Amy: Tonight, a deep dive into a mistake some investors made three weeks ago that they may not recover from. Did you make this mistake? You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner along with Steve Sprovach in for Steve Hruby. August 5th. I mean, I think if people hear that date now, they're like, "I don't know, what happened on August 5th," you know?

Steve: Yeah. I don't remember yesterday. Are you kidding me?

Amy: So, let's remind everyone. You'll recall this one pretty quickly, the S&P 500 dropped 3% that day after a pretty negative July jobs report. So, even if you don't remember that date, you probably remember the feeling of checking the market, seeing they're down 3%. Maybe you checked your 401(k) that day, wasn't the best day. And there was a few days there, a couple days of volatility, and the question is, what did you as an investor do as the result of that?

Steve: I'm glad we're talking about this, because that actually got my attention. I've been upfront about, since retiring the end of last year, I don't look at my accounts.

Amy: Since trying to retire. We keep making you come back.

Steve: Yeah, that's good point. Yeah. Yeah, I enjoy this though. And, you know, that day, it was a typical, "Wow, okay, maybe stocks have had their run and maybe it's time for a 10%, 15% correction," and that gets anybody thinking. Even though I'm making a really good effort not to pay attention, like I did when I was working, to investments, and the market drops 3% in one day, and if you're a normal person, you're gonna say, "Is this the beginning of the big drop? Wow. Am I supposed to do something?" And I hate to keep saying this over and over, but it bears repeating. You generally don't want to do anything. Sitting tight is a decision. If you think it through and say, "Maybe I shouldn't do anything," you've gotta ask yourself, if you get caught up in the negative press of a really rough damn day, did you get out the day before? Because that would've been the time to get out. If you say, "Oh, okay, we're down 3%. I can't afford to lose more. I don't have time to make it back," you're most likely gonna make a really bad decision.

Amy: Well, August 5th and the morning of August 6th, headlines were really scary during that time, right? Is this the beginning of the slide and some terrible recession? Is it the worst thing that we've ever seen? But as we talk about the terrible decision that you might have made on that day, we now have some research and some insight into what some investors decided to do. So, trading in 401(k)s on that day, more than eight times the average daily volume, the highest that we've seen since March of 2020. What was happening in March of 2020? A global pandemic, right? And so, and I think for a lot of people, the reason why maybe there was this knee jerk reaction on August 5th is also because we came out of this period of insane calm in the markets over a year where we didn't have more than a 1% to 2%, you know, up or down day in the market so we forgot what it felt like, and then you get a couple days like that on the heels of a jobs report, and it's like, is this the beginning of the recession? Is this the beginning of the markets falling and the sky falling? And I think there were some investors who pulled their money at that point or moved it to somewhere safer.

Steve: There definitely were, but let me go back to the jobs report for a second. That was a slight miss, right?

Amy: Yeah. More than slight.

Steve: They always make adjustments, the government, Department of Labor, they always make adjustments on, "Okay, here's what we thought the number was, but after we audited the actual results, we were off by usually a little bit." Three hundred thousand jobs is not being off by a little bit. I mean, you know, we joke about, well, it's okay for government work, you know, but that's a huge miss. And that caught investors by surprise, because guess what? Investors don't like surprises. But do you do anything about it? That's the really big question. Yeah, eight times the amount of trading going on than an on a normal day, but you know what? People had been getting greedy for a long time.

I mean, the average equity position had moved up to 72%, which is way higher than the normal average. So in other words, people let their accounts go, stocks make more money than bonds over time, and we were looking at an average account of 72% when I think most people are comfortable in that 60/40 range, 60% stock. And so, "Oh, wow, wait a second, I was 72% stock and the market just dropped 3%. I gotta fix this. I gotta do something." And most of that money, we call it a flight to safety. It's just, I'm selling my stocks, I'm going into something safer, either stable value bonds or a money market and most of that money went into stable value funds.

Amy: You know, I hate to say I told you so. Oh, I'm kidding. I actually love to say I told you so.

Steve: Who are you kidding?

Amy: But we have been talking on the show for a while before this period of volatility hit of like, "Hey, build your boat." You shouldn't have been exposed to 72% exposure to equities if you had taken a look and rebalanced back to that 60/40.

Steve: Yeah. What's your real risk tolerance, right? Yeah.

Amy: Right. And we're not saying, hey, you rebalance once a week, but man, if you slid that much from a 60/40 stock/bond exposure to 72%, you probably should have looked at that this year, and that way on a day when the market's down, you don't have that terrible downside because you don't have more exposure to stocks than you thought. You're listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach in for Steve Hruby tonight as we talk about one day and the mistakes that you might have made or we would hope that you don't because you listened to this show.

Another thing that we talk about often is if you decide to get out of the markets because of a really bad day or a really bad period of time, what we have seen time and time again historically speaking is the good days come on the heels of the bad day. You wouldn't wake up that morning and check the financial headlines or any headlines and say, "Oh, this is gonna be a great day in the markets," yet for those who got out, there was an upswing after that and they didn't participate. They moved their money to bonds, they moved their money to money market accounts that flight to safety, which then doesn't expose them to the opportunity for growth.

Steve: You know, there have been so many studies done about market timing. I'm not in the business anymore. I'm retired, so I don't have a horse in the race of telling people, "Don't do anything. Keep your money invested." Okay, that's an argument. When you have somebody who's an investment advisor on radio, on TV, well, of course he's gonna say that because he doesn't want your money to leave the account where he's not earning money on it, okay? But the numbers kind of bear this out. If you had a million dollars, just you've invested successfully, 20 years ago you put a million dollars in the Standard and Poor's 500, you would have about $6 million today. I mean, that's the power of compounding and that's what investments do for you. If you dismiss the 10 best days...and like you said, the 10 best days tend to come off of bad periods, you know, bounce off the bottom. And there's usually no real great news that causes that to happen, it's just there are no more sellers left. Everybody's capitulated, you know, follow the money. And if you just missed the 10 best days, you had $3 million, still a lot of money, but I don't know about you, but not having an additional $3 million would mean a little bit to me.

Amy: Oh, yeah. A lot [crosstalk 00:07:51.647].

Steve: A little bit. Yeah. That's real money.

Amy: It is real money.

Steve: I mean, given a choice, Steve, would you rather have $3 million or not have $3 million? I'd rather have $3 million.

Amy: Well, and I think the irony is people take their money out of the markets, they get into that fetal position around it because they're worried about losing it. But to your point, they lost millions if they got out and missed those 10 best days, and you never know when they're coming. You know, I also think for a lot of investors...and me personally, I used to love rollercoasters when I was a kid. I hate them now. I feel like I need to go to a chiropractor.

Steve: You're officially middle aged.

Amy: I'm middle aged. My ears hurt, my head hurts, I need a chiropractor. And I think for a lot of investors, it's like, "Oh, you know, what makes me nervous about the stock market is the rollercoaster ride." But listen, you're creating a far worse rollercoaster ride for yourself, right?

Steve: Yeah.

Amy: Much worse drops by getting in and out of the market and trying to time the market some days like this.

Steve: Okay. You just have to acknowledge a couple of things. Over time, you are more likely to make money in stocks than a money market, right? Well, lesson number two is the price of admission. If you're gonna be invested in the stock market, it is a rollercoaster. Don't make it worse, okay? Well, how do you not make it worse? Well, how about number one, diversify. We talk about a 60/40 mix, 70/30, whatever you're comfortable with, if you felt like you had to trade on a 3% drop in stocks because of a bad labor department report, maybe you weren't invested within your risk tolerance. I mean, that's the definition. You want to be comfortable with the mix that you're using. If you get upset by the news, take a look at your account. Did your account drop 3%? If it only dropped 1%, well, maybe you'll feel a little bit different.

So, be diversified, be within your risk tolerance, don't trade, just reallocate. Reallocate means, you know, once or twice a year, make sure you're still within that mix that you want to be in. And then finally, use that emergency fund. We talk about it a lot, but how many people have in retirement one to two years of income need, and then the more important part, use it for that purpose? In other words, if you've got two years sitting in a money market earning whatever interest you're earning, and the market drops off in a sustained year, year-and-a-half bear market, are you now drawing money from the money market instead of your investments so that when the market recovers, you then replenish that emergency fund and you weren't drawing from your investments when they were down? Those three things will keep you on an even keel the rest of your life.

Amy: And I also think some perspective here, right? It may have felt like the sky was falling on that day. It was a 3% drop. If you're gonna get out of the market because of a 3% drop, I'm gonna get a headache even just thinking about how many times you're gonna have to get in and out of the market, right? We had forgot what volatility felt like, that jolted everyone awake that day. Everyone's awake and paying attention. But listen, don't pay attention just to the news, right? Know where you can go to get some trusted sources of news. I mean, we talk about the places that we go to do our research, and even some of those from one day to the next day will have conflicting headlines, right? "This is the next big stock. This is the worst stock ever." They're talking about the same stock within a few days of each other.

Steve: I'm old enough to remember when the news was really the news, it was meant to inform you. Now it's all about clicks and advertisers and getting people to pay attention to that channel versus this channel, and if you realize that, you realize that they're gonna make a bigger deal out of just about everything, whether it's warranted or not. I mean, that's the bottom line. So, take it with a grain of salt, enjoy life, you know, live for the day. Don't panic over this kind of stuff and generally you're gonna be fine.

Amy: Here's the Allworth advice. Listen, anything can happen in one day in the near term, but over time, those investors who avoid these emotional decisions are highly likely to enjoy financial security, right? To get what you're trying to get when it comes to your money. Coming up next, there's another mistake investors are making that could cost up to 15% of returns. I'll tell you what that is next. You're listening to "Simply Money" presented by Allworth Financial here in 55KRC THE Talk Station.

You are listening to "Simply Money" presented by Allworth Financial. I'm Amy Wagner, along with Steve Sprovach. If you can't listen to our show every night, you do not have to miss a thing. We've got a daily podcast for you, just search "Simply Money." It's right there on the iHeart app or wherever you get your podcast. Coming up at 6:43, we're gonna tell you why it might make sense to divest parts of your portfolio, right? We're talking about don't time the markets, but when does it make sense to sell? We'll get into that. Okay. Happy birthday, Social Security turning 89 years old this month. That's good news, right? I mean, it's...

Steve: No jokes about me remembering when it started, please.

Amy: You remember back in that Great Depression when that started? FDR? You know, 89 years of this program and I think it's really important also to remind people what it was set up for. You know, I mean, this was during the Great Depression to keep people in their later years from living on the streets, only ever set up to replace 40% of your income when you're working, yet what we see far too often is this is 100% of the income for some people in retirement.

Steve: Oh. My dad was one of them. Maybe it was 99%, an extra 100 bucks a month from a pension from one of his companies. But there are a lot of people out there and quite a few of them probably listening who this is their sole source of income, and back when Social Security was started back in the '30s, you had 40 employees, 40 workers paying into the system for every retiree. See, they were smart. They set up the retirement age. It's changed since, but you can start drawing so full Social Security at 65 when it was established. Guess what the age of mortality? The average person in the '30s passed away at 65. Yeah. You know, so they were figuring...

Amy: So, no one was even claiming these benefits.

Steve: A lot people paying into this and nobody's gonna draw it. This is the greatest program in the world.

Amy: It's a brilliant formula when it works.

Steve: Well, you've got two-and-a-half workers working today paying for every retiree. So, the math doesn't work. It'll sort out in the long run because people aren't having as many babies today as they did 30, 40, 50 years ago, but you know what? In the meantime, we got a system that's gonna be insolvent within about 9 or 10 years. This is something a lot of people are worried about and I totally understand why.

Amy: Well, and I would say, hey, I've got people who come in and say, "I don't even put Social Security into my plan." Well, I don't think that's reality. I think you can expect, you know, 70% to 80% of your promised benefit if, if Washington, if Congress doesn't do anything to change this. Now, we think it'll be an 11th hour move, you know, on December 31st of 2033 or whatever that deadline looks like. It's a political hot potato, and we've had several members of Congress on the show in the past. I've asked about it, no one wants to answer this one, because whatever decision they're gonna make, it's gonna make some population of the voters not happy. Yet there are some options on the table, and I really hope that in 2033, 2034, we're not talking about the fact that people are actually gonna have to take a reduced benefit.

Steve: No, it's gonna be a tough pill to swallow when they fix it because the only way you're gonna fix it is pay out less and take in more. You know, that's the bottom line and, you know, being a Social Security recipient at this stage in my life, I'm paying attention to it, but I know the equation has to change for the program to stay solvent, so stay tuned.

Amy: Let's talk about that for a second though because we often say, "Hey, if you wait until you're 70 to claim or full retirement age, you're gonna get 7%, 8% more guaranteed every year." Where else can you get that? Yet you're telling me you already claimed.

Steve: I did, and full retirement age is at 67. All that means is, well, it really allows you to make more money if you decide to work in retirement without seeing a reduction in benefits. You've basically got from 62 to 67, about a 6% per year increase and then an 8% per year increase from 67 to 70. So, the longer you wait, the more you're gonna collect. Here's the asterisk though, if you live past a certain age. And when I used to do financial plans, we ran them out to age 95, and I could show in black and white, all these different scenarios of, you know what, you're gonna draw $300,000, $280,000, whatever the number is more out of Social Security if you wait until you're 70, if you live to be 95, and that's the big question.

I'm more worried about my insolvency than the insolvency of the system. So, I started drawing at 62 with my health concerns and just paying the bills and that sort of thing. I'm willing to take that bet of, am I gonna be here at age 95 and draw that extra money out of Social Security? Other people are saying, "I'm gonna wait until 70 because the math works out that way." Almost everybody, and it might be everybody that I ever told that they'll have more money and they're gonna wait until age 70 to draw it change their mind and started drawing it sooner, because health concern comes up, they're tired of spending their own money from their investment accounts that they worked hard for, and they just want to pull money out of the system for whatever reason.

Amy: Yeah. I mean, I think for that perspective, we talk about the fact that you get the most out of the system when you're 70. Was just talking to a woman a couple of weeks ago and she had just turned 70 and had just started drawing, and I was saying, "Gosh, we talk about this, but it's incredibly rare...

Steve: She's the rare person. Yeah.

Amy: ...that someone does that," and she's a professor at Miami and still teaching and that's why that made sense to her. So, just a lot to think through when you think through Social Security. You know, we talk about the fact that our primary job is to keep people from making financial mistakes, mistakes with your money that you just can't recover from, and here's one that we've seen that's costing investors big time.

Steve: Yeah, good point. I mean, the average investor misses out on about 15% of the annual returns of mutual funds. That's according to a Morningstar report. I trust Morningstar. Morningstar is an awesome resource to use. I hope a lot of people use it, and the reason people are missing out is they're moving money in and out of their mutual funds. And, you know, we just got done talking about don't time the market. If there's a bad day, it doesn't necessarily mean you should do something about it. But there's a certain percentage of people that do, and investors being investors, they generally do it at the wrong time.

Amy: You know, I think one of the funniest conversations to have is with an investor who's like, well, you're telling me the S&P 500 is up, whatever, 12% this year. My portfolio isn't up 12%. Oh, well, you got out of the market, you got back in, you got out of the market, you got back in. It's up 12% for those who put their money in and stayed, and that isn't something that you did, and I really appreciate this research that shows in hardcore numbers that you are missing out. You're getting behind where you could have been by messing with those investments.

Steve: Yeah. And if you haven't, if you're a do-it-yourselfer, good for you, use Morningstar. I mean, this is an unpaid opinion. But Morningstar, they show returns after fees and returns versus peers. Great resource for telling you what the actual returns have been on your mutual funds.

Amy: Here's the Allworth advice. The fundamentals of investing, they're really quite simple, don't make things overly complicated. Coming up next, we're talking about a red flag that many hiring managers notice has nothing to do with your resume. 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. Okay. If you are looking for a job, or more specifically maybe your children or grandchildren are looking for a job, what is a hiring manager looking for? Here's a hint. They're not looking for someone who's doing that initial Zoom interview from their bed. This is actually a thing. Joining us tonight, Julie Bauke. Of course, "Julie on the Job." Julie, you're joking, right? I mean, people are actually doing job interviews from their beds.

Julie: No. You know, nobody's surprised to know that we have gotten way casual over the last few years. But I think in that going more casual, many of us lost our common sense around what's appropriate. And, you know, I mean, I think I remember like the beginning of COVID, I would make sure my hair looked great and I had on a nice blouse and makeup, and that definitely slid during that two years. And then on top of that, we have the younger generation who are out there interviewing for these jobs, and they never really had to be in a professional environment, even in an internship. And so they're treating it like any other conversation with the guy behind the counter at Starbucks, and it's just not going over well.

Amy: Okay. So, what are hiring managers actually looking for? Regardless of the age group of whoever's doing the interview, what do we need to keep in mind?

Julie: So, let's break down what an interview is at its core. It is, I am seeing whether...I'm a hiring manager, I have a need, I have an opening, I have a need to fill, and I am seeing whether you are gonna be a good fit for that. You, the job seeker, should be trying to figure out whether this is a place in which you can succeed. And so the goal...and you want to work. And so the goal on both sides is fit. Is this going to be a good fit? Can this person do the job? Will they fit in here? And so an interview should be an opportunity to put your best foot forward, and then at the end of the interview decide, both parties decide, is this worth having another conversation about, or another conversation? And both may say yes, both may say no.

But you always wanna keep yourself in a position so that if at the end of the interview you're like, "Yeah, I really like this," you've put your best self out there so that you can continue on. But if you start off by being like, "Oh, I'm sorry. I forgot we had this call," or, you know, it looks like you're doing 12 other things, or you aren't at least interested, you aren't at least acting like you're interested. You shouldn't be jumping up and down, but let's at least act like you're interested, then you may not get that chance for a second interview. So, you wanna go into it with curiosity, with self-knowledge, with ability, and with the ability to answer key questions and act like you're at least interested in learning more about the job, and then if what you learn isn't a fit, it's okay to back out at that point.

Amy: So you said, you know, if you leave this call and you know you're interested and wanna have hopefully moved to the next stage, if there was kind of a mental checklist that you would say, "Okay, I did all of these things, so hopefully this went well," what does that checklist look like?

Julie: The first thing is...So first of all, there's a lot of Zoom interviews going on now. And so whether it's Zoom or let's say it's a virtual call, whether it's an interview, whether it's Zoom or a phone call, you know, have you studied the job description or the listing? Do you understand what they're looking for? Have you gone through the process of figuring out which of your skills are the best fit for what they're looking for? Do you have all of your devices turned off? Is your background noise turned off? You know, do you do a check before they come on camera? Are we looking good? Do we look like we wanna be here? Do we have our laundry in the background? No. Good. Put it away. You know, so there's the physical stuff. There's the, "How am I going to show up in this 20, 30-minute call," or whatever it is and then there's the, "Am I ready to talk about myself, and am I ready to put my best foot forward in matching up what it is they're looking for with what am I doing?"

And so you wanna give yourself every possible opportunity to have them say yes to you. And so there's the physical readiness, and then there's just the plain old, "Am I ready to answer the core questions?" Tell me about yourself. Why are you interested in this job? What are you looking to do next? What are your strengths and weaknesses? Some of those core interview questions that you can say with confidence, they're gonna come up at least once during this call. And so treat everything like it's something you really, really, really want. Treat everything, every interview like it's an interview for your dream job until you learn differently.

Amy: You're listening to "Simply Money" presented by Allworth Financial. We are joined by Julie Bauke, "Julie on the Job," tonight with some great tips. If you are looking for a job, your children, your grandchildren, times have changed. I mean, it seems, you know, 10 years ago, could you have even imagined doing an initial phone call or interview? I mean, everything happened in person. Now it's almost rare than unless this goes five rounds that you ever even see someone in person. And so how does that change things, Julie?

Julie: So, think about a funnel, okay? So, if there's this funnel and there's 100 people that have applied for a job, there will be some sort of screening process, and it could be using AI to get it down to a smaller note. And then someone else, or some other system will try to get it down to a manageable number. And let's say you decide, you know what, let's find our top 3 candidates out of this 100. We'll bring them in for an interview. We'll fly them in. We'll do a panel interview. You know, we'll take this more seriously. The goal is...and so it's you have to be adept at moving from, you know, talking on the phone to talking to someone on Zoom, to talking to one person, to talking to three people, to doing three consecutive interviews.

And so you have to build that confidence that says, "I can carry this all the way through from that first screening interview down to now they want me to come downtown for a three-hour interview." And so there has to be consistency. And so if you show up really well and really on top of things from the beginning and carry that all the way through when you walk in the door and shake someone's hand and start to really get serious about whether it's a match or not, you have to make sure that you are consistent, you have to make sure that you are showing up in a way that really reflects who you are, and you have to answer questions in a way that you're not faking it.

I've seen people try to be something they're not because they were so desperate for a job, and I truly understand the sentiment there, but you won't be happy and you'll be looking again soon. And so that consistency from when you enter the process until you're no longer in the process, either your decision or their decision is key. You have to be ready from the first conversation, because if you learn, "Oh, my gosh, this is a really great job," you don't wanna have to go, "Yeah, you know that me in my pajamas? That really wasn't me. I really look like this." So, begin every conversation with, "This could really be the job and the career I want."

Amy: And I've heard some buzzwords around, hey, really get your why. Start with your why. If you can get that across in an interview, you're gonna be really well off. What do we mean by saying, "Hey, can you get your why out there to that hiring manager?"

Julie: The way I would break that down to make it more doable is, why do you want this job? Why do you want this career? Why do you wanna work for this company? Why did you apply? Because when you talk about employers want to see enthusiasm from you, at least to learn more about the job. If you are just doing it just to check a box, you aren't going to show up in a way that you can be proud of. And so, before you apply, or before you have a first interview with any company, I'd ask myself, "Why am I applying for this job? Well, I just need a job." Well, that's not good enough.

So, what is it about this job that's a good match for who I am and what I want? Why this company? What have you learned about the company that you like? How does it fit for you? Why does this particular job...why are you going to, honestly, be a good hire for us at this company? So, I think there's more than one why, but you have to know before you even get into the interview process, "Why am I showing up here?" Because nobody wants their time wasted, and if you show up just like, "Because my mom told me I had to," then that comes across, and in the middle of the interview you might be like, "Well, this sounds like kind of a cool job." It's hard to turn the sinking ship around at that point.

Amy: Yeah. Too late. Okay. So, I like this. Let's just start with bare basics. Don't show up in your pajamas and don't show up in your bed. Great tips though well beyond that from Julie Bauke, "Julie on the Job," about how to stand out during the hiring process. 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 Sprovach. Do you have a financial question keeping you up at night? You and your spouse not on the same page about things? 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, keeping your college-aged kids from racking up credit cards debt. I dropped mine off at college last week.

Steve: Oh, boy. This is hitting home for you.

Amy: All of this is hitting home, so pay very, very close attention to this next segment. But, you know, we spend every show talking about investing. One thing that we don't often talk about...We talk about, you know, when it makes sense to buy, right? When markets are down, it makes sense to buy. Most of the time we would say, "Hey, you don't touch the things in your portfolio." But let's talk about divesting, right, when it makes sense to sell things.

Steve: Well, everybody, you know, they have a plan on buying, but do you buy something saying to yourself, "When this happens, I'm gonna sell?" Almost nobody. Almost nobody, so the selling part of it becomes an emotional knee jerk, "Something happened, I want to sell," decision and that's not the way you should do it, but there are times when you want to divest, when you do want to sell, and I think one of those is once a year, go in and rebalance your account, at least check it.

Amy: We're talking about this, why this is so important, because you're taking on more risk if you've got that exposure to the stock market more than you had anticipated.

Steve: I'll give you an example. Most people don't realize that 32% of the Standard and Poor's 500 are technology stocks, 32%. So, if you go out and buy some Apple, you just bumped it up even higher, you know? I mean, you've really gotta pay attention to not just how much is in stocks, and if you started out 60% stock and had a good couple of years, you might be 75% stock without realizing it. That happens basically to everybody over time, but you can also, with a couple of purchases, especially in tech, you can get too heavy in one sector, and these are good reasons to take a hard look at, "Do I need to sell a portion of that investment and move it into," if I'm using tech as an example, "a non-tech investment?" But be careful because if this is a taxable account, when you sell if you've got a profit, guess what enters the picture? All of a sudden you've gotta watch what your gains are that year.

Amy: Yeah. Speaking of gains, one thing that also makes sense is tax strategies, right?

Steve: Sure.

Amy: Tax loss harvesting.

Steve: Take tax losses when they're there.

Amy: Yeah. So, yeah. So, you're pulling back from those gains, harvesting those losses, and that means you're gonna owe less than your taxes. And I think, you know, for many people, this is the missing component when it comes to retirement, when it comes to investing, when you think about taxes, you think about tax preparation for April 15th, but this is where you can really make a difference by keeping more money in your pocket using strategies like this. One thing is you can adjust your investment strategy. I feel like though if you've got an investment strategy, unless you haven't revisited it for 20 years, this is not something that I say, "Hey, quarterly, look at this and move things around." That's not what I'm advocating for here.

Steve: Well, the only good thing that comes out of a really cruddy stock market, just a big old downturn, is it gives you a chance to take some losses. And people, you know, their knee jerk is to say, "Why do I wanna lose? I made that investment to make money." Well, you know what? Something that goes down generally usually, especially if it's a mutual fund, comes back at some point. So, why not catch it on the downturn, sell it, put that money in a similar type of investment and watch the 30-day rule. There's lots of tax considerations, so talk to your accountant before you do this, but you know what? You can take some losses and move it into a similar type of investment and then buy back your original investment at some point so that you do make money on it. Again, be real cautious about taking tax losses and talk to your accountant first.

Amy: You know, another reason to sell is that, you know, whatever you're invested in that particular company does not align with your beliefs. I think about years ago, a woman I came across, you know, broadly invested in the S&P 500, several indexes, and then she came to us and said, "I really don't want to invest in companies that produce tobacco. I don't want it out there. I don't love this." And so we found a strategy where she could pull back from those positions, and you can do that in investing, right? You can feel really strongly about certain companies being good and certain companies that aren't aligning with things, you know, figure that out for yourself or work with a professional who can help you figure out, "Okay. Here's some other good strong U.S. companies and if you feel really strongly about this, you don't have to." I'm gonna throw out another one too, that's if a company is fundamentally not looking very sound.

Steve: Well, that's a good reason that you might wanna consider, "Do I wanna own a dog?" You know, companies that had every reason in the world for you to buy them at some point may not turn out to be a winner, and if it looks like they don't have any long-term positives about them, even though it stinks, everybody hates losing, but you know what? Sometimes you need to. How about time horizon? Okay? Has your time horizon changed? Okay? Well, I'm in retirement right now. Is my risk tolerance gonna change? Yeah, at some point, not yet, you know? But I don't like the argument of your time horizon is based on your retirement date, and that's when I want to move out of stocks and live off the interest. Retirement is not the end of life, you know?

Amy: Yeah. You gotta keep looking toward the future.

Steve: Yeah. Exactly.

Amy: Here's the Allworth advice. When deciding whether to divest, same concept applies, don't make any decisions based on fear or greed. Coming up next, helpful info for parents who just dropped their kids off at college. 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 Sprovach. Okay. First of all, for those parents who dropped their kids off at college, or maybe they're living at home and they're in the middle of classes right now, I just wanna say my heart hurts for you. This whole letting your kids grow, you know, just like, take off, you know, it's a lot. Today's one of the first days I haven't shed any tears yet. [crosstalk 00:36:20.896]

Steve: Yeah. I was gonna ask you, because you just dropped Grace off at college.

Amy: I know. I know. I don't love it. I don't love it. I mean, I get that this is very exciting and this is all this new freedom that they have, and that also makes me nervous, and I think about when I first went off to college, and I was on UK's campus and there were all these tents set up all over the place, free t-shirts, free water bottles. All you had to do was sign up for credit cards. They have dialed back on that a lot, but there are still a lot of kids going off to college with credit cards and here's my question for you, have you had the Gary Wagner conversation with your kids? Literally, the one thing that my dad said to me scared me to death before I went off to college was, "Here is a credit card. It is for emergencies and whatever you put on there, you have to be able to pay off every month. Don't ever, ever, ever carry a balance." To this day, I have never carried a balance.

Steve: I wish my dad had that conversation with me. I'm not sure it would've meant anything. I was perfectly capable of maxing out my Visa all by myself. I didn't need to give it to my kid going away to college to help me. Okay. My question for you, did you give Grace a credit card?

Amy: She doesn't have one yet.

Steve: Really?

Amy: They're more difficult to qualify for now based on your income. She does have a debit card and the Venmo and the Apple Pay and all the things that kids have now. But I gotta stay, over the past couple of years, I've really seen her become really mature and a lot more responsible about her money. So, I wouldn't have an issue with it if she did have a credit card, and at some point we'll probably make her an authorized user on ours to build up her credit, but I don't think as a freshman she needs that. And that's what the stats bear out, 25% of college students have credit card debt exceeding $1000, you know?

Steve: And they have no way of paying that back. Yeah.

Amy: How the heck are they gonna pay that off? Yes, absolutely.

Steve: Yeah. Waiting tables and...I doubt that, you know? So, it's hard to do. Please be cautious with your kids and credit cards when they're in college. I would encourage separate savings accounts. I mean, just, if you need to save up for something, you do it in a savings account over time instead of a credit card.

Amy: Please have these conversations with your kids while they're still in high school, right? Before they take off an hour away, three hours away, or even if they're going to Xavier or NKU or UC and they're living at home, you don't exactly have insight into all of their finances, so make sure that they have the tools they need. Thank you for listening tonight. We hope you're gonna tune in tomorrow. We're talking about strategies that you can use to reduce your financial stress. You've been listening to "Simply Money" presented by Allworth Financial here in 55KRC THE Talk Station.