Amy: You are listening to "Simply Money" presented by Allworth. I'm Amy Wagner, along with Steve Hruby. If you could just put together a financial plan, figure out what's best for you long term and stay the course, you'll be so far ahead. So what gets in the way your emotions time and time again, and often those emotions are fear and greed. Joining us tonight with some incredible perspective on how fear and greed can really mess up anything when it comes to money is our good friend Apollo Lupescu. He's actually a vice president at Dimensional Fund Advisors, but more importantly maybe for our purposes, he is known as the secretary of explaining stuff. Apollo, I love how you make things so understandable. I listen to you talk and I'm like, "Well, duh." But I think we have to go to fear and greed here because so many times when someone walks into our offices and they've made a decision about their money that wasn't to their benefit, it was driven by one of these emotions.

Apollo: Oh, absolutely. And I think we talked on the previous segment that these emotions are what makes us human. And I don't think we should be ashamed of them. I think we should embrace them and acknowledge them because, again, this is a part of our human nature. I think the question here is when it comes to investing, are these emotions good or bad for your money? And over and over, what we've seen is that both of these emotions are not necessarily serving your best interest. And I'm gonna talk about maybe how to kinda deal with them and how to make the best outcome possible for you as an investor. But let me start with just a little bit of why these emotions are so powerful. And I'll start with fear because that is a primary emotion that has helped us as a species survive. When you get chased by an animal and you're afraid, well, you're gonna run quickly, and that's gonna save your life. So I think fear is part of our natural condition and it helped us along the way...

Amy: Healthy part.

Apollo: ...to get to where we are.

Steve: Exactly.

Apollo: So I don't think that we should say, oh, these are bad. No, they're absolutely real and they're fine to have. I wouldn't be ashamed. I mean, I'm sometimes afraid of things, and I should be. And greed perhaps is also something that helped us survive because the people who can actually gather more resources were the ones to survive much more so than the ones who didn't. Now, in the modern society, the way that we work today, one of the problems that I see is that the media, and particularly this 24-hour cycle that we're in, whether it's social media or real media, whatever it is, it is feeding us just fuel for these emotions and they become much stronger than, in my opinion, they ought to be as an investor. And if you think of the programs over the past couple of decades, they have been getting much better at tapping those emotions because that what draws eyeballs and that is what sells advertisements for companies.

Steve: [crosstalk 00:03:22]

Apollo: And again, I'm not here to demonize the media because everybody's on top of them. I have to say, folks, when you're watching shows on different investment programs, I think you have to acknowledge that those are not investment advice, but they're trying to be entertainment. Now, that's what they call it, but it's not investment advice. And the way they make money is by tapping into these fundamental emotions, the fear and greed, and that's how they sell advertising because once you're hooked on fear or greed, you're much more likely to return to that show. And we've seen this over and over and over again. In fact, one of the more popular show, "Mat Money," the executive producer was the same person who did "Jerry Springer." It's kind of the same idea.

Amy: Say no more.

Apollo: And it's kind of the same idea that you're tapping different emotions. And why is it that those emotions are so bad for you as an investor? Well, think about...let's just...fear first, that you are watching something and you are afraid. And at that point, let's say the market tanks, and you're really afraid that, "What's gonna happen to my money? I don't wanna lose everything in the market," and particularly when the market drops, that's when we see a lot of people acting on that fear and selling. Most of the selling that we see investors do on their own without an advisor is when the markets drop at a low point. And then once the market rebounds and things look good, when the markets are on the way up, that's when people feel comfortable buying. So think about this, Amy and Steve, the fundamental premise of investing is buy low, sell high. That's how you make money in investing. What do emotions make us do? Well, we sell at a low point, and then we buy high, which is exactly the opposite of what we ought to do.

I'm gonna come back to this. There's nothing wrong with having these emotions. And the only way that I found that you can put a backstop to these is to have a financial advisor, to have competent financial advisors like Allworth who can actually coach you through those times and make sure that you don't make those decisions that are ultimately gonna be detrimental with your money because those decisions are made typically by investors on emotions rather than data and evidence. And what I know that you do, because I've known you for a while, is exactly the opposite. When the market drops, rather than selling in panic, what emotions would wanna do, you keep your level head, and that might be the time to buy. Buy low, that's what you do.

And then when things go up, you might want to trim those gains and take chips off the table. But do it through a systematic process. That's what advisors have. They have a process that it's established ahead of time where they remove the emotions and they make sure they have the systematic program to buy low and sell high. And that is called rebalancing. And rebalancing has a dual purpose of, one, making sure that your portfolio doesn't get too risky. On the other hand, it has the purpose of helping your portfolio recover after a loss because once you buy low, you're not gonna be too light on the asset class that might go up next.

Steve: It's fascinating to me because when investors get spooked by stock prices going down, and if you look at it as something like a big sale, a Memorial Day sale, for example, when everything's at a discount, that's when you go into the store and you buy the thing that you've been waiting to buy. It's the exact opposite that that fear has on us when it comes to investing. We say, "All right. Well, everything's on sale now, I'm gonna sell and sit on the sidelines instead of buying more."

Apollo: That's exactly...

Steve: [crosstalk 00:07:21]

Apollo: ...right. Great point, Steve. Why would you wanna go buy at full price when there's a sale and you can buy at a discount? But again, it's the emotions. And I think they're real. And without an advisor, it's incredibly hard to navigate these emotional waters. And I know you've seen this over and over and over again. There are so many studies that have confirmed, that looked at the outcomes for investors when they let these emotions drive investment decisions. And it's one more argument for having a really good financial advisor who has, you know, a program in place to try to not only coach clients to these times, but to some degree try take advantage of these times.

Steve: What's your take on the other side of the coin, and instead of fear, what about greed? Because right now we're reading noisy headlines. You talk about media, if it bleeds, it reads, people are gonna click, advertisers are gonna make more money, but at the same time, media has no fiduciary standard to make sure that you're making good decisions with your money. So we see stuff all the time about the Magnificent Seven, AI, crypto, people think there are easy ways to get rich quick. What's your take on greed?

Apollo: Absolutely. And I think there are a variety of perspectives on greed. I mean, I think the simplest one is that people wanna make sure that they keep up with their neighbors. I think there's an element there that if my neighbor's making a lot of money, well, I better make a lot of money, I don't wanna miss out on that. So there's that fear of missing out. And I think the media is tapping into that as well.

Steve: [crosstalk 00:08:55]

Apollo: And you always hear about people who make so much money, and look at the car that I drive, and look at all...and, you know, my nice shoes, whatever I have. And the reality is that you wanna know, "Hey, am I missing out on this?" And that fear of missing out is real. And they could be fed not by the media, but also by friends and family. I mean, I know that years ago when I had a friend of mine, we went for a hike and he was telling me about all the money that he made in a particular investment, like, in my mind, "Wow, that sounds really good." I mean, if I didn't know any better, I'd be like, "I wanna jump on that because I don't want to miss out on this great opportunity." So there is an element of the fear of missing out.

And in my mind, I always think that when you have these phenomenal investments that you're afraid of missing out, the FOMO normally it's called, you also have to look at the other side as well. These investments where you really make a lot of money, they tend to be pretty concentrated, whether it's one investment or something like a Bitcoin that everybody talks about like, "Hey, this is in the way of the future," you make so much money in that, and you wanna make sure you're not missing out. On the other hand, the fear of missing out should also be considered in the context of fear of losing your shirt...

Steve: Yeah, great point.

Apollo: ...because you make a lot of money or lose a lot of money. And I think that too many people are looking at the upside potential without taking a step back and saying, "Well, what if things don't go according to plan?" And one of my friends actually had...another friend had this situation happen where he basically said, "I'm gonna put some numbers there, like $5 million bucks," made a lot of money into this, you know, crypto, and, "I'm gonna wait to get to $8 million, and when I get to $8 million, I'm gonna cash out and live happily ever after." And that was kind of the idea, let's just wait for that magic number. And in my mind, you know, what I wanted to ask him is, "Hey, how will your life be different if you have $8 million versus $5 million? Are you really gonna spend on vastly different things, are you gonna consume, like, something that you can't really do right now? Is your life gonna be significantly better if you add the $3 million?" And the answer....

Amy: [crosstalk 00:11:10] always sounds better, right?

Apollo: [crosstalk 00:11:11] really. No. On the other hand, what you have to also consider, what if instead of adding the $3 million, I subtract, what if I go from $5 million to $2 million, will my life be different at that point? And to me, without a doubt, your life will be very different. So whenever you're afraid of missing out, also consider being afraid of losing your shirt and changing your lifestyle. So you're right that the greed is also a powerful emotion. And it can come from the media because, again, the media wants to do it. And not only that they want to sell you advertisement, but there is an armada of marketers trying to sell you the hot product of the day. And there's always something hot. And these people put a lot of money into marketing, and they're selling you something because typically on these hot products, the fees tend to be pretty high for them. And it absolutely makes sense to spend the money in marketing.

So again, it's absolutely human to have these emotions. Nothing wrong, but my suggestion is have an advisor who is competent, who is levelheaded and can coach you through different times and evaluate. I mean, if you have a great idea and you go to Allworth and say, "Well, what do you think about this?" You know, I'm sure they'll look at it and say, "Well, how is this helping you achieve your goals? How is this fitting into your financial plan?" And if it does, perhaps that's something that they'll say, "Maybe that's worth kinda looking at and maybe deciding how it fits in the big picture." But I do think that you need an advisor. Absolutely, you need an advisor.

Amy: We always say, as advisors, our number one responsibility is to make sure that the clients that we're working with, the investors that we're working with are not making financial decisions that they cannot recover from. Great perspective from Apollo Lupescu, our friend at Dimensional Fund Advisors. You're listening to "Simply Money" presented by Allworth Financial here on 55KRC THE Talk Station.

"Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby. If you were listening at the start of the show, you heard really some game-changing perspective on fear and greed and how that can impact your money from our good friend Apollo Lupescu, who is just brilliant. So if you were listening and you were thinking, "Someone I know could really benefit from what we talked about, from what you're listening to," just, there's a daily podcast for you. Search "Simply Money" on the iHeart app or wherever you get your podcast, share that show. I think there's a lot of really great information there. When we talk about financial plans, Steve, we talk about it sort of being a roadmap, right? It's a place that you're trying to get to. And if you were gonna look at the vehicle that gets most of us there, I think we would say it's the 401(k), it's like a Subaru, right, you can count on it, it's reliable, it's gonna get you from one place to the other.

Steve: Yeah, I mean, 401(k)s, they've taken over as the main vehicle for savings because it used to fall on the employer when there was the day of the pension. Most of us...

Amy: Good old days.

Steve: ...do not get pensions anymore. It used to be the three-legged stool of pensions, Social Security, and 401(k). But businesses removed that risk from themselves as people started living longer and they pivoted to us as the individual to make sure that we're making the best decisions that we possibly can with our 401(k). Now, there's a recent article that came out from MarketWatch that detailed five changes to a 401(k) that would make a big difference for the better. So this isn't anything to be nervous about, but some of these are some pretty interesting ideas. For example, one is giving credits for long-term family caregivers. That is, so if you're an individual that needs to stop working to take care of an aging family member, for example, then, you know, somebody that falls ill or is just getting older and you are that caregiver working fewer hours, the idea here is that you're also able to earn credits towards Social Security when you would normally stop earning those credits if you're not earning income.

Amy: A lot of these suggestions I think make a lot of sense. Some of them I'm a little bit on the fence about and we can get to that.

Steve: Yeah, I agree.

Amy: This point about caregivers though is a really fantastic one because this is a gut-wrenching situation and decision for a lot of people. You just don't have a choice, right? Someone you love needs your help and that either means that you have to cut back on the hours that you're working or quit working entirely in order to care for them and then you're being penalized financially on so many levels. You're not earning credits towards Social Security, right, obviously, money's not going into the 401(k), there's no company match. And another thing, another possible situation that could be helpful here, there's a U.S. Representative, Chris Pappas, New Hampshire Democrat, and he actually has a proposal that would allow you to make up catch-up contributions. So we talk about this, like if you're 50 or older, you can put additional money into a 401(k). Well, what if you're 45, but at the age of 35, you were forced to leave the workforce to take care of someone? Now you're getting back into the workforce and you're way behind on that 401(k). I really actually like this idea. I'm sure there's some sort of paperwork that would be involved...

Steve: Of course.

Amy: ...in proving that that's what you've been doing. But once that proof is there, I think allowing these people to make catch-up contributions regardless of age makes a lot of sense.

Steve: And this is co-sponsored. This bill that you're talking about was co-sponsored by Republicans...

Amy: Yes. Yeah, it's...

Steve: ...out of New York.

Amy: ...bipartisan.

Steve: New York and Arizona. So bipartisan, that's not something we see too often in this day and age, but we can all...

Amy: It makes sense.

Steve: We can all agree that if life threw you an unfair curve ball and you had to make the tough decision between taking care of a family member and letting them be on their own, most of us are gonna step up to the plate and take care of that family member if we're able. So instead of penalizing, opening the door to being able to save more is a great opportunity that this, like, would open up for people. Now, the second thing, and we had a segment about this not too long ago, and it was the idea of automating annuities within target date retirement funds. It's a really interesting idea posited by BlackRock, where these target date retirement funds...Remember, it's a date like 2050, 2065. It's more aggressive. The younger you are, the more it gets more conservative the older you get. But there's a component to these that they would then create annuity income, so cash flow. It's essentially creating that third leg that we're missing by filling in the blank for the pension. It's an interesting idea. I'm not sure how it would work until we saw it in practice.

Amy: I like options, right? I like more options. I think the problem or what makes me nervous, I will say, about annuities in 401(k)s is that so many people gravitate toward that guaranteed income component of these, not understanding that while that's a great thing...And what's not clear is...and I think these would be sort of lower commission products, not typical annuities that you would buy from someone. So I guess there could be an advantage to these, but often there's a trade off to that guaranteed income in the fact that if that money had been invested, you likely would've made a lot more off of that money and so this is still an incredibly new product and incredibly new option. I'm never against looking at more options in 401(k)s, as long as it, first of all, doesn't confuse the investor and, second of all, isn't a terrible idea. And my understanding of this is, it's just a portion of what would be in sort of this version of target date funds would get a little bit larger the closer you get to retirement and then you would have the option to exercise whether or not you actually rolled this money into an annuity or not.

Steve: And it seems like it's capped at 30% of the amount that's actually held in that particular target date retirement fund. So you're right, it is an option. But, you know, to expand on it, there's also the idea of expanding guaranteed income options within 401(k) plans, which wouldn't just be the target date retirement fund where you could transition 30% of it to an annuity, it's offering more annuity solutions within the 401(k). Now, again, we're not totally against annuities, they do have a place. But a situation where it's under the umbrella of a workplace retirement plan is going to create lower fees for everybody that has access to them, which expands the possibility of creating that fixed income stream without having to give up a significant portion of your balance in a commission to a sales rep. So it is a neat solution that lowers the fees for everybody that do want some fixed income in retirement.

Amy: Something I think is a fantastic idea, and maybe a lot of people would disagree with me on this, not allowing pre-retirement withdrawals. Essentially, that money is locked up like a pension, you can't get to it, you can't touch it. So many people are just so tempted by this money when it's there. If it wasn't an option, you would find a different way to pay for the things that you're trying to pull this money out of this account for. So I think that one is a great one. Here's the Allworth advice. These changes to 401(k)s, I think many of them would be welcomed. In the meantime, though, do everything you can to protect this big investment and vehicle. For most of us, it's an incredibly important one.

Next, what to do when the inevitable happens, if something that is so hard to think about, but something you have to be aware of. We'll get into that next. You're listening to "Simply Money" presented by Allworth Financial here on 55KRC THE Talk Station. You are listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby. Have you ever read any of Mitch Albom's books, "Tuesdays with Morrie?"

Steve: No.

Amy: Oh my gosh. So good. So good. Such a great writer. He's a sports writer, but he is written all these incredibly thoughtful novels. And one of his quotes is, "Death ends a life but not a relationship." And I think for many people who have lost someone that you're close to, you feel very much that way, right? That relationship goes on, but as the result of that death, unfortunately, there are still some very real logistical things that have to be dealt with. So for anyone who has lost a partner or someone who's incredibly close to you, we just kinda wanna talk through some of the sort of maybe feels more tedious, but things that need to be cared for.

Steve: This is good information to have in your back pocket because you never know what's gonna happen...

Amy: You don't.

Steve: ...and when it's gonna happen, but it is inevitable. So, you know, as something happens, the world doesn't stand still around you, everything keeps moving forwards, and it's this jarring moment like, "What am I supposed to do now?" Well, first things first is contact your financial and legal professionals. If you're at a point in your life where, you know, you've saved and you're retired and you're living off of retirement assets, for example, then you should have a team that has, you know, on your bench an attorney, a CPA, a CFP, fiduciary financial planner, and these individuals are going to be able to help you create a plan of attack for the exact next steps that you need to take at this point.

Amy: I had a meeting this week with someone, a guy who had been very much at the helm of all of the money decisions, all of the saving and investing in the family. And I was making the point that I would really like for his wife to come in the next time, right? Several times throughout the conversation, she comes up as, "You know, well, my wife loves this, and she loves that, and she feels very strongly about this," so I'd like for her to be a part of the conversation. He said, "Well, she really doesn't have any interest in this, she's never been a part of it, she's not interested in it." I said, "I understand that, and you're in excellent shape, and there's no reason to think something's gonna happen to you, but something always could and if it does, how overwhelming for her to have to be leaning on a professional who knows the intimate workings of the money in your family, but she doesn't know me," right? And so I said, "It's a gift to her, really, to have her be part of this conversation now, so that when she's reeling from this very emotional loss. At least she trusts the person that she's picking up the phone and calling and saying, 'Okay, help me figure out what's next, what do we need to do here,' rather than picking up the phone and calling a stranger during that time."

Steve: Explaining that to folks usually resonates to the point where they end up bringing their spouse into the next meeting because...

Amy: Yes. You hope so.

Steve: ...you are right, especially considering the fact that women tend to live longer than men. Statistically speaking, that's the case. So let's say you're a man and you've been the one that's been doing the financial planning in your household, for whatever reason, you haven't folded your spouse into that conversation. It is something that you need to do, especially if they're younger than you, because chances are they're gonna last longer than you do. And in that situation, like you just explained, it's uncomfortable. You don't know the person that's been running your finances for potentially decades. So, you know, let's say that you've contacted your financial advisor at this point, your attorney...

Amy: Your team.

Steve: ...your CPA, yeah, your team, you're gonna need to procure the will and death certificates. Now, there's certain people out there that say you need two dozen death certificates, maybe 10 or 15, somewhere in the middle, because you're gonna need a lot of these things. For every single financial institution that you deal with that holds any liabilities, that holds accounts, that holds old pensions, you're gonna have to present these copies to these places in order to prove that something has changed to the point where now next steps need to happen.

Amy: You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Hruby, as we tackle one of the topics that no one likes to think about, but it's inevitably gonna happen and that is losing someone who you care about and maybe specifically a spouse. And what are those next steps? We're big advocates for, if you look at your accounts, right, your investment accounts, and there's a list a mile long, right, that can feel really good like, "Gosh, I've got, you know, several old 401(k)s and some IRAs," that can be really hard to keep up with, right? And we say, "Hey, consolidate, that makes life so much easier." So one of the things that you have to think about if you've lost your partner is reaching out to, if they're not retired yet, any current but also past employers. And the past employers part of this is really critical because if there's old 401(k)s that haven't been rolled over that are sitting in old plans, you've got to keep track of those. And we see so many orphan 401(k)s out there that no one ever claims because people lose track of them.

Steve: These organizations aren't gonna reach out to you. They don't know that something changed and that something happened. So it's up to you to take charge with that. It is an argument as to why when we're working with folks and building financial plans and fiduciary advisors across the nation, they're working with them to consolidate accounts that they have spread out all over the place, one rollover IRA, one Roth IRA, maybe a joint brokerage account. You don't need to have stuff spread out for diversification between firms because it makes it that much more difficult when the inevitable happens. So that is a good point you bring up in life where we can make things a little bit easier in death. But you're gonna be reaching out to all these current and former employers to provide them with whatever they need to open accounts now in your name or make sure that that pension cash flow now goes towards you with this change.

Amy: Another thing is, you know, updating the ownership of all assets. You're gonna need that death certificate again for that. Hopefully you were already the beneficiary. But often you can't legally transfer those assets entirely to your name without that. So it's just kind of another step. Hopefully, also, I would say hopefully you were part of conversations with this team of people that you're working with now, and hopefully you knew them already, but also one of the conversations that is incredibly helpful if it's had before is where all of the important documents are, account passwords, right? Make sure that everyone in the family knows where these things are hopefully stored together in a safe, secure place.

Steve: And remember, the CPA or whoever's helping you with filing your taxes, there's likely to be conversations around maybe this is the last time that you can file jointly at this point. So realizing income in certain situations, depending on the types of assets that you're inheriting, could be a benefit as opposed to a couple of years down the line when you were filing single. Really grim subjects but super important. You're gonna have to update beneficiaries in the accounts for the most part, make sure that all of that is in order as well.

Amy: Here's a big one. Do not make any major financial...

Steve: Yeah, please don't.

Amy: ...decisions right now. I've shared this story several times on the show, but it still hurt to my heart that someone I care very deeply about after losing a loved one was sold an annuity. In years later realized after the fact how much they paid in commission, how much that money would have become had it been invested, and really sort of felt taken advantage of, not at the time, but as years passed. And, you know, it's not just buying life insurance products that you don't necessarily need. It's making major changes, like huge moves or big purchases, all of those things. Just give yourself several months to let the dust settle. If there's something that you're thinking about doing, maybe write it down, maybe think about it, but don't make any major decisions that you're pulling the trigger on until you're absolutely sure that makes the best, the most sense moving forward.

Steve: I actually felt a little burst of anger when you said that, my blood pressure rose.

Amy: Yeah, mine too.

Steve: Somebody took advantage of an individual that was right there reeling from a terribly emotional situation and sold them a commissioned product that they didn't need. Yeah, be careful. Don't make those big emotional decisions when emotions are high.

Amy: Here's the Allworth advice. Please give yourself some grace after you lose your spouse or your partner or someone close to you. Make sure you've got a team of individuals, helpers, professionals who will help you through this time. And hopefully you already have personal relationships with each of them. Coming up next, we're testing your knowledge with a little retirement fact or fiction. We wanna make sure you know the facts when it comes to your money. 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. Do you have a financial question you need a little help with? There's a red button you can click on while you're listening to the show. It's right there on the iHeart app. Record your question, it's coming straight to us. And straight ahead, how to keep from making a major purchase that you might regret making later. If you're thinking about buying one of these now, we've got a little warning for you. We'll tell you what that is coming up in just a few minutes. Time to play retirement fact or fiction, because when it comes to your money, we wanna make sure you know only the facts. First one up, Steve Hruby, fact or fiction, Social Security should make up about 60% of your income in retirement?

Steve: Fiction. No, thank you. Even in the first place, Social Security was designed to replace about 40% of your income. So if you're in a situation where Social Security's making up 60% of your income, then you probably don't have a ton of cash flow, you're probably not living or maintaining the type of lifestyle that you generated based on your income pre-retirement. Now, I have plenty of folks I work with that do have, you know, significant portions of their income made up by Social Security. It doesn't mean it's impossible to retire in that situation, but you have to be living oftentimes below your means.

Amy: I think for most people, when you think about retirement, you wanna continue with the lifestyle that you're living now.

Steve: Exactly.

Amy: And if retirement for you means all of a sudden Social Security is your main source of income and you can't afford to eat out once or twice a week like you are now, you can't afford any vacations to the beach or to visit your grandkids, okay, well, then that's not the goal here. So I think you have to figure out, okay, what are some ways that I can build up my savings and my investments in order that Social Security is truly only making up 40% of my income as it was intended to do?

Steve: This is an easy one. Fact or fiction for you, your portfolio allocation can change multiple times over your lifetime.

Amy: This is a fact. And I would say not only can it change, but it probably should change for most of us. The younger you are, right, when you're in your 20s and you first start working, you first start putting money into that 401(k), I would say it's not out of the realm of normalcy to have 100% of what you're putting in there in stocks, right, in the stock market, because you have a long time horizon, you know, decades to continue working. Think about how many recessions you'll go through, how many bear markets during that time, and if you've got the stomach for it, I think that makes a lot of sense. Now, as you get closer to retirement and that money is real money and you need it, then you start dialing back that stock exposure and you start buying more bonds. And so I think there's almost, like, a sliding path that can happen during that time. But I would expect that that asset allocation changes several times over the course of your life as an investor.

Steve: It should change several times over the course of your life as an investor.

Amy: Fact or fiction, investing in real-estate is a good hedge against inflation.

Steve: Sure, I guess, fact, it can be. I'm a little skeptical. You know, there are obviously challenges with liquidity when it comes to real-estate. There's a lot of people out there that just think that real estate is a way to get the job done. But when you don't have a portfolio of investment assets that you can pull from to generate a diversified income stream in retirement, it can create its own challenges. Yes, the value of property in some areas is gonna continue to increase almost no matter what's happening in the markets. But again, there's that lack of liquidity. And if you are a landlord, there's always challenges with making sure that there's somebody to fill in and actually pay rent.

Amy: There are lots of people out there that are gonna tell you that there's a number of different investments that you can make that are a great hedge against inflation. I mean, look no further than gold commercials, right? There's lots of things out there. People like the thought of real estate because you can touch it, you can feel it, right, you know the use for it. I take this as anything but a smart part of your financial plan if that's decided that it is a good fit for you. I think back to 2007, 2008, right, it was not a hedge against inflation at that time.

Steve: No, it wasn't.

Amy: You were losing value on that property if you needed to liquidate it for some reason at that time, which is not an easy thing. It was gonna sit there, first of all, for months, and you were losing value on it. There's no prediction of what's gonna happen in the future. Yes, you know, real estate's a good investment right now. Who knows what it could be in the future? I don't like it as a hedge against inflation or really any part of a long-term financial retirement plan.

Steve: This is a tough one because if you have a diversified portfolio and you wanna add in some additional level of diversification, sure, but that's also why my answer is a little bit more wishy-washy than normal. So [crosstalk 00:08]...

Amy: You kind of hedged your answer.

Steve: I did hedge my answer. Thank you. I appreciate that.

Amy: I've got one for you.

Steve: Okay. Let's hear it.

Amy: Fact or fiction, Steve Hruby has never made a financial mistake.

Steve: I want you to answer this one.

Amy: Okay. This comes up because you were saying...

Steve: This is an easy one, fact. Just say it, Amy.

Amy: I don't believe it. I'm almost gonna sit here in silence until you think of something because there's no...Well, I can't sit here in silence because I can't be silent for more than three seconds. But I refuse to believe that you have never made a mistake when it comes to money in your life. What I do believe is that you saw mistakes made when you were growing up and you are more intentional than the average person about what you do with your money. And I actually very much admire that in you.

Steve: Thank you.

Amy: I don't wanna get [crosstalk 00:34:54]...

Steve: This turned into a really nice answer. I appreciate that. Let's keep talking about this for a while.

Amy: I really want you to say, though, there has to be something that you look back on and you're like, "Okay, that wasn't the smartest..."

Steve: Okay. Based on what you just said we're both in agreement here. Fact, no mistakes ever. I learned from those before me and here I am today.

Amy: Never made a financial mistake?

Steve: We'll find one. I admitted one like a year ago once.

Amy: What was it?

Steve: If you forget, it doesn't matter, fact,

Amy: I'm throwing the fiction flag on this one and it is my goal...

Steve: But not providing an example?

Amy: It is my goal to unearth one over the course of time. Nobody makes it through life without making money mistakes. We wouldn't have a show if that was a thing. Coming up next, when money will not buy you happiness, but regret instead. Obviously, Steve Hruby has never done any of these things, but we'll talk about them next. 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. Have you ever bought something really expensive only to regret it later? We're talking big purchases here, a boat, some land, at the time it made all the sense in the world and then reality sets in. Steve Hruby has already just set us up for the fact that he's never made any bad financial decisions, but many of us have. And one of the major forms this can take is buying a boat.

Steve: I can't wait to make this mistake.

Amy: You wanna make these mistake is what you're telling me.

Steve: I do. So is it a mistake if I know what I'm getting into? That's the question. That's philosophical at that point, I think...

Amy: I'm not answering that.

Steve: ...because a lot of people know. A lot of people have the dream of purchasing a boat when they transition into retirement and, you know, sailing off into the sunset. But there's more to owning a boat than just purchasing it. There's costs that add up very, very quickly. It's supposed to give you joy and freedom, but then you're almost obligated to use it all the time so you can get your money's worth. And they lose value very, very quickly. Is it a mistake to buy a boat if I know what the challenges are?

Amy: I guess if you go into this fully eyes open. My husband owned a boat before we got married. And we actually had a great time on it. It was at Norris Lake in Tennessee. We would go down, we would take our kids down. Then our kids started getting older and more into sports and dancing and all the things and it became more and more difficult to get there. To your point about all of the costs associated with it, me being me, my kids call me a fun sponge, I did the math and was like, "Okay, what we're paying for a slip fee, what we're paying for gas for this boat, what we're paying for, you know, ownership of it, every time we go down here and use this boat, it's like $2,000."

Steve: I don't wanna...

Amy: You know?

Steve: ...hear any more about that.

Amy: Well, it's perspective.

Steve: It is. Again, it's a mistake that I look forward to making at some point in my life. An RV might be another one. You know, you get all the comforts of home, but you don't have to worry about lodging, you're able to just hit the road and get out there. But it's one of those another things where Amy could be a fun sponge about and share all the hidden costs that exist.

Amy: I just think we can romanticize these things, right, hitting the open road and all the national parks, and then you are actually like, "I really miss a hotel and the fact that they make the bed every day or clean the bathroom or whatever," and all of a sudden it's like not the great thing that you thought it was. With a lot of these things, these major purchases, test them first. Rent an RV, use it for a month. If you love it and you can...then great, think about it. But test it first before you make that commitment that's really hard to undo.

Steve: Test drive that fancy car that might be just a little bit out of your price range, but you feel like you could stretch it because it's a pipe dream and it's something that you've wanted to have for quite some time. Test drive that car you don't have to go out there and cash out a 401(k) to buy yourself a Maserati or whatever.

Amy: Right. That's gonna lose a lot of the value the second you roll it off of that parking lot. Timeshares are a big one, your dream home. For so many people it's just that transition into retirement feels like you need to do something big, right, something big, and then a lot of times you're like, "Well, how do I undo this big thing that I did," and it can be a major mistake. Another thing is giving to your adult children to the sacrifice of your long-term financial health. So these are major decisions that we've seen could end up being regrets. Don't make these. Thanks for listening tonight. You've been listening to "Simply Money" presented by Allworth Financial here on 55KRC THE Talk Station.