Announcer:
It’s time now on KROS for financial focus brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Register representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA, S I P C investment advisor, representative Cambridge Investment Research Advisors Incorporated a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s financial focus program.
Nate Kreinbrink:
Good morning. And welcome to this week’s financial focus brought to you each and every Wednesday morning right here on KROS. Well this is Nate and I got James joining me today, day before Thanksgiving. I know for my household, kids are home. It feels like it’s a circus and a break for them.
James Nelson:
Yeah, mine too. Fun time of the year though. You know, we got football, you got a big game this Saturday with your Buckeyes.
Nate Kreinbrink:
A big rivalry game.
James Nelson:
So yeah, plenty of football coming up. It’s fun time of year.
Nate Kreinbrink:
It is a fun time of year and again, I always look at the calendar and it’s hard to believe that we’re almost switching over, end of November already. Next week we get to December Christmas programs, Christmas, all that kind of stuff. Then you’re into that. And all of a sudden, where did the year go again?
James Nelson:
Yeah, exactly. They go fast.
Nate Kreinbrink:
They definitely go faster, like I always tell my kids, they get older, I get younger. I don’t know how it works, but that’s what I believe. So the topic for today, I know we had Andy on last week, NelsonCorp tax solutions. We kind of went over some of the child tax credits, what they need to be looking at for the end of the year. Make sure you take your RMB’s by the end of the year. A lot of that type of stuff. Again, James and I were kind of talking yesterday as far as what we were going to, kind of go over today and again, market updates and where the volatility is. And some of the headlines that continue to pop up, I think, was warranted as far as to kind of address today. Bond markets and where those are going is another thing that continues to keep coming up. And I think it’s important for people to understand what’s going on and, what that really concerns them for.
James Nelson:
Yeah. I mean, we’re getting towards the end of the year, so we can talk about, what the markets done this year and, it’s been pretty good. I mean, pretty smooth sailing most of the year. September was a little bit of a, down month wasn’t, great stretch through September, but all in all, volatility’s been fairly low and in markets continue to climb higher somehow. We’re going on 12 to 13 years of this bull market. People always ask how long can it continue? Who knows? I mean, a lot of this government intervention the last several years, has certainly kept things moving along and kept markets cooperating, but we all know that doesn’t go forever. So again, it just comes back to what we always talk about on the program here is knowing what you own and whether that’s in an IRA, a 401k, whatever the case may be knowing what positions you have and knowing, what conditions are conducive with those positions is certainly key.
James Nelson:
We’re in a strange period of time where we’ve got markets at all time highs, and we’ve got a bond market basically at all time lows. So we all know that interest rates are down great time to be refinancing the house or, really financing anything with the interest rate environment where it’s at, but not so great on the yields. As far as those bonds, they’re also impacted by interest rates. So, a few years ago we had bonds paying three and 4% and that’s come down to one or 2%. So it just kind of depends what side of things you’re on and again, knowing what you own and what environment is going to impact your investments.
Nate Kreinbrink:
Right. And I think you’ve mentioned it as far as knowing what you own. And I think the misconception that we get a lot of times with people, that all stocks are, or all funds are, are equal. And there’re different sectors, there’re different spaces that you may want to have exposure to in different parts of time. Last year was a prime example with the technology sector, kind of really leading the way that changes. It’s always kind of a cyclical cycle as far as which sector is doing well. So again, it’s understanding what you own.
Nate Kreinbrink:
There’re certain things you want to be invested in. There’re certain things, maybe not so good at the moment, but maybe something you look at going forward. And I think that’s the misconception that, people really want to to look at and again, know what you own. And we look at it now I mean, with oil and some of the decisions and the prices at the pump that people are seeing now. Inflation at the grocery store, with what they’re saying for, heating, for energy, for all those type of things, it’s something that people really want to be cognizant of, and know exactly what it is, what they own.
James Nelson:
Yeah, exactly. And oil is another one where it kind of cuts both ways. We all cringe when we go to the gas station, but from an investment standpoint, it’s been pretty good. I mean, if you’ve owned any commodities this year, you’ve done really, really well, specifically energy those positions are up huge. We talk a lot about size, style and region too. You know, what size company is it? Large, small, mid-caps, what’s the size company? Is it style? Is it growth? Is it value? Nate just mentioned, the growth boom that we saw with the tech companies doing extremely well. Now values kind of coming back into play. A lot of the value companies have had a nice stretch here recently, and then region. Do we own domestic stocks, do we own foreign stocks? Do we own emerging markets?
James Nelson:
Where are we owning these positions? And, it really makes a difference too as far as what type of [inaudible 00:06:03] makes it in owning the right investments and the right accounts can make a big difference from a tax perspective, too. We spend a lot of time talking about the differences between mutual funds, which most people have inside their 401k plans or any retirement plans. Mutual funds are predominantly the option versus ETS, which are a little bit, similar to mutual funds but a little bit more tax efficient for those non-retirement accounts that can make a lot of sense. So all of this stuff is part of a broad conversation, knowing what you own and where you own it are very important.
Nate Kreinbrink:
Right. And I think we see it a lot of times with people, especially when people do it themselves with their 401k plans or whatever they’ve essentially, and we’ve kind of go over it with them is they’ve been overpaid over the last 10 years, right. They’ve been invested, they’ve done really well probably for the most part. What we want to look at with them is, okay, when is the end game? Okay? When is enough, enough? And what is your plan for when things start getting a little bit rocky to not give everything that you’ve just earned, give it all back. And that’s where people be like, well, I don’t really have one. I’m just going to write it out. And that’s where it gets scary. Especially with people, the closer they get to retirement, they’ve done really well, they’ve had some nice returns inside of their account, but what are you going to do to not give them back?
Nate Kreinbrink:
And that’s where people really get into that moment where they’re like, I don’t know. And, and it gets scary. And especially in the market that we’re in the volatility, that’s kind of out there that we’re seeing and going to probably continue going forward. We want to really make sure that we have some guardrails and we have some protection around those accounts. To, again, you have all that volatility the closer you get to retirement, either one, you’re going to go into retirement with a little less money than what you thought you were, or two, you’re going to have to work longer. Either one of those outcomes is not ideal for the client when they get to that point.
James Nelson:
Right.
Nate Kreinbrink:
So we want to make sure that we protect those assets as much as possible.
James Nelson:
Yeah, absolutely. And, and I think that gets ignored, and especially when somebody’s getting close to retirement and they know that they’re going to start drawing income off their lump sum of money, let’s say 401k account, you can’t take the big hit. You can’t take the 30 or 40% hit while you’re taking money out. You know, maybe you were able to stomach it and do it while you were working and still putting money away. But when those contributions stop and now you’re actually pulling money out of those accounts, you can’t take those big swings in the market or that just spells trouble. I mean, there’s a lot of, sizable accounts that kind of blew up when people are taking money out in a down environment. That’s a really, really bad scenario. And like you said, Nate, nobody likes pushing those retirement dates back. So, preservation and protection when you’re getting towards that, stage is vitally important.
Nate Kreinbrink:
Well, and I think too, the volatility is nothing new. The volatility has been there the whole time they’ve been putting money into their 401k. It was just kind of muted a little bit because they were putting contributions into their account. So if they had a little bit of a downturn in their account, it was kind of muted a little bit because they were putting money in, the company was potentially matching something going into there. And they probably didn’t pay attention to it as much as what they did when they’re getting closer to retirement. And they’re looking at that almost daily trying to see what it is and what they can pull out of there. So again, it’s nothing new, it’s just understanding and as you mentioned, you’re taking money out, that volatility and those downturns have such a huge impact on your account that you want to make sure that you manage throughout it.
James Nelson:
Yeah. And that really comes back to just a coordinated approach, whether it’s, not just we’re talking investments today, but how does the investment fit with the social security and the tax planning and all of these things really fit together in a coordinated approach really can make a lot of sense. So we spend and a lot of time talking about financial planning in general. And I know that, it is a general term and people kind of brush it off maybe sometimes, but when you, pull the pieces together and you see the final product, it really does create a better outcome for everybody.
Nate Kreinbrink:
All good stuff. But again, as we get going and I always joke with Andy, we start talking taxes with him and then time just flies by, we start getting into concepts with this. Our program’s ending. Just want to mention though that every Friday NelsonCorp Wealth Management is “Wearing Jeans for Charity.” Money raised in the month of November will be donated to the United Way of Clinton County. As always James, I appreciate you joining me. Want to wish everybody a very happy Thanksgiving break. Enjoy the time with friends and family. Appreciate it. And, enjoy the heck out of it.
James Nelson:
Yeah. Happy Thanksgiving everybody.
Nate Kreinbrink:
Again, Nate and James with NelsonCorp Wealth Management, bringing you this week’s financial focus. Thanks again for tuning in and have a great rest of your week.
Announcer:
Financial focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representatives securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINRA, S I P C, investment advisor, representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information visit our website at, www.nelsoncorp.com