Ep. 111 – Wine Down – Mortgages – Fear Selling – Getting Hacked
Do you have questions about retirement planning that you want to be answered over a glass of wine?
In this episode Secure Your Retirement, we have our monthly wine down episode where we answer a few questions surrounding retirement planning as we enjoy some 19 crimes cabernet sauvignon wine. We cover questions on mortgages, the best asset mixes, whether to sell stocks and how to avoid getting hacked.
Listen in to learn why some of these things need an individualized approach with the help of a financial professional.
In this episode, find out:
- Have your numbers analyzed before deciding to pay or not to pay off your mortgage.
- Why there isn’t the best asset mix, and you should instead have an active retirement plan.
- Our review on the 19 Crimes, cabernet sauvignon wine of the day.
- The precautions to put in place to ensure security and avoid getting hacked.
- Why you shouldn’t make your money decisions based on your emotions.
- Have an investment strategy that you’re comfortable with and don’t rush to sell your stocks.
- “I don’t think there is the best asset mix out there for anyone, you just have to have something that is going to work actively for you.”– Murs Tariq
- “We all hate to change passwords, but that would at least make it more difficult for somebody to hack and listen to/watch your emails.”– Radon Stancil
If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!
To access the course, simply visit POMWealth.net/podcast.
Here’s the Full Transcript:
|Radon:||Welcome everyone to our monthly wine down. This is always a treat. It’s a treat for us, not just because we get to have wine, but because we get to do it together, we get to answer some common questions that people are asking, and so, as we do all of our wine downs, we let Morgan tell us about our wine and a little bit of a outline of what we’re going to talk about.|
|Morgan:||So today we’re drinking 19 Crimes, we’re drinking the Cabernet Sauvignon, and this is Radon’s kind of go-to wine, his favorite. But in addition to that, there’s actually some really cool stories about how 19 Crimes started with the conviction of British rogues, and then they were sent to Australia kind of as punishment. But the coolest part is there’s an app that you can use, if you haven’t already heard this, where you can hold it up to it and they tell you their story, so it’s actually really cool that way too.|
|Radon:||Well, good. Oh, you know what you didn’t do?|
|Radon:||I’m sorry. You got to give us the outline. So what are we going to talk about?|
|Morgan:||So now you want the questions. I was concerned with the wine. All right. So we do have four questions that we’re going to address today. The first one being, should I pay off my mortgage, then what is the best assets mix in retirement, 80/20, 60/40, or 40/60, and then how to avoid being hacked, instructions for transactions. Then finally the stock market is at record highs, should you sell? So back to the first one, should I pay off my mortgage?|
|Radon:||Very, very good. This is a great question because a lot of people ask about it and they are worried because they’re looking at things and are going, “You know what? I’m going to go into retirement and do I really want this payment?” It’s mostly around emotion, but when somebody asks me, “Should I pay off the mortgage?” I always think about it from a return or cashflow return first. I’m going to walk you through an example, and this’ll make it really easy for you to think through and go, “That makes sense,” or, “That does not make sense.” I’m going to give you a couple scenarios.|
|The first scenario is an easy one and see if you can follow me. Let’s say that you owe $100,000 on your mortgage. $100,000 is easy math. You owe $100,000 on your mortgage, and let’s just say that your house payment, you’ve had it forever, and without your escrow, without any payments toward insurance or taxes, let’s just say that on that $100,000 mortgage, you have a $1,500 payment. That’s $1,500 a month or roughly $17,000 a year. Now, think about that for a second and say, “How much money would I need to invest to generate $1,500 a month? Or what type of return is that?” Well, that’s like a 17% cashflow. That’s a huge cash flow, you could not invest $100,000 and get that kind of cashflow. If you paid the mortgage off, you’re instantly going to get that positive cashflow of $1,500 a month. The math on that is super easy, pay off the mortgage. That’s the answer.|
|But now what if it’s a different scenario? What if it’s maybe a $250,000 mortgage and you’ve gotten a great rate on it, but your cashflow out of that is not that good, maybe it’s only 4% or 3%. Well, now it might not make sense to pay the mortgage off, or it’s going to deplete a tremendous amount of your savings, or what if you told me and Murs, “Hey, I’ve got to use IRA money to pay off the mortgage.” You would never do that in our opinion. Why? Because you’re going to have to take the money out of the IRA, you’re going to have to pay taxes on it in order to net, or get yourselves down to the balance of whatever it is that you own the mortgage.|
|To answer that question and to make sure I give it to you clearly, it needs to be individualized. There is no blanket answer that says, “Make sure you pay off your mortgage no matter what, before you retire.” Always take time, talk to a financial advisor, talk to somebody and say, “What is it that I need to consider so that I make sure I don’t make a mistake and do something I should or shouldn’t do when it comes to paying off a mortgage?” Have the numbers ran. If you listen to this podcast and you turn it off, remember I need to have the numbers analyzed before I make a decision on whether I should or shouldn’t pay off my mortgage again.|
|Morgan:||Very good. All right, we have next is what is the best assets mix in retirement, 80/20, 60/40, 40/60?|
|Murs:||Yeah. These are some common terms that are thrown around in particular, the 60/40. You can read all types of articles that say you should be in a 60/40 when you’re retiring, or even the concept of you should be getting more conservative or you should be adding more and more bonds to your portfolio as you age. Radon and I, we just don’t believe in this thinking. The whole reason is that sometimes we don’t realize how much risk is in certain portions of the market.|
|Take 2020, for example, in the pandemic. We saw equities fall considerably, but also imagine if you’re in that 60/40 portfolio, 60% of your portfolio is equities and they are falling, but also in that year we saw a very tough period in the bond market and we’re still seeing that as well, and so that 40% of your portfolio that’s supposed to be relatively safe, also has a ton of risk to it as well. In our opinion, holding to a certain mix, just doesn’t make sense, especially when it comes to someone that is approaching retirement or already in retirement.|
|If you’ve listened to our podcast, you know we prefer an active methodology, specifically, one that has a sell side discipline. Well, what does that mean? That means our goal is to be in the strongest assets at all given times, and if there are issues in the market, we’re completely fine to get out of the market, go to cash, sit to the side, and wait until we know that things have trended back upward. We did that back in 2020, took a lot of the stress off of our clients, as far as how is this all going to play out?|
|The idea of one or two or three different asset mixes should work for everyone, we just don’t believe that. How we handle it is we take everyone through a risk conversation basically, and we say, “Hey, here’s your dollars.” Let’s say you’ve got $500,000 or a million dollars, whatever the number is, we’re going to take that and we’re going to put risk to it. We’re going to say, “Well, what if this loses, what if this million dollars that you have loses 20%?” Sometimes we hear the 20% or the 15% we think, “That doesn’t seem so bad,” but when we apply the number and we say, “Well, that’s actually $150,000,” or, “That’s actually $200,000, how does that make you feel?” Well, all of a sudden your thoughts, your whole mind starts to shift a little bit. We take it to the individual, kind of like the mortgage payoff question. We take it to the individual and try to line up the risk, your ability to stomach risk, and then cater that to a portfolio that is risk managed, that is not just going to be a buy and hold. I don’t think there is a best asset mix out there for anyone. You have to have something that is going to work actively for you.|
|Morgan:||Yeah. Well, this next question certainly applies to everybody how to avoid being hacked and some instructions for transactions.|
|Radon:||That’s a really important one, but I thought I would just take a minute here, and sometimes we just go all through this entire show and we don’t tell about how we think the wine is. So how do you think the wine is?|
|Now Murs, I may just tell you a little story here. So 19 Crimes is a wine that I found or I came across a long time ago. You can buy it like for $9 a bottle. It’s great. You can actually put an app on it and show the guy on the label and he’ll tell you about his crime, but I just think it tastes really good. What do you think, Murs?|
|Murs:||It could be just because we’ve had some of it here and there, and maybe I enjoy the wine and maybe that’s because we’re sitting here at 5:00 having a glass of wine, but Morgan opened this up hours and hours ago, so it got a really good amount of time to breathe. It tastes pretty, pretty good or maybe it’s just because it’s 5:00 and a glass of wine sounds good. But I will drink it. I think it’s fine. If you haven’t heard the app or the thing that Morgan was talking about, the augmented reality app where the label comes alive and tells you a whole story behind what the wine was made for, that is something that is worth buying the wine by itself even if it doesn’t taste that great.|
|Morgan:||Or you could just download it and go to the store and look at all of them. [crosstalk]|
|Murs:||Yeah, or you can just sit in the wine aisle and just … [crosstalk]|
|Radon:||So from a woman’s perspective, Morgan, do you like the wine?|
|Morgan:||Yeah, I think it’s very versatile and drinkable. It’s very good. Whereas I did open hours ago, I did not start drinking hours ago.|
|Radon:||By the way, so this bottle I told you is $9 for the bottle. Murs is so high society he decided he wants to drink $11 bottles of wine. Anyway, he does fancy wine.|
|Morgan:||He’s out of our league.|
|Radon:||We’ll do his wine next and so he can talk all about it.|
|All right, how to avoid being hacked. Now this is really, really important because the hackers and those that are getting into your emails are getting really, really good, they’re getting better and better and better. We’re not talking about hacking your account at your bank. What we’re going to talk about now is hacking your email account.|
|Now, I’m going to tell you a couple of stories. One just happened to me. A business sent me an email, a person that I know, they had their logo in there, they had everything look legit about this, but what they did is they just sent an email and said, “Hey, we need you to access this document, ” and just the way it read, made me go, “This doesn’t look right.” So I called the people and I said, “Hey, I got this email. What are you looking for? What type of document?”|
|They said, “Do not click on it. We’ve gotten hacked.” That’s the way we operate. We operate with it before we click on an email and before we click on a button, we are basically being suspicious of that email before we do it.|
|I’ll tell you another example, as to the reason why. We had a client and the client, from our perspective, sent us an email and said, “I need some money. Please send me,” and I think it was around $30,000. “I need this money to be sent to me.: It was not anything obscure just says, “Hey, I would like it,” and actually named the account.|
|Well, we have a rule that if somebody sends us an email, we never ever make a transaction on an email. You cannot send us an email and make us do a transaction. We called the client and they said, “No, I did not send that email.” Come to find out they had been hacked and somebody was in there and they were reading their emails and then once they got to know that we were the financial advisor, reading the email, and reading all their emails, by the way, and then they go out and they start reaching out to people to try to get more information.|
|If you don’t have somebody who’s being suspicious, you need to be suspicious. One of the things we talk about, and we tell our clients, you can send us a little email that says, “Hey, I need to make a transaction.” Just don’t tell a bank, a CPA, an attorney, a financial advisor, specific things in an email. Now you don’t have to go all crazy with this and think you can’t say anything but if you just say things that a hacker wouldn’t be able to do anything with, if you say, “Hey, give me a call. I need to take care of a transaction.” Or, “I would like to set an appointment because I need to do a transact.” Whatever that is, a hacker really can’t deal with that because now we got phone, voice, as well as verifications.|
|All we’re trying to do in this little part of this question is be careful, be careful about what you ask for in an email, because whatever you ask for could be being read. Now, you might also come up with new protocols that says, “Every three months, I’m going to change the password to my email account.” I know we all hate the change passwords, but that would at least make it more difficult for somebody to hack and listen to you or watch your emails. That’s my little spill on that.|
|Morgan:||We won’t even change your email or your home address or phone numbers, unless we call you and talk to you about that first from an email. All right, the last one here is the stock market is at record highs. Should you sell?|
|Murs:||This is a fun one because the stock market is at record highs and it seems like every other day or so, you’ll see a headline that says, “We’ve hit a new high, we’ve hit a new high.” One thing we got to remember is that it’s the media’s job to make sure that they’re creating some type of news that is worth listening to, or that is exciting, and so highlighting the fact that the DOW just hit one point above its last high, while that is true, it is a new record high, a lot of times that creates anxiety because if you hit a high, well, it seems impossible that the market could continue to reach new highs. But we have been seeing that for years and years. If you go back a few years and we’ve been in a market that’s been in record highs for quite a long time now.|
|Imagine if you said, “No, I’m going to sell and get to the side because I just can’t see this market sustaining for whatever reason, I don’t believe in the administration that’s in place, or I don’t believe in this, or I don’t believe in that, there’s no way.” Ultimately that becomes an emotional decision that you say, “I just don’t believe that this could go on the way that it has been going on,” and you get out. What we know is, and we’ve seen this with clients, is that they’ve missed out on considerable amounts of returns in the amount of 50% at the very least, depending on when you got out. We’ve seen people make decisions off of a change in administration, like when president Trump got put in office years ago, or even before that. The idea was, well, if one person gets put in office versus another one, the market’s going to go way up or the market’s going to go way down. we’ve seen not only individuals, but we’ve seen advisors act off of that emotional rollercoaster. It just, in our opinion, doesn’t make sense.|
|I bring it back to the way that we manage money. We manage money in a very emotionless way, which means we’re reading the numbers on a daily basis, we’re tracking basically supply and demand in the market. None of our numbers have any emotion to them. None of our numbers are evaluating, who’s being put into office or evaluating what the COVID numbers are right this moment, all we’re doing is looking at what’s trending from a pure technical number perspective, and that has paid off very well to get us through COVID last year and to be sitting where we sit this year.|
|At the end of the day, I guess my spiel is if we’re at record highs, it’s very possible that it could continue. What we would say is just, don’t get emotional. Don’t make a rash decision. Talk to your advisor, talk to someone who does this and ultimately have an investment strategy that you’re comfortable with, but that’s really all I’ve got.|
|Radon:||All right. Well, we thank you very much for listening today. We hope that when we do these wine downs and we kind of do rapid fire questions is the way we’re trying to handle these is just a handle, hey, these are basic common questions we’re getting all the time. We hope this has beneficial. Please visit our website, pomwealth.net. Go to the blog page. We have a new blog article that comes out at least every week and sometimes two a week, so you need to kill it and visit that quite often in order to keep up to date. We have two different things that you are able to subscribe to. One of those is our masterclass, Three Keys to Secure Your Retirement, absolutely free, but a wealth of information if you’re getting close to our already in retirement. But thank you so much, we look forward to talking to you next week.|