Chris Payne, Warren Buffet, BOB discussed on No Payne, No Gain
Each week. We dissect a real financial plan and uncover the floors or we call pain points. Our listeners can avoid the same mistakes that they're planning investing. And Chris. You worked with a woman recently. Why do you break down how you helped her get on her path to financial independence. So right. We always talk about diversification in our portfolio, and I really think that's like an overused term in our industry. But seldom do we really explain What diversification is, and I think that the general consensus is having your money and a lot of different places. You know, I think that's the first thing. But you know, the second part of the two is also having diversification in your returns. So I think most of you out there perceive your returns. As what you're getting from the growth of the market, right? You buy something for $5 you sell it for 10. Your growth is $5. But the truth is, is that over time, your return should come from two places the growth in the market. It also interesting dividends. And that's the case here. Not only did this person lack diversification in their portfolio, but most of their return was really only coming from one place right in just a question here, Chris why did they decided this point? Cause it looks like the very aggressive portfolio. What was the catalyst to say? Hey, I need to sit down for a financial planner and really figure out what I'm doing with my money. Well, you know what, right to use the nautical analogy because, as you all know, I'm an avid sailor if they were essentially lost it, see They don't know where they stood. They didn't know where they were in terms of do I have enough savings, You know, is this enough to get me through retirement? You know, Am I making the right decisions now? Because this is a couple that's in the early fifties. So You know, it's become more more and more critical for them to really figure that out Chris former some of the gaps in their strategy, and you're planning some of the things that they missed that we're probably obvious to you. Well, the majority the money was in was in there for one case, and they were invested in over a million dollars in a 41 K and they're investing a target fund. Which I think it's fine. You know when you have, you know, 30 $40,000, But you know when you're talking about millions of dollars, the problem is just like any other index. It starts to get more heavily weighted with the things that have done well, so What that came down to is that they had most their money concentrated one area of the market. And like most of you out there, that's large cap growth stocks. That's right, because you hear the old saying just on the S and P 500, you're gonna be fine. Just on that s and P 500, you know, you'll be able to get to retirement. But the truth is, it's just one place to put your money, And sometimes it does do great. Other times. It does pretty lousy. You can't afford for all your money at one point to be doing lousy during retirement because you need to draw from that portfolio. It sounds like you're walking a tightrope here. Chris. Looks like you know, you have to basically have two goals, right? You want to accumulate wealth? Then you also wanna maintain that wealth. Right? So if you want to create wealth, you concentrate. If you want to maintain your wealth, you spread it around And you diversify Is that what I hear is saying, Yeah, exactly that. I really do like your type rope analogy because I think a lot of people do walk that tightrope in terms of the amount of risk that they take. It's like You could get across the river. But do you want to take the tight rope, which may get you there faster, but much more risky, or you want to take the beautiful bridge that's been engineered for hundreds of years. That's a lot safer and more of a sure thing. Yes, I always saw you as a bridge builder. But any it comes down to Chris. You and I had talked to actually a client of ours recently. It's like a lot that you can afford for the market to go up and up and up. You can afford to go up 100% on your portfolio, and that's great. But I bet it doesn't change your lifestyle. You probably have a certain lifestyle that you want to keep. But you're not looking to change it on the other side of the equation, though, if you were to lose 50 60% of your portfolio that can have a negative impact on the lifestyle that you enjoy. Right now. It's just the risk reward of taking the right amount of risk in your portfolio. But not more, even if the gains could be better, because if you lose that money You're out of luck and just to go back to analogy used earlier today by the famous Warren Buffet where, he said, You know, it's really when the tide goes out that you get to see who's swimming naked and when it comes to your portfolio, you really don't want to be swimming naked because the bottom line is you don't have to. If you're thinking to yourself right now, like I don't wanna swim naked. I don't know what risk I'm taking in my portfolio. I need to build a portfolio that's based on my goals for retirement because I want to keep my lifestyle intact for our time and Well, here's your shot to do it. We literally have two slots left. If you have over $500,000 safe retirement myself. Bob and Chris Payne will run for You are now famous Total financial master plan and we'll do that with no obligation or cost..