5 Strategies for Investing During Uncertain Times Video from Savant Wealth Management

Download our complimentary guide books, checklists, and other useful financial resources at savantwealth.com/guides. Hello and welcome to today’s webinar. Our subject matter today is five strategies for investing during uncertain times. Seems like it’s always uncertain times or has the potential but these days you may be feeling that it’s particularly uncertain. There’s a lot going on in the world, a lot of headline concerns certainly foremost for many of us would be wars happening around the world which has the following implication of prices and what we pay at the gas pump. So, we’re going to delve into that today. Hey, my name is Rob Morrison. I’m the chief experience officer at Savant. I’ve been a financial adviser for 25 years. I’m going to be joined by a longtime colleague and friend Ed Cruickshank here momentarily. But just to frame what we’re up to today, we’re going to talk about, you know, the potential that we could see for some volatility. Markets as you know have actually drifted upwards nicely at least in stocks this year but I think that’s why this is the best time to be having this conversation is we’ve actually had good gains not only over this year but over the last couple of years and yet we have some concerns and if you have concerns you know those are legitimate there are real things happening both abroad and at home that give us all pause you know on a day-to-day basis. So, we’ve been through this many, many times. It’s part of the challenge of being a successful investor is navigating markets that have the potential to go down, go sideways. We just don’t know from year to year how those are going to play out. We certainly are informed by past years like 2008 2020, the COVID year u had a massive impact on markets. 2022 big inflation. So, again, no better time to do what we would have called historically lifeboat drills than you know when we’re actually up a little bit and we can revisit some of what we’re doing and why. So, excited to delve into that. Our agenda today we’re going to cover these five key things we think are important. You know what’s important about fundamentals. Always good to remind yourself around that. You know what does the historical research and data tell us is so key and how can we use that to make better decisions. How do we capitalize on what’s happening should things go in different directions. The importance of kind of pulling back and looking at things more holistically and tying all of these pieces together and then ultimately how do you apply this in your investment portfolio and then we’ll leave some time at the end hopefully for some of your questions invite you to click at the bottom of your screen if you have a question put that in the chat and Ed and I’ll work to get to that as best we can. So, with that I want to introduce my colleague Ed Cruickshank. He’s a senior financial adviser in our Lincolnshire, Illinois office. Ed, we’ve been through this a number of times. Certainly not uncommon at any moment for us to face a laundry list of things to be concerned about. So, welcome to the conversation. Thank you. Thank you, Rob. And yeah, the first section here is really as you’re looking at invest the title of this our webinar here is investing in uncertain times. And what does that mean? Are you look to change your investment strategy? Are you unsure how to implement and manage your portfolio? And the first real step we believe is taking a step back when you look at that and look at the fundamentals and you know when you look at the fundamentals before we get into some more specific data you know do you have a set of core investment beliefs okay reflect on that how what’s important to you how do you manage your portfolio what are your core beliefs at Savant you know we really believe that the financial plan is the driver of the investments strategy and the investment portfolio should serve the plan and not vice versa. Asset allocation is the most important decision that you can make. Markets are very efficient. You should as I always say use view the market as an ally to capture their returns and not an adversary that you’re trying to outthink it and outguess it. Risk and return are related. Diversification is critical. Expenses matter and then rebalancing can reduce risk and increase your return. So, we look at the first slide here. This is one of our favorites that we use. You know volatility is a normal thing and when you hear the word volatility most people have a negative connotation of that like volatility means down only. Well volatility just assuredly can be to the upside as well. But what we try tend to forget is the actual typical year in and year out level of volatility that exists in the market. We tend to forget how volatile it is year-to-ear. This goes back to the late 70s where it really shows in any given calendar year on average the pullback in any during any given year is almost 15%. If you look at the color charts here, the teal is where the market finished up. The market meaning the Russell 3000 in this case, it finished up where it’s green and the burgundy or red is where it finished down for that calendar year. But if you look at the high and low bands surrounding those bars, that’s what the market had either the highest point it reached in any given year or the lowest point it reached in any given year. So, you can see year in and year out how truly volatile the market is. And I think we tend to forget that. You know we’ve had some volatility early this year but it didn’t approach more than 10 or 12% to the downside which is actually below the historical average. It may not feel like that at the time though. When you’re addressing the question of should you change your asset allocation or how do I implement and manage my portfolio during uncertain times. There’s some reasons there’s some good reasons you should and there’s some reasons that you shouldn’t and you should be aware of that and be self-aware of why you’re making the decisions. Has your time horizon changed? Has your lifestyle changed? Has your risk tolerance changed? Like, did you think you could take a certain allocation and now we’re in a pullback market and it turns out that you can’t really live with that allocation?, are you letting your emotions drive your decisions? Are you trying to time the market in and out, when to get in, when to get out? These are all types of decisions that might cause you to revisit your investment allocation. Some good, some not so good, I would argue. Really the dominant determinant and the driver of your portfolio experience aside from your own behavior I would say is your asset allocation. What is your true split of stocks to bonds or cash? So, what type of risk and return are you aiming for to make your plan work and to reach all your goals? This is really the dominant driver of your return. It’s not when to get in, when to get out of the market, or wait, this manager did well last year, I’m going to put my money in with him this year. So, manager selection, market timing, trying to time with geopolitical or political news, all of that is very small part of your return where really your true asset allocation is the dominant driver of your total portfolio return. So, be aware of that. It’s a good call out. This is what I call the no free lunch chart. This is the efficient frontier which tracks from the least aggressive portfolio with the lowest expected return all the way up to a portfolio with more risk and a higher expected rate of return. We all want a portfolio allocation that has a very high return with extremely low risk. That just does not exist. Okay. And so doing sometimes people you see where the it says inefficient portfolio in the bottom right by people making decisions when to get in or out of the market or trying to speculate or overconcentrate in a certain area. You can actually create an inefficient portfolio that’s taking on a lot of risk and actually not optimizing your rate of return. So, understand that risk and return are related that cannot be delin and there is no free lunch and the best portfolio allocation for you is one that’s tied to your plan but it’s also one that you will not deviate from in good times and in bad. This is the same frontier just blown out in a little more detail to show the types of allocations we have at Savant. Depending on your goals and your needs. How much risk do you need to take to reach your goals? How much return do you need? And I would say that in general most of our folks in retirement are between 50 to 70 in their allocation. What that means is 50 to 70% of equity allocation. Very few people have are in a what I’d say diversified 20. So, extremely conservative, very low risk, low return, but again also very few people out at the far right end where it’s 100% most aggressive, higher expected rate of return. The next chart here touches on what I spoke to earlier about market timing. So, this shows the danger of getting out as markets pull back and waiting to things calm down to get back in. This specifically is a chart from Morning Star that shows what if you got out when the market pulled down 5% and then got back in after the market had rebounded 3% to the upside. And if you did that over and over again rather than just staying diversified, you can see the large spread of return and really what you’re costing yourself and your portfolio and your financial plan over the long run. So, market timing very difficult to do. You have to be right two times, when to get out and when to get back in. And then you have to repeat that process over and over again. This is another chart that’s pretty well known. It’s one that Rob and I have used for many, many years, but it shows that the difference of just missing a handful of days of not being in the market and not sticking to your plan can really erode your long-term rate of return. And you can see just growth of a thousand dollars over the last, you know, 35 years. What missing a handful of days can do to your overall investment experience. It’s you may it may not feel like at the time if you may think you’re making the decision when to get out of the market based on facts and current events and that type of thing, but it truly is an emotional decision, especially when to get back in. How are you going to know when to get back in? The odds are you’re going to miss some very good days while you’re sitting on the sidelines.

This is another chart that really explains why we don’t believe that trying to pick and speculate on individual stocks or a handful of stocks makes much sense with your serious retirement money. This shows these are professional money managers. This is from morning star data that show really the failure of active management from an equity standpoint very difficult to beat the market on an ongoing basis I mean year in year out the data shows that about two thirds of professional money managers fail to beat their index and that just exacerbates over time. So, again, not something you should do with your long-term money. Not something you should do, and maybe this helps you focus on as you’re reassessing your investment priorities and you’re looking at how to invest your money in uncertain times. We don’t believe that picking stocks individually is a smart way to manage your long-term serious money.

Great. Great summary there, Ed. I think as you were going through that it occurred to me you know somebody might look at that chart on efficient frontier and say what is an why would somebody pick an inefficient portfolio really that what you’re going through in terms of market timing is the example those two tie together that you know we make these incremental short-term decisions sometimes let’s say to go to cash with a portion of the portfolio that in and of itself is a riskier call because as you said you have to be right twice reminds me the old saying, you know, that you know, your portfolios could be thought of as similar to a bar of soap. You know, the more you touch it and handle it, the smaller it gets over time. That’s right. One of our favorite analogies. Yeah. So, lot of great insights there. And based on really robust, deep historical study of how markets work. So, I want to dive in next to what the historical data tells us about how markets actually do work. You know, they say history doesn’t repeat itself, but it rhymes. And so, there’s a lot of important patterns that we observe over markets. This is a really important one, I think, again, that is worth reminding ourselves over, which is that the markets more often than not go up by a pretty significant preponderance. So, if you look at this chart, the average annual return since 1937 through the end of last year of the S&P 500, which most of us think of as the proxy for stocks, is 12.2%. U but included in that 12.2% there have been some down years quite a few less down years. In fact, it’s about a 3:1 ratio of up years to down. So, you know, for every 3 to four years that we have an up year, we’re going to occasionally have a draw down period. But that’s significant. Look at those average positive returns. Almost 20% and we’ve seen that in the last couple of years where stock returns coming out of 2022 were positive. So, that’s really important number one to know that the returns that we’re going to get as investors are a function of participating in both the up and the down. Does not require us to exit the market through a crystal ball prior to the down and miss that you’re that double-digit potential return or expected return in stocks includes staying in your seat because as you already illustrated Ed we just can’t time when those periods are going to happen. Another key thing is that the nature and the returns of where they were returns come from year to year is really hard to know and predict. This happens to be a what I think of as a returns quilt of country returns since 2007. And you can kind of see what sort of a mess it is. Try to look for a pattern here and observe, you know, where would I where would be the best place to invest. Well, it turns out the best place over this particular period to invest is Denmark. That’s your dark blue. But pretty hard to discern a pattern, a color pattern. And in fact, I would say if you picked one color and looked at it for a few minutes, we’ll go back to that. Sorry. If you pick one pattern, what you’ll observe is that if it’s up towards the top, meaning it had the best return in a particular calendar year or a couple of calendar years, you probably see it down towards the bottom in subsequent years. There’s a there’s this sort of constant rotation of returns and it’s a pretty wide swing in any given year. If you look at that box at the upper right, the skew from the top to the bottom is almost 50% on any given year. So, again, knowing which in this case country or asset class to be in that’s going to be the so-called winner, very hard to predict and there’s a high cost to trying to do so in terms of the cost and return variance. So, let’s go to the next one. If we just summarize this and we look we often think of as US investors we’re US- centric in our returns and we think about diversifying all those other countries you saw in that last chart. The last number of years have been very good being US investors relative to around the world. But if we go back further again you can see it’s kind of 50/50 you know from one year to the next. These bars, you know, the purple bars show when it’s actually been better to be an investor in international, so non US large stocks, those have outperformed US. And the green is when the US has outperformed. So, probably say the US has outperformed a little more often, but you can see it runs. And in particular, I would say what’s important is it runs in streaks. When you see two or three bars in a row where the US outperforms like in the late 90s there in the middle then you have a period you know and we know that in the decade of the 2000s it was far better to be diversified globally and the S&P 500 actually was negative for that decade and so you benefited from diversification so you know on average we over very long periods of time really benefit from that kind of global diversification because it’s going to go back and forth from year to year.

I mentioned earlier, you know, politics is always a backdrop and the concerns about policy, u taxes, things like that our government looks to manipulate or manage. And there’s often looking at who’s in the White House and who controls Congress u as a key siren about whether we should or shouldn’t be investing in different ways. The interesting piece about this is the data is fairly conclusive that it doesn’t matter as much as we think it does. And I’d say the reason for that is that we have to keep in mind we’re investing in companies at the end of the day for the most part that have management teams and those management teams are factoring in current and potential future near future policy and navigating through that and the expectation is that policy is going to continue to change. So, it’s actually statistically been, you know, not that much different whether we have a Republican led or a Democratic, you know, government in terms of what markets do. They tend over the long run, as you see, to go up and to the right, which means you’re making money as an investor over the very long term. There are blips, of course, in the short term, and that’s part of what markets do is factor in the short term some of the changes that we see coming. So, important to keep an eye on or keep a mind on I should say that doesn’t really matter. So, what does really matter summarizing as you had said a few minutes ago Ed at the end of the day when you look at all of the exhaustive data we have on markets the truth is markets do work and you get paid as an investor over the long run by being patient and staying in the market. Diversification at the end of the day is our friend. You know, as our chief investment officer likes to say, we’re not in the prediction game. We’re in the preparation game in as investors. So, one of the best tools for preparation is to diversify, spread our risks out. And then focus on the things that we can control. We can’t control what’s going to happen you know with interest rates or inflation those kinds of things but we can control our own costs our own behavior our ability to rebalance you know when markets go up and go down and so forth so I think you know it’s always good to sort of look back at some of this historical data and think about what informs the plan the investment plan and strategy that we’ve implemented that got us here so far. Yeah. Well, well said. And that’s a great segue the last point you made, Rob, about focusing on what you can control. And we’ve revisited, you know, the fundamentals of portfolio construction, right? Risk and return. We’ve talked about the historical data. But now we’re going to talk about more what can you do? What can you control within your portfolio that can make you add reduce risk? It can increase your return. It can add value on the tax side. These are things that you can control even you know during uncertain times when you’re feeling a little uneasy about things. There are things that you can do to add a value overall. And the first thing is tax lost harvesting. This is something that you know we do on a regular basis where you can you know basically you know capture some losses in the short term replace one fund with another and you have some losses on the books so to speak. Some can be used to reduce ordinary income. The bulk or the remainder of that can be used to realize you know future offset future capital gains. This is something you should just do regularly, particularly something to review if there’s an if there’s a draw down period of the equities when they pull back temporarily. Is there anything you can do from a tax loss harvesting standpoint that really can add value if you do that in a discipline fashion o over time? The next thing with it really can help you add value and it’s really not something you can see immediate effects on but where you put different assets in different accounts really adds up over time as far as reducing taxes, reducing tax drag on your portfolio. It’s always not what you earn, it’s what you keep. So, there’s different types of accounts that you might have in your portfolio. And the question is which assets should go in which accounts? This is something we do as a default and a regular process for all of our clients. Funds that are more tax unfriendly. They’re still important part of your portfolio, but they may pay high capital gain distributions and they may pay high regular income taxable. So, you want to have those in tax sheltered vehicles, 401ks, SE IAS, IAS, that type of thing. So, bucketing those assets in there as much as you can. The a taxable brokerage account, think a joint account or a trust account, that type of thing, where, you know, income is taxed annually. And you are, you know, they do generate a dividends and interest, but you want to have vehicles in there that are very tax efficient that aren’t creating a lot of tax drag in your portfolio. If you have health savings accounts, this is probably the best most tax friendly vehicle out there. So, making sure you’re funding that to the maximum and that is invested the most aggressively as it can. You want to use that for health care cost in your retirement. And then Roth 401k, Roth IAS, these are tax-free assets. They’ve already been taxed. So, they grow tax free. They come out tax free. It’s a great additional bucket to have, especially as you’re in your retirement. You can control your distributions and what you’re taxed on. There’s no forced requirement to take them out. It’s a great legacy planning tool as well for your heirs where they’re inheriting a tax-free asset rather than a taxable asset. Another area that people has is becoming more and more popular over the last five or 10 years, as laws have changed and made it easier to do these Roth conversions. This is basically taking money out of your pre-tax traditional IRA and moving it to a tax-free Roth IRA. There’s no income limitation to do this. Unlike being able to contribute to a Roth, IRA directly, there are income limitations there. Roth conversions, there is none. So, when would you do it? And why would you do it? Well, you do it when your tax bracket is in a lower bracket. Maybe you’re out of work for a year or so. That’s a great opportunity to do it if you’re in mid-career and you’re looking for work and your income drops. That’s a good time to shovel some money over to your tax-free bucket, if you will. Or if you retire in, let’s say, early to mid60s, you have a period of time until your minimum distributions kick in from your IRA or 401k assets. That’s another great time to move money over to your Roth. Not all at once, but working with your tax professional and financial advisor to understand how much of a particular bracket you want to fill up to move over across the fence to the Roth IRA, so to speak. Grows tax free. Like I said, it’s a great legacy planning tool. It reduces your future minimum distribution requirements in your 70s 75 for most people these days. It’s a great legacy tool. You can be very aggressive with this asset allocation because you’re looking this at this is multiple decades long and so it can be can have a more aggressive tilt than your overall portfolio allocation. Rebalancing. This is probably the most difficult one because there’s some behavior in here that oftentimes it’s hard for folks to sell what has been done doing very well lately and buy what has not been doing so well. But having that discipline periodically to shave off the winners and redistributed to what hasn’t been doing as well, sort of the recent term losers, if you will. This can really bring you back to your risk target. It can enhance your return overall and can control your overall portfolio risk where it doesn’t drift and drift until you’re you know a classic 6040 60 stock 40 bond portfolio. If left alone will continue to drift more and get more and more aggressive and all of a sudden you’re in a portfolio allocation that really isn’t appropriate for you or your distribution timeline or your retirement timeline. This requires some discipline to do. Not saying you have to do it every day, but having some rules of the road of knowing when to peel back your winners and redistribute, it’s very important. It’s very counterintuitive to ourselves as humans as investors but it’s very important and can add a lot of value. This shows exactly what I was talking about what a traditional 6040 portfolio left unbalanced can drift and suddenly be in a allocation that is may not appropriate for you and your retirement planning goals. So, we’ve talked about sticking to the fundamentals, leveraging some historical data, looking back, and, maybe capitalizing on some opportunities, focusing on what you can control. But now this is another area that Rob’s going to talk about that’s sort of near and dear to his heart is maybe tying it all together with looking at things holistically and really helping reassess what’s important to you and what you’re trying to achieve. Yeah, great. Thanks, Ed. And as you said there, I think when we get into an environment, and again, we’re in a positive environment so far this year, you know, in markets. So, again, maybe there’s just a slight itch that you have or a concern about what’s going on and what the implications are. That’s appropriate and you can’t be in the world today and consuming the news that comes out. There are legitimate significant things to be worried about in a lot of directions. How we apply that to our you know financial planning and decision making and behavior you know is a different thing. And so we have some frameworks that we work from that I think are particularly important as we step into times like this. And as I said to kick off, I think now is an extraordinary time because we’re not in the midst of some kind of big draw down or panic. So, what is the right sort of mental model for which to make decisions? So, we work from the perspective that there’s sort of a hierarchy of how you should organize really anything but in this case financial decisions and it should start at the bottom of this chart that really want to take a look at the key dimensions of your life and you could sort this in any number of ways. We’re using eight dimensions of well-being at the on the bottom here. So, if you took stock of kind of how are you feeling in these different areas of your life, how important is it to you? How’s it going in that particular area? Do you feel like you’re living your best life in all these areas that are important to you? And not every area is important to every person, but to the degree that it’s important to you. And then above that, you know, we’ve got some values tiles here. I think it’s really important every so often to take a, you know, really get organized and if you have a significant other, spend some time with your significant other thinking about, hey, what are our core household values that we’re trying to accomplish? I think we tend to be too tactical in life and in society where we think about, you know, very small elemental things like, hey, should I be doing a Roth conversion? Should I be doing this or that? Those were great elements that you pointed out, Adam, and maybe may maybe be very appropriate, but they’re not stand alone. They should be tied to things like what are the things that we’re trying to accomplish in life. Is it, you know, hey, I want to get to where I can spend without guilt or I have loved ones that I want to take care of. Maybe I just want to feel more confident, you know, about my finances. I don’t really understand you know, what trajectory I’m on. You might be a career person who’s looking to make a shift and, you know, spend more time volunteering. Maybe you want to relocate. Like that those should be the drivers at the end of the day of all the things that you do, but in particular how you move your money potentially from a conversation like that where you square up what your values are. You really should come up with some goals like okay for you know your values really probably won’t change a lot over the course of your life. You might change one or two things as different stages of your life, but your goals you know goals tend to change every few years and your priorities should change every few years in terms of hay I want to get to you know financial independence you know or we want to buy that second house or you know we’re saving enough to send our kids or grandkids to college. So, you want to get down to smart goals, right? U you know achievable defined goals. And then and only then really should you start thinking about okay if these are our goals and I see a lot that people when they really unpack it in a meaningful way have something more like 8 to 10 goals. I’ve had as many as 25 goals taking people through an exercise like this. But you want to have a very rich and colorful set of goals for yourself and your family. And then once you’re square on those, what strategies financial and non-financial line up to support achieving those goals? And so that’s where, hey, we want to, you know, maximize our, you know, after tax returns in our portfolio. We want to you know save a certain percentage of our income so that we can accumulate to a certain financial independence number. Now we can get more granular. Okay well how maybe we can’t do all those things overnight and that’s where we get into tactics and the tactics are more you know very short-term this year. You know should we be contributing to an IRA? Should we you know increase our 401k deferral rate? Should we draw out of for income purposes you know our portfolio or trigger social security? Those are the incremental year-by-year sorts of decisions that fall out of you know this framework and prioritizing you know what matters most versus you know what we’ve seen a lot of people do you know is knee-jerk reactions or you know as we alluded to earlier I’m concerned about the market therefore I’m going to you know take some of my portfolio and go to cash you know those can be costly decisions when they’re not driven by a framework like this that’s that centers you on the long term. So, encourage you, you know, to go through this kind of exercise. Again, now is a terrific time to do that. The we’ve had good experience investing over the last few years. Hopefully your portfolio has grown nicely. It’s a good inflection point. Revisit, you know, some of those assumptions. So, let’s go to our next slide. Just some key questions. So, as you sit here today, what do you envision over the next three, five, 10 years? What are the important milestones for you and your family? And then mapping out okay what needs to happen for that to occur what are the steps you know what’s not true today that needs to be true for you to achieve those goals or what steps do you need to take what actions do we need to do this year next year you know what in sequence needs to be true this I think is a much more productive exercise when we have the psychological emotional concern again totally normal and appropriate it with the news of the day, but come back to your plan, ground your decisions in these more intermediate and long-term sorts of goals and things that you aspire to. So, I think in a moment of hesitation, this is the certainly our view as planners ourselves, you know, same thing if you applied this in an analogy to another area of life. You were building a home, you know, hopefully the first thing you do is get some architectural plans, right? And then things change. My wife and I been doing a renovation on our home and found some things we didn’t expect, you know, as they began to tear down walls. Okay, well, something’s occurred. Now, we need to go back to the plans and say, what does this mean? What should we change about what we intend to do? And you could apply that to your financial house as well. So, encouraged to go through this process again with your advisor on your own, however you prefer to do it, but revisit that. I’ve recently kind of done some of that myself. Is, you know, we’ve had some good success, some good gains. What does this mean for us? Do we continue to take the same amount of risk in the portfolio? Where are we tracking towards these goals? These are great activities in moments like this to go through. Great, great, terrific stuff there, Rob. But really as we wrap up the this is our the last of the five areas you should sort of focus on and what when you’re investing in uncertain times. I think the phrase you used earlier Rob was great about grounding yourself in these areas can really help you clarify and help you when you reassess. So, you know why do why is important to reassess your investment priorities? Well, it can help eliminate unnecessary risk. It can maybe help you clarify you’re making this based on some factual information, a retirement time horizon, lifestyle change, or is it an emotional decision? You know, really help reassess and clarify, can reduce taking unnecessary risks, and it instills a sense of discipline in as you’re looking to change your potentially change your investment strategy. This is a great chart. It’s been around in one way or another for many years. But this is really to prove the point of the type of emotions that investors can go through and find themselves in and potentially make the wrong decision at the wrong time. As you reinvest, reassess your investment prior priorities. You can look here when you start off and it’s a real roller coaster of emotions, right? Where often times we find people at the most euphoric or thrilling time. They tend to want to take more risk and maybe take too much risk and too much speculation. They’re trying to chase returns and they’re very euphoric. They make maybe make bad decisions where they’re not. This is be the time where Rob and I would want to maybe rebalance the portfolio and then talk about taking some chips off the table as opposed to at the bottom during market cycles. This is when folks might make the decision on the opposite end. Maybe wanting to go to cash, wait till things calm down. So, these are the different emotions that you as an investor can go through as you ride through these market cycles. And I just wanted to call that out just to point it out what the dangers are as you go through these cycles. What really helps we think ground yourself as an investor and planning for retirement is again not just focusing on the portfolio as a silo but this is our the way we look at our clients lives which is what is truly their ideal future and what 10 key planning areas really can apply and support their goals. Now, not everything is going to apply as far as you know, maybe there’s not a business planning in succession that some people have. But you can see investment planning is part of the spoke of this wheel, but it’s not the dominant part. There’s also income tax, education, managing the debt, risk management, retirement planning, your health and wellness, charitable planning. All of these areas should be worked on together, coordinated, and part of your reassessment. If you’re looking to reassess your investment portfolio, well, you should reassess, as Rob said earlier, your goals, your values, what’s important to you, what are you doing, and this really can help pull you back from the day-to-day. And it can sort of tune out some of that noise in the short term, really help you what’s focus on what’s important in the long term. You know, this is a great we got a couple more slides here to go and this is a great reminder to focus on what you can control and not of what you can’t. You can stick to your fundamentals. You can, as we pointed out, you know, look at historical and leverage that historical evidence and data. You can capitalize on opportunities from tax planning, rebalancing, things like that. You can refocus your holistic well-being plan, what’s important to you and your family, what are you trying to accomplish? And you can periodically, it’s healthy to reassess your priorities, right? You really can’t, we feel, abandon your plan. You should always have a plan in place. You can’t just wait until the dust settles, until things calm down. U because news flash, they never will calm down. There’s always going to be something to keep you anxious and worried. But the more you focus on your plan and your fundamentals, the less that should really affect you. You can’t know what the markets are going to do in the short term. Okay? There’s a lot of noise out there mouth-to-mouth, year to year. And you also can’t let your emotions drive your actions. Okay. So, given those what you can and can’t control, I’m going to jump to our last slide, which is maybe a way to look at your portfolio assets in a way that can help you manage your emotions during uncertain times. Maybe it’s a different way to look at your portfolio than maybe you’ve done before. And I’ll let Rob touch on that.

Yeah. So, one of the tried and tested methodologies we’ve had over the years is has been thinking about the balance of, you know, what is what can we invest for the very long term versus shorter term. We know that there are going to be these inevitable ups and downs. And as investors, you know, it’s what we do, not so much in the ups. The ups are easy. It’s in the downs. And I loved on that last list, you know, the things that we can do is how do we seize on the opportunities? And, you know, I know over the years we found, you know, when we’re working with clients and the market goes down, a lot of them call and say, “Hey, I want to add some money to my portfolio. This is an opportunity that on your chart earlier there that was the point of maximum opportunity you know was you know when the market is at its nater and so the flip side of this is you know whether we’re in accumulation mode or in distribution mode in retirement thinking about our portfolio in terms of kind of buckets we have the growth long very long term on the far right money that we don’t foresee needing, you know, for the next, you know, beyond seven years from now. So, that I can afford to let things sort of ride the up and downs to get that long-term return, that expected return from primarily equities. My ability to sit in my seat is often predicated on actually what’s in those first couple of buckets. What do I have in very short-term?, and this is how we often structure it for people approaching, retirement is you want to have one to two years of very liquid, it’s going to have a lower expected return as a result, but very liquid assets like cash, CDs, ultra short-term bonds, high quality. We don’t want to take a lot of risk with that bucket. That’s what we’re going to use for, you know, monthly regular sorts of distributions. And then the second, you know, bucket in there in the middle, the yellow one, is, you know, could be something where I might take a little bit more risk. So, maybe this is short and intermediate corporate bonds, treasuries, REITs, which are real estate, investment trusts. These are things that display historically less volatility, have a little bit higher return, but you know, if we had a stock market, you know, bare market, if you will, we expect these assets to probably hold the majority of their value or even appreciate. So, if I take those first couple of buckets, and I’ve done this dozens of times with people approaching retirement, if I said, “Oh, you have, you know, 8 to 10 years of liquidity. If you were 8 to 10 years away from retiring and you were concerned about what the market would do, how would you feel about that? How would you approach it?” Most of the time, the response is, “Well, I’d look at it as an opportunity. I could put more, you know, money to work at cheaper prices in that blue bucket. And in reality, if you structure your portfolio with your advisor appropriately in that balanced mix, you know, that’s where you end up with. But this is an important review point and exercise to take a look and make sure we can ride through this. We had this experience you know back in ’08 where you know you had the stock market go you know down really from peak to draw 50%. And I had the experience of clients who had you know retired during that cycle and working through that with those clients and trying to figure out you know do we have enough liquidity to ride out these types of storms. You know that’s the work here of tying this all together and in retirement I think this is as important of an exercise really as thinking about your risk tolerance you know your broad asset allocation is do we have enough liquidity to write out these storms which is both an actual piece actual activity that’s important but it’s an important psychological piece to realize you’re not going to spend your entire portfolio you know all at once right you’re going to spend it in increments. And if we started at the front of the line here on the left in the green bucket and the yellow bucket, assuming we’ve walled ourselves off, markets work in these cycles and we’d have enough hopefully in a six to 8 year period to cycle through and make adjustments as needed to get through that until our portfolio value has recovered, you know, in that blue bucket. So, I think it’s a key concept to sort of brings this all together. Again, if you’re, you know, watching what’s going on in the world, you’re thinking about this, reviewing your financial plan, with your advisor on your own, we’ll talk about there are ways that you can engage with us if you’re not already. Yeah, there it is. If you’d like to have a conversation with an advisor about this, happy to have that front-end introductory call to talk about, you know, kind of your financial chess pieces, how you might want to think about this portfolio’s up. So, we’re not making decisions, you know, during the storm. They always say the best time to make these kinds of decisions is in the quiet and as far as the markets go, the markets have continued to drift up. So, great time to kind of review that. So, I think that’s a really good summary. Obviously, we wanted to leave some time to take questions. You know so Ed did you hopefully had a chance to take a look at the queue and see what we’ve got there? Yeah what question I got a few I got a few. I’ll start off with one question is related to gold as an investment and should you buy gold? And it sort of folds into another different question we had about inflationary concerns. But you know the way we look at you know gold and really any other precious metal is it’s people will often purport it to be an a hedge against inflation, right? As a long-term purchase and it has done very well lately. Gold has. But what history tells us about gold is if you look at the long-term rate of return going back 30, 40, 50 years is it just about keeps pace with inflation. It surely certainly doesn’t certainly doesn’t beat inflation by a wide margin. So, its long-term rate of return equals about 2 and a half 3%. So, it gets very attractive during uncertain times when it can shoot way up and it’ll draw a lot of attention. But it’s very volatile and it can underperform the market and inflation for really long I mean decades sometimes periods of time. So, when people ask me really about gold, I’ll tell them, you know, if you know exactly when to get in and exactly when to get out, then yes, maybe it is a good investment choice for you. But generally, we prefer, you know, owning equities, owning, you know, fixed income. These have expected rates of return. You’re a shareholder of capital, particularly in equities across the globe. They pay dividends. They generate profitability. Gold doesn’t do any of that. So, it’s essentially worth whatever someone behind you in line is willing to pay for it. That folds into another question I had that come through there as far as the inflation question. Well, how do you know concerns about inflation creeping up lately? We had a certainly high inflationary environment several years ago as well coming out of the pandemic. And we often call inflation when we’re doing retirement planning. Inflation is your silent partner through retirement. It’s always there eroding your purchasing power. What’s the best way to offset that? The very best way is to own a diversified basket of equities globally diversified as part of your overall portfolio. Rob, do you have any other questions that have come through? Yeah, we’ve got a good stream here. I actually want to read this one. It’s a very good question. I’m glad it came up. Should I be concerned about the expansion of AI, artificial intelligence, and the potential for job displacement or loss and the negative impacts on the economy and consumer spending? It’s a great question. Certainly, that’s ripped from the headlines. And there’s obviously significant concerns on where artificial intelligence goes and how it impacts our society especially I would say in some of the creative aspects you know I know the art community is concerned about the protections and how AI could entrench on things. You know from an economic and financial standpoint I think the while it’s completely a new environment new world with AI I think it rhymes with innovation that we’ve seen historically the most recent would be the proliferation of the internet and if you think back to the internet you know 20 25 years ago you know there was lots of speculation about what that was going to mean and industries it is going to displace. It’s actually ultimately been a tool for business and you know a tool that you know can help us create more automation more efficiencies can help drive down costs you know that can be beneficial over the long run and I think we likely to see that you know businesses business leaders management teams will be using AI to think about you know how they can lower their cost automate low value activities. Now the obvious concern there is well doesn’t that isn’t that really code for hiring fewer people? And the answer is probably yes. Probably the low lower value types of tasks and jobs will over time you know be replaced you know by automation but we’ve seen that you know many times including beginning in the industrial revolution. And so the opportunity I guess there if you’re an optimist is for human beings to go up the value stack and focus on you know higher skilled activities and other value creation and creative you know sorts of tasks. So, again, anything that comes along, if you think about CO, CO was one of the most unprecedented things in the history of the world, certainly in our lifetimes and think about the innovation that occurred during that period and because of that period really driving businesses forward. So, don’t discount the ability of great management teams to adapt and innovate with new technologies like this. So, I think in the long run it’ll be positive for economic activity and for investment returns. Great. Well said. Any other question? Another one. Yeah, I got one more here about the political environment. Which seems to envelop us all the time. This says, you know, I’m concerned about the current visceral political environment, parties taking on more aggressive stance on both sides. You know, does it make sense to derisk as a result of that? And I guess I would answer that two ways. I would first say it might make sense to derisk. The other thing I would refer back to is, you know, that the current noise, while louder than most of us have experienced, and maybe more visceral, certainly more visceral than we’ve seen in most of our lives, as it concerns markets, often is, you know, really noise. And I’d say you want to have, you know, think of the story of the three little pigs. We want to have the house made of brick. You want to have a portfolio that can withstand these winds that come along, the political winds that could affect markets and prices and things like that. But we want to look longer term. And I’d say one last thing. I know we’re kind of running short on time here, but never forget that any news that I know, Ed, that you know, that’s largely baked into the cake of markets. What do I mean by that? If you and I know it, then it’s news that’s been out there that’s been consumed, and people are factoring that into their buying decisions. The so-called efficient market hypothesis says that, you know, prices reflect all known information, all biases, all concerns people have. We’ve seen that recently with you know, things like the taper tantrum last year or the Iran issues this year. You know, markets and market participants are factoring that in. And so some of that, you know, political unknowable is being factored into how people are betting with their buy and sell trade. So, we get the benefit of that price discovery and those unknowns. So, do we want to hedge more on top of that on our own with our own views? I think that’s actually somewhat risky to go further with that. So, agreed. That’s we got a lot of great interest here and I want to thank everybody for their participation, but, we’re running out of time here. Thanks for your time and attention. My sincere hope is that, reviewing these concepts and these five fundamentals, you got a couple of ideas that you think are actionable or at the very least reminders about mental frameworks. You know, being a great investor and succeeding is a lot about how you manage, you know, your mind during these periods and what you let concern you. So, hopefully this was a positive review. As we said earlier, love to have a conversation with you if you’d like to work with somebody and you’re not already engaged with a financial adviser or you’d like to get a second opinion on this, see if we can be a resource for you. So, with that, we’re going to sign off. Ed, thanks for the time today. Enjoyed the conversation. Thank you, Rob. As always, thank you very much. If you enjoyed this webinar, visit savantwealth.com/guides and download our complimentary guide books, checklists, and other useful financial resources.