May 30, 2023 Weekly Update

We do love it when someone refers a family member or friend to us.  Sometimes the question is, “How can we introduce them to you?”   Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.

Here are this week’s items:

Portfolio Update:  Murs and I have recorded our portfolio update for May 30, 2023

This Week’s Podcast – How To Manage Risk in Volatile Markets

Learn how we use data/numbers to identify and align with the best asset classes to be invested in. You will also learn why an active asset management strategy allows you to make a decent rate of return, not lose a bunch of money, and have peace of mind in your retirement.


This Week’s Blog – How To Manage Risk in Volatile Markets

Growing your money to secure your retirement is something that everyone should do as part of their retirement planning. Active management, which is what we do, is something that clients come to us for because they want us to manage their portfolios.

How To Manage Risk in Volatile Markets

Growing your money to secure your retirement is something that everyone should do as part of their retirement planning. Active management, which is what we do, is something that clients come to us for because they want us to manage their portfolios.

If you wanted a very low-risk investment you could keep your money in treasury bonds, CDs, or a savings account. However, growth opportunities with these types of investments are very limited. You might put some of your money in these accounts, but not 100%, because the potential to grow your money falls too much with a conservative investment portfolio.

Managing risks, especially in a volatile market, is more difficult for many investors because if you put all your money into an S&P 500 index, you take on all the associated risks in the process.

In the years 2000–2002, the S&P 500 was down 50%, meaning many retirees had their portfolios cut in half. Imagine if you’re withdrawing money from this portfolio at the time of a major decline, causing a compounded problem in the process.

Now, you could take 60% of your money and put it in the market and the other 40% into bonds. Come 2021 and 2022, and the bond market goes into a crisis, causing a lot of people to lose the money that they thought was very low risk.

Active Management to Lower Portfolio Risks

Managing your account actively helps negate these risks because we move within the market and take a very hands-on approach to growing your money.

Metrics and data points are used to help a person maximize their money within their own risk threshold. For example, hedge fund managers often try and make their clients the most money possible. The issue is that big returns also come with larger risks.

In an active management strategy like ours, our clients want safety and security and aren’t chasing the homerun gains that some of the other managers strive for with their clients. Instead, our active management approach maximizes returns while keeping risk at a minimum.

Many people are 10 years from retirement and have been through 2008 and 2020-2021, when the markets took a nosedive, and they don’t want to shoulder large risks any longer. As you get closer to retirement, earning and income potential begins to fall. At this point, you need to mitigate risks as well as you can.

When you have an active management strategy, the goal is to put your money into the best investment vehicles at the time.

Data allows an active management strategy to take place because we focus more about what the data is telling us and less about specific news on inflation and the debt ceiling.

Investing comes with pros and cons, but if you pick an investment strategy that works well for you, it can also help you secure your retirement.

Example from an Industry Podcast

Recently, on an industry podcast, they had a few financial advisors as guests to speak about how they manage their clients’ money. There was one response that stood out the most. This individual used to take part of the clients’ money and invest it actively, as we discussed above, and mentioned that the logistics of the approach were too complex and resource-intensive. Ultimately, they transitioned into a buy-and-hold strategy for their clients. The manager wasn’t set up for the trading involved in an active management environment, and a buy-and-hold strategy is easier to manage. 

With a buy-and-hold strategy, the most that needs to be done is balancing the portfolio on a monthly or quarterly basis. Technology makes this a touch-of-a-button scenario. Simply put in the wanted parameters, tap a few buttons, and rebalance a portfolio.

Instead, when we actively manage a portfolio, we check risk daily and will readjust a portfolio regularly. It’s unlikely that we need to perform a readjustment every day, but we’re ready to when it’s necessary.

At Peace of Mind Wealth Management, we like to manage our clients’ money in the same way that we invest our money: actively.

We find that an actively managed portfolio reduces risk greatly, which in turn reduces immense emotional tolls from portfolio losses.

Imagine losing 10% of your portfolio, realizing you lost $100,000 or $200,000. It doesn’t feel good. You can have a portion of your retirement savings in the market and another portion in safer investments that still offer plenty of opportunities.

This is why active management in a portfolio can be a powerful tool in retirement planning.

Asset Classes in a Portfolio

During any given year, some asset classes in a portfolio may be working and others are not. Asset classes can be a lot of things, such as:

  • Large-cap stocks
  • Mid-cap stocks
  • Small cap stocks
  • International markets
  • Emerging market investments
  • REITs
  • Investment bonds
  • Treasuries
  • Cash

Year-over-year asset classes move around, just like we saw in 2022 when the S&P 500 was down nearly 20%. Cash and treasuries were the leaders of asset classes in 2022 because they provided some level of return.

In 2021-2022, the 60/40 flaws started to show because a lot of the investment bond yields were down 11% – 13%. Bonds, for some people, were down as much as their market investments. At the time, many people thought it wasn’t possible to lose money in bonds.

Monitoring asset class movements and structuring a portfolio is how we like to invest our clients’ money. Monthly and quarterly data analysis and restructuring of asset allocation empower us to put investments in what’s performing well right now.

If the upswing and downswing of the market don’t bother you, then a buy-and-hold investment strategy may be better for you.

However, a lot of clients of ours love making a good return with minimal risk. Clients may sleep better at night and have peace of mind that they won’t wake up with a portfolio loss of 20%. This is what an actively managed portfolio provides.

Click here to schedule a 15-minute complimentary call with us to learn how your investment portfolio can be actively managed.

Retirement Strategies

Retirement requires unique strategies to help you live the lifestyle you want when you retire. Since every firm is set up differently, it’s crucial to understand the differences between retirement strategies and how these firms work to secure your retirement.

In this post, we’re going to shed some light on how we’re set up as a firm and how many others are, too.

However, we’re not here to sell you on one strategy or firm style versus another. Instead, we’re going to explain the options you have available to find a solution that works best for you.

How Most People Enter the World of Retirement Planning

Many people start really thinking about retiring and delve into the world of investing once their career picks up. For most people, they’ll follow a few steps:

  • Set up an investment account, put money into the account and watch the stock rise or fall
  • Start putting money into a 401(k) at work

As you start thinking more about your financial future, you’re likely going to want some help from a financial advisor. These are professionals that will help you invest your money in a way that best meets your retirement goals.

With that said, the firm’s approach and retirement strategies may be different from what you would expect.

Ideally, you’ll talk to 2, 3 or even 5 financial planners, and you’ll quickly start to notice that each recommends a different approach to meet your financial goals.

What are the approaches you’re likely going to come across?

Investment Advisor

An investment advisor is who you seek out when you’ve invested some money on your own, but you want some professional help managing your portfolio. These professionals will help you invest and grow your portfolio.

Unfortunately, these advisors won’t assist with:

  • Tax planning
  • Estate planning
  • Etc.

If your sole goal is to grow your money in the markets, an investment advisor offers exceptional services to help you achieve this goal.

Hands-off Financial Advisor / Plan Creator

If you have the mentality that you want to execute a plan on your own but need someone to help you develop the plan, there is an advisor that can help with that, too. These professionals will:

  • Create a financial plan
  • Allow you to execute the plan

These hands-off professionals offer you a one-time fee plan that will take all of your goals into account and devise a plan to meet these goals. Unfortunately, if your goals change in the future or something doesn’t go as expected, there’s no additional help provided due to the one-time fee.

One-stop Shop

A one-stop shop is what we’ve tried to transition into with our business, and it’s a more robust solution for our clients. When working with a one-stop-shop, you receive help with:

Using a holistic approach, these advisors will work with you to meet your retirement goals and your lifestyle goals.

When you’re working on your retirement strategy, you may want to:

  • Hire a professional who does everything for you
  • Work with someone on just investments
  • Execute a plan from a professional

Thankfully, the financial industry has professional advisors who can help you through each of these categories. Some clients want to be very hands-on with their retirement planning, while others want to understand the plan yet want someone to handle all the logistics.

Why a One-stop Shop or Comprehensive Service is What We Offer

Throughout the years, we’ve learned a lot about our clients. While everyone has their own preference on how to handle retirement, many people want someone who can help in the various areas of retirement, such as estate planning, tax planning and everything else.

In fact, we have built out our services to the current state, which looks something like this:

  1. Build a retirement-focused financial plan
  2. Create an income plan
  3. Build out an estate plan

We’ll even work with your CPA or other advisors to help ensure that we’re all on the same page and working to create the retirement you envision.

Truly, the financial plan we create is the foundation of our client’s success. Once we have this plan in place, we can begin looking at investments, taxes, estate plans and more.

When we create a retirement financial plan, we look at multiple parts:

  • Where you’re at today with your retirement
  • What your goals are for retirement
  • How many years out you are from retirement
  • How much have you accumulated?
  • How much will you continue to accumulate until retirement
  • Your lifestyle wants in retirement

Once we go through all these points, we have a much clearer picture of what your retirement can look like and how to reach this phase in life. We’ll then look at lifespan and delve into estate planning.

If you think there will be money left after retirement, you can then start deciding who to leave your money to when you’re gone.

However, we also answer questions on:

  • When it’s best to retire
  • If you retired today, what your finances would look like
  • Survivorship questions and so much more

Building out the foundation of your retirement plan allows us to see what happens if you need long-term care or a spouse dies. Or, if you purchase another house, how would it impact retirement?

Multiple Financial Professionals Under One Roof

When you work with a one-stop-shop or comprehensive financial planner, you’re opting to work with someone who can bring in other professionals to help you. We’re not accountants, but we have accountants that we work with who help our clients deal with:

  • Tax strategies
  • Tax planning
  • Retirement account conversions
  • Etc.

Since we put this system together, there are no additional charges for speaking to one of these professionals.

When choosing someone to help you with your retirement plan and strategy, it’s crucial to ensure that these professionals evolve and change over time. Economies and markets are changing, and if the person you trust with your retirement planning doesn’t evolve, your retirement will suffer.

If you need help trying to find peace of mind in your retirement, we can help.
Click here to read our newest book, called Secure Your Retirement.