Amy: Tonight, we're talking about something the markets haven't experienced in 377 trading days, and why you might want to take note. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby. If you're a regular listener to this show, you know, we talk about the stock market, not in terms of points, but percentages. And there's a really good reason for that.

Steve: Yeah, percentages just make so much more sense. Because when you read a headline that says the Dow Jones, or the NASDAQ, or the S&P 500, or whatever the headline says, plummeted or plunged X amount of points... Points can sound heavy. Yeah, it can sound like a lot. And you might get jittery, you might get nervous, you might even react emotionally to that and make a bad decision with your 401(k). But did you look at the percentage drop? Because that's the key.

Amy: Yeah, it is the key. And I also hate the verbs that these headline writers use. I mean, they're trying to get clicks, they're trying to get your attention. But it does make you feel like when they use the word plunge, like, you know, the bottoms falling out here. Well, no, no. I mean, understanding that when you invest money in the stock market, the price is always going to be some volatility. And when you hear X number of points, oh, that sounds scary. But I think the percentage provides context. How much of a drop are we talking here? Points, they don't really mean anything. Percentage, well, it does.

Steve: Yeah, percentage can certainly mean something. And speaking of, the last time the S&P 500 had a sell off of more than 2% was just over a year ago, 377 trading days specifically. And that's the longest stretch since the financial crisis, the Great Recession. So more than 15 years ago. And this is according to data, you know, put together by facts, compiled by CNBC. The index, the same index, the S&P 500, hasn't experienced a gain of at least 2.15% in the last 377 days, either. Which means, believe it or not, we are in a period of calm.

Amy: You know what makes me really nervous about calm is there's this kind of false sense of, like, what could go wrong, right? Not a lot of really bad days, not a lot of really great days either. You know, I think we had a stat, I don't know, a few weeks ago, or a month or so ago, about the fact that if you really look at the gains in your portfolio so far this year, there's like eight or nine days that contributed. And none of those days were really higher than 2%. But if you missed those days, right, those days combined are what got you, at least a pretty good year so far. You know, so I think understanding these percentages is incredibly important, but also the perspective that comes from a relatively rare long stretch of calm waters. We've also recently talked about the fact that this is when you build your boat, your financial boat, right? That's incredibly important. Because you do not want to be building a boat in times when markets are way down, and I would also say way up. Fear and greed equally can play terrible roles in your financial plan. So I think there's some advantages to being in this place, right, some things that you can be doing right now. And also maybe we would say some perspective we think that you should have.

Steve: Yeah, that's a great point about building your boat. We had an entire segment on that a month or so ago, where we talked about building your financial strategy during periods of calm. Because I'll have people... You know, I had an 85 year old gentleman in my office the other week, and he was like, "Hey, you know, the markets are doing great. I think I want to deploy some of my cash. I want to put it to work now that things are at an all time high."

Amy: Sure he does. Put me all in on the stock market, right?

Steve: Well, why didn't we do this, you know, five years ago, when this was... This could have been part of your long term plan, rather than something based on a little bit of greed, I would argue. But we also had a segment recently about the VIX. Remember, the volatility index is the gauge that that shows Wall Street's fear. And anything above 20 is not calm waters. Anything below 20 signifies calm. And that's where we've been for quite some time.

Amy: And if you look closely under the hood, I think the reason why we've sort of had this period of calm is that, you know, we came out of this period of incredibly high inflation, and we're starting to see some relief. So we're seeing some relief from inflation. There's a little more clarity on maybe what the Federal Reserve might do next. We came out of this time where the Federal Reserve was pretty consistently hiking interest rates, which was sending some sort of shock waves through the economy, right, through through the system. And now the conversation has sort of pivoted from increasing those interest rates to maybe later this year, decreasing those rates. And all of these things sort of bode well for the economy, for the stock market, for the average investor. And so I think it's like everyone is taking a collective deep breath right now.

Steve: A sigh of a real almost.

Amy: Yes. Like, you know, when you get on financial websites right now, every headline isn't declaring Armageddon is going to happen tomorrow. Doomsday prophecies, major recessions like we've seen predicted over the last year, two years. I think collectively, we feel like, okay, there is a bit of a sense of calm here.

Steve: Yeah. Well, I mean, not to throw a wrench in all of it, but that doesn't mean it's going to stick around, because the markets...

Amy: No, it will not stick around.

Steve: Yeah. So if we look at 2017, the S&P 500, it had just eight daily moves of more than 1%, which is calm. That is very calm. The VIX fell to historic lows. Again, that's the Wall Street Fear Index of around...just below nine. Today it sits at 13, which is still calm. Remember, below 20 signifies those calm waters. The following year, 2018, however, volatility came back to the market, and the VIX surged to above 50 before easing.

Amy: We all know the term the calm before the storm, right? I mean, I'm not saying that that's what's happening here, but, you know, volatility is an evitable part of a really healthy financial and stock market cycle. You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby, as we talk about something we haven't seen in a really long time. And that's a lot of volatility in the market. No major downswings below 2%, no major upswings above 2.15%. And we would say, okay, this is the time where if you do not have a financial plan, you build the boat. You get your plan into place. You figure out what your risk tolerance is. You rebalance if you haven't rebalanced in a long time. You get to know your 401(k). You make sure you're maxing out the company match. You make sure that those investments that are in there are really well suited for you long term. I think there's some work to be done in these periods of calm.

Steve: Yeah. And obviously, while we're not making predictions, there are those that are going to use periods of calm to make predictions. So, you know, the media thinks, for example, that they know how things are going to shake out. And remember, if it bleeds, it reads. You know, we've seen one recently that said, get ready for stocks to hit a wall this summer, for example. Sounds kind of scary. Doesn't it? Stocks are gonna hit a wall. Everything's gonna drop. The bottom is gonna fall out. We're certainly seeing things like that. There's a guy with JP Morgan, we would call them Wall Street's last bear standing. Perma bear is somebody that thinks the markets are always going to close down at the end of the year. They're always going to close down. And most of the time, they're wrong, thankfully. He's saying that the S&P is going to close down 4200 points at the end of the year.

Amy: What's the job description for the job? That is, you just make a bunch of predictions and nobody holds you accountable if they're not right.

Steve: Economic analyst?

Amy: Like, what is that ? Sign me up for that. Because the problem is, there is... You know, nothing happens to them, right, if they're wrong. In fact, very few people, except for maybe us, are out there kind of holding feet to the fire, saying, hey, remember when you said this and this was wrong? My concern, though, is people who don't know better, exposed to those headlines, exposed to that information, feeling like triggered that they need to do something. I need to sell, or I need to go all in because of these predictions. You know, you've got someone talking about the S&P 500 down at the end of the end of the year. On the flip side, another headline which reads that, you know, it's going to hit 5700 in a post election rally. Really? Who has that crystal ball? Where is it? And where is the fallout for them when these predictions don't come true? That doesn't happen.

Steve: There is none. It's just clicks lead to marketing revenue, and marketing revenue is a good thing. So they're allowed to say what they want in order to be loud on one side of the belief spectrum. And the other one saying that the bottom is going to fall out. And that guy's name is Marko Kolanovic, with JP Morgan. S&P is going to end up 4200. And then we have people at Wells Fargo saying the S&P is going to be 5700 post election. Speaking of post election, we do encourage you to not make emotional decisions based on political beliefs for what happens in November with the elections,

Amy: I am getting investors that I work with asking these questions right now. I'm getting text messages from friends who are saying, "We know we're going into a recession as soon as we have a new president, regardless of who that President is." I know, you know, many of you can be incredibly, incredibly passionate about your politics. And I think you should be. You've got the right to vote. You should exercise that right. But the problem is when you're also so emotional about your money, and then you think you need to do something with that passion that you have for politics with your money. And we've got some great perspective on this. We had an interview not long ago. It's on our "Best of Simply Money" Podcast from May 31st. If you have any anxiety around this election and what you should do with your investments, I encourage you to download that and share it with your friends. We have someone that we kind of refer to as the secretary of explaining stuff that has some of the best perspective I have ever heard in regard to politics. Who's in Oval Office? Who's running Congress? And what that means for your investment. So if you have, at any point this year or in past election cycles, thought I need to do something as the result of what I think is coming, please, hit pause on those feelings and those thoughts. Listen to this podcast. Give it some consideration before you do anything. And if someone around you is bringing that up, please, please share again that podcast, "Best of Simply Money," from May 31st. There's some just really great perspective on it.

Steve: Yeah, I mean, a quick summary of what's talked about in that segment is that it doesn't matter who ends up in the White House, because companies are still going to find ways to make money. That's the bottom line. We live in a capitalistic society. And betting against the markets is betting against corporate greed and capitalism. So no matter who's in office, we're still typically seeing growth, not only in election years, but in the four years following.

Amy: And I think a lot of people also try to make predictions about what sectors might do well or do poorly based on a particular politician and what they believe in. And we've seen that go incredibly awry many, many times. I mean, there's so many factors outside of that Oval Office. And I realize we consider this person the most powerful person in our country, in the world. But thankfully, the American economy is even bigger and more powerful than that. And when you get really caught up in the emotions behind politics, I want you to remember one thing, that is the S&P 500, that is American companies are built on the backs of corporate greed. Corporations clawing at ways to make more and more money. And that's kind of the American way. There's not going to be any politician that's going to make them stop doing that. And I think that's some great perspective. So, we are in a period of relative calm. We don't know, right, when we get closer to the election and after, if there will be some volatility. There likely will be. But I think you've got to have that perspective. Here's the Allworth advice, don't go chasing investment return just because the markets are calm right now. Any short term decision based on greed or even fear could really hurt you long term. Coming up next, did you change your asset allocation this year? We're looking at investors who have saved a lot of money, and what we can learn from them. You're listening to "Simply Money," presented by Allworth Financial here on 55KRC THE Talk Station.

If you can't listen to our show every night, we do have a daily podcast for you. Search "Simply Money." It's right there on the iHeart app, or wherever you get your podcast. So many different kinds of investments out there. Coming up in a few minutes, we're going to talk about something called a buffered ETF. Is it a good strategy? Is it a good investment for you? We'll explain a little bit about what it is and why it might make sense. You know, I think many times you can feel like, oh, I'm behind the eight ball, or, what did this person do that I didn't do? And so tonight, we're taking kind of a deeper dive into those who have saved well, right? There's some recent research out there about people who have a million dollars or more, and how they're invested. And I would actually say, it's interesting information. I don't agree with it.

Steve: Yeah, that's a good point. I mean, we can talk about how people are investing at different asset levels. But at the end of the day, if you're working with a fiduciary financial planner, it's going to open the door up to different investment strategies and tax planning strategies. But let's take a look at some of these, because there was research done by Capgemini Institute that looked at high net worth investment opportunities, and how those with at least a million dollars are typically investing. And what they found is that at the start of 2023, folks that had at least a million dollars, they had about 34% of their assets in cash or some kind of a cash equivalent. This would include CDs, money market funds. Twenty three percent in equities, 15% in fixed income like bonds or maybe some kind of a fixed annuity, 15% real estate, 13% in alternative investments. And keep in mind now, one of the reasons we were talking about this as well is because it can show trends. By January of 2024, the cash position went down.

Amy: By 10%.

Steve: Yes, by 10%. We don't need to get into the rest of the weeds about all the other statistics there. But people with more than a million dollars went from wealth preservation during confusing times last year, with interest rate hikes and uncertainty about when interest rates were going to be falling again, which is likely later this year, at this point, to how can I get my money working a little bit harder?

Amy: Yeah. And I think, you know, some perspective there is, yeah, we came out of a period of some pretty insane volatility all over the place in 2022. So I think there was a lot of people who were kind of seeking some kind of reprieve from that. And then, yeah, we've talked many times on the show about the one silver lining of the Federal Reserve, our nation's central bank, raising interest rates, is you are likely able to make more money on the money that you have sitting in cash. You know, it used to be like 0.000001% that maybe your bank would give you on the money that you had sitting in those accounts. Well, we've seen that skyrocket over the past couple of years to even north of 5%. So I understand the thinking behind, oh, I've amassed this money. I saw it go all over the place this year. I'm just gonna put it in somewhere that feels really safe to me and make 5% on it. My concern in looking at these numbers year over year and seeing that, okay, if it made sense for these people to put a little more money in cash, then why the huge change in thinking year over year? Right? Because we would say, the way to really amass wealth, to build money, is to have a financial plan and you stick to it. Regardless of what's going on in the economy, in the stock market, you kind of brave those things, understand that you're going to go through cycles.

So I think looking at how people are changing their minds year over year, and investing differently, and changing their mindset from, oh, I need to preserve this money, to grow this money. It's a very individual thing. Do I need to grow my money or do I need to preserve my money? Right? There's different strategies. And I also think even for the same person, and I'm sure you would agree, that changes over the course of your lifetime. For most of us, when we're younger in our careers, and we're working, and we're bringing home paychecks, it's all about growth. And when you get closer to retirement and that transition, it becomes a little more about preservation. But we just went through a period of really high inflation. And I think many of us, the wake up call was, you still have to have some growth in there.

Steve: Yeah, it's an interesting thing to even look at, because at the end of the day, I don't care a whole lot about...

Amy: What anyone else is doing. Yeah.

Steve: Yeah, about these numbers. Because when I work with folks... Just like you said, we build financial plans. It doesn't matter if you have, you know, a few hundred thousand or $10 million because the financial plan writes the prescription for your money. And what that means is, it will help us determine the level of risk that you need to take to meet your goals, that you can afford to take based on your financial situation. And then just getting to know you a little bit shines a light on risk tolerance. And it's important to find that sweet spot based on the long term, and then have review meetings periodically. Because you're right, things do change over time. When you're younger and you're in the accumulation phase of retirement planning, it makes more sense to be higher risk, higher reward, but making sure that you keep some of that money on the sidelines for an emergency fund or a rainy day fund. So, you know, with looking at data that shows that millionaires deployed more of their cash to longer term investments, I don't care. I think that the folks I'm working with should have that long term strategy that focuses on their own financial situation, needs, and goals.

Amy: What I do care about and what I do think there is a sort of larger takeaway for everyone else that doesn't have millions of dollars stocked away is, someone who works with higher net worth people was kind of making this point that those people seek specialized advice to leverage tax rules effectively. Why? Why is it just them? You know what I mean? This is something everyone should be taking advantage of. And for those of you who have kind of been doing it yourself for years, and you've done a great job at, you know, accumulating money and having a large amount in that 401(k), or IRAs, or whatever it is, where you have your money, when you get to that transition into retirement, I think this is where tax efficiency becomes incredibly important. You've amassed this money, you want to keep as much of it in your pocket as possible without having to pay so much of it to Uncle Sam. It's not just people who have millions of dollars who should be looking into those strategies. It's everyone. And if that feels above your head, it doesn't have to be, because you find a fiduciary financial advisor that's helped many, many other people think through these strategies. And it goes into, do Roth conversions make sense? And if I have money saved in different sort of buckets, investments with different sort of tax treatments, which makes the most sense to pull from? And in what situations, right? All of those things are a big part of this, whether you have $10,000 in the bank or $10million in the bank.

Steve: Yeah, the same article and the same research by Capgemini also talks about what people north of $10 million do, and it's tax planning. Come on, you know, folks that work with fiduciary financial planners...

Amy: You don't need $10 million.

Steve: Yeah, you don't need $10 million to explore tax planning strategies, like you're talking about, qualified charitable distributions, Roth conversions, so on, so forth.

Amy: Here's the Allworth advice, your asset allocation should be tied to when you need that money long term, how much risk you are willing to take to get there, not to what anyone else is doing. Coming up next, we're going to stretch our muscles with our financial fitness guru and break down why cash might not actually be king. You're listening to "Simply Money," presented by Allworth Financial, here on 55KRC THE Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I am Amy Wagner, along with Steve Hruby. Are there particular days in your life that you reflect back on and you think, man, I learned something big that day. Or maybe it just takes a little time and you realize there was a major lesson that came out of something. Al Riddick, our good friend from Game Time Budgeting, has just that perspective from Father's Day this year. Al, I love, because you can turn everyday situations into a takeaway that we can all remember when it comes to our money. What's the latest from the Riddick household?

Al: So this year, my dad spent an entire week with me at my home. So, obviously, we did a lot of different things. You know, we played some card games. We went to the movies. Took him to see a live band perform. We even went to the comedy club. But there was one day in particular where we had gone to the movies, and then we stopped at a restaurant for lunch. So my dad said, he was like, "Hey, this time I want to treat you." And I was like, "You know what? If that's what you want to do, let's do it." So I ordered the food, and then when he handed the cashier his money, the person said, "We don't accept cash."

Amy: Awkward.

Al: I know, right? You should have seen the look on my dad's face, because I can pretty much guarantee you that was the first time in his life that he had ever heard someone say that. So of course, I was like, "Don't worry about it, pop, I got it." So when we think about that term cash being king, you know, of course, we tend to think about the superiority of cash over other forms of payment. But in the high tech world we live in today, maybe cash is not King, as my dad learned.

Steve: That's amazing. I'm a season ticket holder to Kings Island. I have a nine year old daughter. And, you know, if you live in Cincinnati, you're nearby, as far as Kings Island is concerned. And they don't accept cash either. So if you have cash, you put it into a machine, you get a card that you can use.

Amy: That's what my son was just telling me. I sent him to Kings Island with some friends, and I gave him some money, and I was like, "Can you use cash?" Because I'm certainly not going to give him my credit card. And he was like, "Well, there's just machines you put your cash into, and it kicks out a card that you use, like a credit card." So I mean, to your point, Al, in places now, cash isn't necessarily an option.

Al: That is so true. And it's becoming more and... Well, actually, less and less of an option these days. But it was so intriguing, because when you spend an entire week with your parent, you do learn a few lessons, you know? So one of the things that I learned... Now, keep in mind, my dad, he'll be 80 in a couple of months, right? So one day when we had left another restaurant, he was like, "I'm tired." So I was like, "There's a bench right there. Why don't we sit down?" So you have to picture it. We're sitting on a bench, there's a nice breeze blowing through, and the sun is not out, so it was very comfortable. We sat on this bench for over an hour, Amy.

Steve: That's a good way to spend an afternoon.

Al: I know. And as I was watching the world through my dad's eyes, he was just getting excited just by looking at the cars driving through the little shopping plaza and watching people live their daily lives. So one of the things that really hit me was that time is more valuable than money. So of course, when you look at it, you know, we plan appropriately for our financial futures, right? And when we do that, we shouldn't run out of money in retirement, but however, all of us will eventually run out of time.

Amy: And Al, I'm wondering what your perspective is for people who save and save and save, right, for that day when they retire, and then something happens, right? And you've been focusing your entire life on saving so that you can sit on that bench and enjoy life. And then maybe it doesn't come. Like, what is your comment on the balance of saving, but also living your life at the same time.

Al: So it's kind of like this, Amy. So for most people, you know, when you're young and you start thinking about retirement, and you're in your high revenue generating years of your life, financial planning...and of course, this is just my opinion, it is a purely selfish act. But I say that in a good way, because it's selfishness for a very good purpose. Because who wants to retire one day and not have money, right? So when we think about just balancing, planning for retirement versus the inevitability of running out of time, I think it's very important to make sure that you spend time with people you love and people who love you in return. Because that time is very... Well, actually, it's really priceless when you look at it. So for myself, just by being able to hangout with my dad, and consider the fact that, you know, last year, this time, he had just had a stroke, that time, to me, was precious, because I think we kind of, like, got to see each other in a different light. And I also learned a couple of things that I get from my dad just like my normal day to day behaviors as well, just observing him.

Steve: That's really beautiful actually, looking at this through the lens of planning for, making sure that you have time in retirement, and making sure that you're making the most of that time. Because some people, they struggle with the idea of making that transition. What am I going to do? I'm gonna be bored. Finding ways to make sure that you fill your time with things that you value is a great way to spend retirement.

Al: Exactly.

Steve: Outside of that, what other revelations have you maybe had about money that perhaps caught you by surprise during this week of spending time with your dad?

Al: So it actually gave me a new goal, Steve. So, keep in mind, my dad has been retired for almost 30 freaking years. Right? That's a long time.

Amy: Wow, that's a beautiful long retirement.

Al: I know, right? So I noticed that one of the things he kept doing, like, every day, he would say, "Son, what day is it?" I mean, he was so [inaudible 00:25:57], what time is it? And it really hit me that in his world, because he does not have to report to a job, he does not care what day of the week it is.

Amy: It doesn't matter.

Al: And he also doesn't care about time. And I was like, "Man, this is amazing." So now I have a new goal to eventually forget the day of the week and not care what time of the day it is. Because to me, that is when you are truly enjoying life, where those two things that are extremely important to the average person, no longer makes sense to you.

Amy: You know. Al, I can't imagine, I can't imagine a time when time doesn't make sense. But I love that as a goal. And I think about so many people who use the excuse of, I'm just gonna work forever, so I'm not gonna save anything. And they miss out on the opportunity to not have to care what day of the week it is, and to not care about time. Because they're going to have to report to that boss until the day that they can't anymore.

Al: Exactly. And Amy, obviously, you know me quite well by now. I'm a big, big believer in saving money, because it's just a smart thing to do financially. However, I'm also a big believer in creating experiences that will last a lifetime. Because to me, what's the point of living your life if you're always so concerned about putting away every penny. You know, I'm all about the dollars, but not so much the pennies. And then you miss out. And then eventually, you get to a point in your life where you say, "You know what, I wish I had spent more time doing X." Or I wish I had spent more time with a certain person in your life that just allows you to experience life at a better level.

Steve: Well, that's how I describe financial planning. It's not just protecting your net worth, but growing it year over year, so that you can maintain a standard of living that you've grown used to, make sure that you continue to have the experiences that you desire to and through retirement. So making sure that you have that plan in place that allows you to continue living that lifestyle that you've grown used to is one of the big motivators for actually sitting down and building a financial plan.

Al: Definitely, sir. And the more people take advantage of like the services that people like you offer, I think it only will help you reduce stress with your personal finances, but better prepare you for your future as well.

Amy: Time is money. Money is time, right? And I think that your perspective on just a day with your dad, a week with your dad, is something that we can all apply to our own lives. Al, as always, we learned so much from you. And it always amazes me how you can take one situation, one day, and make it such a teachable moment for the rest of us. We appreciate that about you. You're listening to "Simply Money," presented by Allworth Financial here on 55KRC THE Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby. If you've got a financial question you want us to answer, we can help you. There's a red button you can click on while you're listening to the show. You need to go to the iHeart app, record that question. It's coming straight to us. We can help you figure it out. And straight ahead, maybe going nowhere for your next vacation might be the best decision, and maybe why Cincinnati is actually a really great place to do that. I've mentioned this man on the show many, many times. Several years ago, every time we had any sort of Allworth workshop, webinar, seminar, he was there in the front row. And the reason why is because he really understood that he needed to invest his money, and he wanted to grow his money. He also was paralyzed by the fact that there is a downside to investing. I mean, he just kept coming in, thinking that in the last month, since he was in the front row, we were going to come up with a new option for him.

Steve: The unicorn fund.

Amy: Yeah. And it was like... It doesn't exist. To invest, there is going to be risk. But for those of you who are super risk averse, there are more complex strategies out there that can help you maybe minimize the downside. So if the market is down 25%, right, 20%, and it's like terrible and everyone is bleeding. Or I think back to 2007, 2008, when my 401(k) was down 40%. There are strategies out there that can help you maybe not participate in the entire downside.

Steve: Yeah. So we're going to talk about buffered ETFs today. Now, you may have...

Amy: Fancy.

Steve: Yeah. You might have heard about that. An ETF, first of all, it's an exchange traded fund, which is a basket of securities that casts a large net. And it trades on the stock exchange, just like an individual security. ETF share prices, they fluctuate throughout the day, as opposed to a mutual fund, which is priced in at the end of the trading day. Now, a buffered ETF has more of a defined outcome that limits losses while giving up some of your potential gains. So it's a little bit like an equity indexed annuity, without needing to take on a contract. And it's done using options strategies. Options are more complex investment vehicles. You sell a call, you sell a put, you use the premiums to buy a call and buy a put. And it essentially structures that ETF so that your gains are kept, but so are your losses. And that can be very appealing to some people, because it doesn't have the same restrictions, and you're not locked in the same way as you are with an annuity.

Amy: Not the same commissions that you'll be paying to that person who sold the annuity to you, right? Not the same probably surrender charges, so it gives you...

Steve: No surrender charges.

Amy: Yeah, right. It gives you a lot more flexibility. And keep in mind, too, this is not the most tax friendly strategy. So you don't want to have this in your taxable accounts, because that's going to be a huge headache and a mess. But in your tax deferred retirement accounts, this can make some sense. And, you know, I think you've got to know yourself. This is a sort of look yourself in the mirror proposition. And if you really, really struggle when markets are down and you feel like I need to do something, I need to go into cash, I need to move some money out of this. A strategy like this can be very helpful. And I think that peace of mind factor of sleeping better at night. Now, this is a long term proposition, right? You're still going to see fluctuations over the course, you know, six months out, but it's like for an entire year, right? If over the course of the next year, ultimately the markets are down 20%, and your buffered ETF only goes down 15%, then you're...

Steve: Or 10 potentially.

Amy: Or 10%, right? Then you're sheltered from a good portion of that. It may be that allows you to sleep better at night. On the flip side, man, if there's a heck of the year in the stock market index, and every time you're at parties, in cookouts, everyone's talking about how great their 401(k) is doing, your 401(k) will still be doing really well, but you will not have the entire upside that everyone else would have.

Steve: Yeah, that's one of the downsides, outside of the loss of tax efficiency, because you're constantly... Well, there are...

Amy: These are very actively managed accounts.

Steve: Yeah, because there's options. That's the right to buy, the right to sell. Stuff that you don't need to concern yourself with necessarily.

Amy: Complicated spreadsheets that are constantly looking at different options of buying and selling. Yeah.

Steve: Yeah. So, that's what creates a hedge against market losses, is the options. And you do, you limit your your earnings on your investment by sacrificing that in effect to minimize your losses.

Amy: Now, is this something we would say, hey, DIYers, you can do this on your own? No.

Steve: Technically, you can. It would just be...

Amy: I mean, you can. But if you can, you should take my job. Because you have a heck of an analytical mind, and you should completely be a financial analyst, right? I mean, this is a very complex strategy. It doesn't mean that you don't have access to it, because more and more people do. They access those, usually through their fiduciary investment advisors, who really understand the intricacies of these. They can say, hey, this might actually be a really great strategy for you. Maybe there's another option that helps to limit the downside that would be better. But I think the most important thing to know is that if you are someone who really struggles with huge market fluctuations, there are options out there, and this is just one of them.

Steve: And I would say, most financial planners that deploy the strategy with folks they work with would probably use it for a small portion of a client's overall net worth, not your entire net worth. Because again, you're limiting the upside potential, and that can create problems.

Amy: Yes. This is just that sleep factor of maybe all of your portfolio isn't so exposed to that volatility. Here's the Allworth advice. Speak with a fiduciary financial pro to determine whether an investment like a buffered ETF even makes sense for your portfolio and your financial goals. Coming up next, why people find staycations really attractive right now, especially right here. You're listening to "Simply Money," presented by Allworth Financial, here on 55KRC THE Talk Station.

You're listening to "Simply Money," presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby. I would say, tis the season. You know, kids are out of school. Many people's workplaces kind of slow down a little bit. A lot of people go places in the summer, head to the beach. But we would say, hey, maybe this is the year to start thinking about a staycation. One of the reasons why is because you happen to be living in one of the best places in the country to do just that.

Steve: Yeah, how about that? Cincinnati ranked as the top five cities in the U.S. to enjoy a staycation.

Amy: Look at us.

Steve: Yeah. This is according from a new ranking put out by a WalletHub. They compared actually 180 cities across three key dimensions to find the best places for a fun experience that is also wallet friendly. So they looked at things like day trip activity close to home that doesn't require overnight accommodations, for example.

Amy: They looked at swimming pools, and how easy it is to bike around cities, how much it costs to go to a movie, how accessible bowling is, nightlife, festivals, restaurants. When you think about it, and I think we take this for granted. I grew up here, and I know you didn't. But I remember a time when there really wasn't a lot to do downtown. And you certainly didn't go down to over the Rhine. I mean, this city has experienced a pretty major renaissance over the past 10, 15 years, making it a destination. And I say that we take it for granted, because oftentimes when someone comes in from out of town, they're like, "Huh, this is great."

Steve: This is really cool.

Amy: Yeah. I went to a reds game and then I had the most amazing meal. Or, you know, I walked along the river and then I did this. And it's a great city. So if this is a year where maybe you're struggling financially, or you just want to save a little more, you can still have a lot of fun. And it's interesting, because a friend of mine on Facebook recently made the point that her husband took one of the kids to do a big trip, and so she was here in Cincinnati with another child, and they spent three days. And I'm looking at this, I'm like, what? You can do all of those things in Cincinnati? Like, it was kind of eye opening. They had a blast. They did so many different things that I don't even take advantage of here.

Steve: Well, you should.

Amy: I know. I know that now.

Steve: It turns out that I come from number 57 on the ranking, Cleveland. That's pretty good out of 180.

Amy: Sure. Still not three.

Steve: Yeah. Cincinnati beat out Vegas, Tampa, Florida. It's the only Ohio city in the top 10. So, I mean, there are certainly opportunities here to to not break the bank by taking an expensive vacation, while getting to know the city that you live in, and having a great time. You said it yourself, you know, when I have people visit from from out of town, they say, this place is pretty cool. It caught me off guard as to how much fun Cincinnati can be.

Amy: There's an affordability and an accessibility about it, right? We have, you know, major market sports. We have, you know, professional teams here, with the addition of FCC. That's a ton of excitement that happens right downtown, over the Rhine. Like, there's so much going on. And then the restaurant scene. Like, we're kind of spoiled around here. We have so many restaurants that are affordable. You know, at least four and a half stars out of five. You know, you go to a Chicago or New York, like, you're going to pay a lot of money for that. So this might be the summer to stay around. Thanks for listening. We hope you're going to tune in tomorrow. We're giving you our take on a claim that index funds are actually ruining the stock market. You've been listening to "Simply Money," presented Allworth Financial, here on 55KRC THE Talk Station.