Frantic Markets! Here's What To Do Ep. 124 Artwork

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.

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Excel in Retirement

Frantic Markets! Here's What To Do Ep. 124

August 07, 2024 • David C. Treece • Episode 124

I’m reading a book titled Think Ahead by Craig Groeschel, and one of the premises of the book is to pre-decide how we will react in given circumstances. My first thought was this would be a great book for teenagers to read. Planning beforehand for the outcome we know to be right is better than waiting until we’re under stress to think through what we should do. Under stress we may make bad decisions.

One of the reasons Groeschel said we sometimes make poor decisions is we are fatigued by all the decisions we have to make. He writes, “Experts estimate that we make 35,000 decisions a day.”

Think about how many basic decisions you made before you even left your house this morning. You had to think about getting up, brushing your teeth, what to eat, what to wear, taking the dog outside, and the list could go on.

The issue is by the time we get hit with a big decision we may not make our best decision because we have not predetermined our belief system about the topic.

In my previous volunteer work with a local ministry called Jumpstart, I learned that one of the ways prisons control the detained is by limiting the decisions they can make in a given day. Instead of 35,000 decisions they may have 6,000 decisions they can make a day. It stands to reason that the way we can control our outcomes is to limit the amount of mental energy we need to expend on making decisions.

As evidenced by major stock market trading platforms going down on Monday due to large quantities of people placing trades in their equity portfolios, a lot of investors may not have pre-decided what they should do in a market downturn. When we don’t have a plan, we subjugate ourselves to making decisions based on feelings and not on hard facts. The stock market likes predictability and we’ve seen historically unpredictable events transpire recently.

The cool thing about our financial planning process is we have pre-determined how we should react in a down market so we don’t have to frantically attempt to make wise decisions in the chaos of the moment. In our 3 Roles of Money process we have our “red money” in the market, but we’ve segregated out our “blue money” to use over the next ten years.

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SPEAKER_01: 0:00

Welcome back to the Excel in Retirement podcast, where we help good people make wise financial decisions so that they may excel in retirement with confidence. Learn more at clientsexcel.com. Now to your host, David Treese.

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David Treese.

SPEAKER_00: 0:25

Okay, well, welcome back to episode 124. I appreciate you listening here today. Well, I am reading a book titled Think Ahead by Pastor Craig Groeschel. And one of the premises of the book is he advocates for pre-deciding how we will react in given circumstances. And at surface level, my thought was, well, this would be a great book for teenagers to read, right? Because we want to avoid bad situations when we're coming up and Sometimes we haven't faced those, and so it could be advantageous for us to pre-decide how we're going to react. But really, this is beneficial for all of us, right? Planning beforehand for the outcome we know to be right is better than waiting until we're under stress. That was my takeaway. And so we want to pre-determine what we're going to do based on our belief system that we developed beforehand. And under stress, we may make bad decisions. We all know that when pressure is applied, sometimes people pop and things go bad. One of the reasons Groeschel said early on in the book that we make poor decisions is we're just fatigued by all the decisions we have to make. And so he quotes, or I quote him in saying, experts estimate that we make 35,000 decisions a day. And so think about how many basic decisions you made before you even left your house today. You had to think about getting out of bed, first of all, or whether you should hit the snooze button, whether to brush your teeth, what to eat, what to wear. Did you take the dog outside? And the list could go on, right? And these decisions just add up over our day. The issue is that by the time we get hit with a big decision that's really impactful and we really need to make a good decision, we may not make our best decision because we haven't predetermined our belief system about that topic. Previously, in volunteer work with a local ministry called Jumpstart, I learned that one of the ways prisons control those being detained is by limiting the decisions they can make in any given day. Jumpstart is a ministry that helps folks that are incarcerated and helps them transition back out of prison and live a productive life, and so it's a really cool organization. Instead of the 35,000 decisions, though, a prisoner may make 6,000 decisions per day, and It's a way to control people to get them manageable, I guess, when they're incarcerated. It stands to reason, though, that the way that we can control our outcomes is to limit the amount of mental energy we need to expend on making decisions. On Monday, we saw that major trading platforms at Charles Schwab and Fidelity went down due to the large quantities of people placing trades in their equity portfolios. And so a lot of investors may not have pre-decided what they should do when the market starts going down. And the S&P went down about 3% and things were getting a little chaotic there for a while. When we don't have a plan, we subjugate ourselves to make decisions based on our feelings and not hard facts. Now, we're emotional creatures, I'll give you that, but we want to make decisions based on facts because feelings can often be fleeting and they can change very quickly. The stock market likes predictability. You've probably heard that before. And we've seen historically unpredictable events transpire recently. We saw a former president get shot recently. We saw a president drop out of his reelection bid. We haven't known for sure who the options to vote for in November are going to be, and we're only a few months out from that. And last week, the Federal Reserve decided not to lower interest rates. And one of the reasons for not lowering interest rates was because they believed there was strong employment numbers. But then Friday, a few days after that, The latest jobs report came out revealing that unemployment was higher than the Fed was anticipating. This sent fear throughout the economy that a recession may be near and that perhaps the Federal Reserve isn't going to be able to orchestrate this soft landing to bring inflation down. If you recall, the government has been trying to bring inflation down without causing a major disruption to the economy. And so when the unemployment numbers were higher than the government thought, that sent fears that a recession may come and that the Fed had not done as they had hoped, in essence. Then Monday, we saw the stock market sell-off. They had the largest loss since 2022. The S&P 500, as I said earlier, fell 3%. But as of this recording, the market is recovering. This is Tuesday, the day before this is released, and so it's recovering. And the good news is, as of right now, the S&P 500, year-to-date, is still up about 11%. The cool thing about our financial planning process is we have predetermined how we should react in a downed stock market, so we don't have to frantically attempt to make wise decisions in the chaos of a moment. In our three roles of money, and I'll link to an article I've written for Kiplinger on this that you can read more about this on, we have a process in our three roles of money process, and we color code money. And so our red money is in the stock market. And we have segregated out our blue money to use for distributions over the next 10 years. And what this means is we're going to use our blue money as our income in our first 10 years of retirement or whenever we get ready to take distributions out of our account. Because we have invested the blue bucket to be as stable as possible. Then this allows us to let our red bucket money ride during market turmoil. which is generally what we want to do because most of us can't effectively and consistently time when to get out of the stock market and when to get back in. It's just a fact. And often I cite Warren Buffett's philosophy of not to invest in the stock market or not to invest in a stock if you can't hold that for 10 years or don't plan to hold it for 10 years. How in the world do we do that in retirement if we have not sectioned off a But what we can figure out is that when it gets frantic and we get worried, we tend to make bad decisions. But if we have an all weatherproof plan and we've made allowances for different markets, we can benefit ourselves by not having to make those challenging decisions in the heat of the moment. I've written more about this in our book called The Excel or How to Excel in Retirement so that you can live worry free. And I would be happy to UPS you a copy of that. Just send us an email at hello at clientsexcel.com. I hope you have a great day. Take

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