a company that we worked for, or it may be an investment we inherited from our parents. Oftentimes, people in this scenario have a high concentration of their portfolio in one stock or in one industry sector. Can you see the problem with that already? The problem as I see it is that this type of investing is that sometimes companies or sectors falter. Sometimes they have a poor earnings report, and this could leave us overexposed and feeling distraught if something should happen to one of those companies. Just as if Thriller or Boogie Woogie broke, Amelia would be disappointed. We don't want to be overly allocated to one sector in the event that the investment underperforms. If we're investing in stocks, it makes sense to have numerous companies, right? But often, a lower cost way that requires less rebalancing is to use index funds. An example of an index is the S&P 500. Now, the S&P 500 was created back in 1957, and it was designed to represent 500 large U.S. companies. Today, there are many different types of indexes to allocate to. We can use index funds to allocate to bond Real estate, technology, emerging markets, international markets, and the list goes on. With index funds, we are diversified amongst the companies inside of the index, and this prevents us from being overexposed to one company. Also, what this does is it allows us to be diversified, thereby not being disappointed if a company, one individual stock, would underperform. When the market turns down as it has this year, it's a great time to evaluate how your portfolio has performed under stress and assess whether you need to rebalance to get your holdings in line with your priorities. Perhaps an index fund may be appropriate for you to add in. If you need assistance with rebalancing and assess I appreciate you listening today, and I hope you have a great day.

SPEAKER_00: 7:19

AE Wealth Management and ClientsXL are not affiliated companies. Investing involves risk, including potential loss of principal. Transcription by CastingWords Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.