#68 – Passion, Planning, and Portfolio Power: Lessons from Microsoft, Market Trends, and the Mappiness Project

Wes Moss [00:00:23]:
Hello, Wes. Today we’re going to talk about fear, I would say is the main, it’s.

Wes Moss [00:00:29]:
An uplifting version of fear.

Wes Moss [00:00:31]:
Yeah. There’s so many side of fear.

Wes Moss [00:00:32]:
Yeah.

Wes Moss [00:00:33]:
The fears around the stock market. And you’ve got a couple of interesting topics around that I would say.

Wes Moss [00:00:37]:
They’re of course they’re interesting. Yeah. I mean, thinking a long time about what to talk about today. And I think about this in, in the swirl that we’ve been in in 2025 where the stock market has been, it’s still almost, not even in the roller coaster phase. It’s still in the, it’s still, I don’t, I don’t know if we talked about this last week, but it’s more in the bungee cord phase where you have these really big drops, but then we have these really big gains. I mean, thousand point days in the Dow have been almost normal in 2025. So we’re not really even in the roller coaster phase. Remember, we had a couple of years that were more like the escalator phase.

Wes Moss [00:01:15]:
That’s the one everybody loves. The escalators is the market that everyone loves. And you kind of forget that there are big drops. But we had a couple years where just steadily higher down 2,3%. But 2025 has been a year full of volatility. And we’re going to talk about the vix. The VIX is the fear index. And we can watch in any given day what that level is.

Wes Moss [00:01:39]:
It’s its own index. And when we have an escalator year, the VIX settles in at 15, 13, 14, 15, 16, getting to 20, things are getting a little nerve wracking. And then when it gets above 20, 25, 30, you’re getting into a little bit of investor panic. So the VIX is a measure of people buying safety to protect their market from their portfolio from going down. So we know when the VIX is low, the world is to some extent calm and collected. When the VIX is high, that means investors are very nervous. And you usually see if the VIX is spiking, it usually means the stock market is cratering. And that’s what we’ve seen in 2025.

Wes Moss [00:02:20]:
Huge moves higher in the VIX lower in stocks. But I go back and I pulled 10 different scenarios and I don’t know if we won’t go through all 10 of them, but I wanted to go back over the last, call it 20, 25 years and look at periods of time when the VIX spiked. Because all you have to do is look and see when the VIX spiked and then you can deduce, oh, that was the dot com crash. That was September of 2001. That was the 911 crash. Go back to the 90s of the Asian financial crisis crash, the global financial crisis. VIX spiked, markets to some extent really crashed over a period of time. The COVID pandemic, the VIX spiked dramatically.

Wes Moss [00:03:02]:
Got to again, we were talking about 15 to 20 is a placid area. Got over 80. It was four times the norm. And we invariably get a period of time where you have peak fear and we can nail it to a day. The VIX is the highest on this day. And that was essentially peak fear in any crisis. And then fear subsided and then fear subsided. And it’s happened every single time.

Wes Moss [00:03:33]:
And there’s always a reason. And I think of it, and it’s very easy in retrospective to know what the turning point was. I think about. It’s almost like the History Channel. You’re watching the History Channel, we’re talking about a war or crisis. And then the voice comes on and says something like, with President Kennedy’s careful yet firm handling of the Cuban missile crisis in 1962, a potential nuclear catastrophe quickly pivoted to peaceful negotiations and Cold War tensions eased. And you look in retrospect and you say, oh, well, that week was really scary. And then fear subsided.

Wes Moss [00:04:13]:
And when fear subsided, or why fear subsided because commerce has prevailed. And the negotiation kind of got to a resolution. And it’s essentially that same pattern over and over and over again. And the VIX starts to move higher when the market gets scared, investors get nervous, and then it really peaks and then it starts to calm down. And you can only in retrospect see, well, why did we calm down? Well, let’s go through a couple of these. And the punchline here is that we’re still in that heightened VIX phase. We may have seen the peak fear because there were a couple of days where the VIX was in the 60s, not quite as bad as where we were in the middle of the depths of the pandemic and the peak fear of the pandemic. But we’ve already seen a really, really high spike in the vix.

Wes Moss [00:05:04]:
So Far, we don’t know what resolves it, Christa, but we do know at some point something will resolve it. And I think about the COVID pandemic. We were announcements of everything gets canceled. We get shut in our homes and the stock market’s dropping like a bungee cord, not a roller coaster. And then we started to get the thought of, wait a minute, they’re working on vaccines. We are not going to stay locked in our homes forever. Different states started opening things back up and say, no, you can now, you can go to the grocery store, you can go to XYZ establishment. And then fear started to subside.

Wes Moss [00:05:45]:
In retrospect, the Federal Reserve came in. The Federal Reserve came in and did huge monetary stimulus and stabilized the market. So looking back, that’s why fear started to really subside. All of those, the confluence of those pieces of good news. Same thing with inflation spike and the interest rate shock in 2022. Inflation started to moderate. And we look back, we say, oh yeah, inflation got to 9%, but then the new prints were starting to moderate and there was a path for Americans to say, okay, we’re not going to have 10% inflation forever. European debt crisis.

Wes Moss [00:06:22]:
The European debt crisis. I Remember back in 2011, we were worried that bonds all around the world weren’t going to be able to be paid by governments. That was scary. And the Vix Spike, the Vix got to almost, almost 50 in 2011. That’s a really scary level. Remember, we’re over 60 already this year at one point. And then Mario Draghi, he was the chief of their European Central bank, came out and said, we will do whatever it takes and make sure that the bond market is in good shape and we’re not going to let things slip. And the plumbing’s working in the financial system.

Wes Moss [00:06:56]:
And what happened, that’s when fear started, subsided. It doesn’t necessarily happen in a day, but you can look back and say, oh, that was the week. Mario Draghi said, whatever it takes. So we look back over time and we see Fed intervention, where the Fed comes in and says, okay, we’ll lower rates, we’ll stabilize the financial system. We’ve seen it here in the United States, we’ve seen it in Europe. We see things like, now we’ve got better news and maybe a hopeful eye towards the future during the pandemic. But we don’t know why it gets better this time. We never know.

Wes Moss [00:07:32]:
Now you could say, well, the whole tariff issue is going to be solved and everyone’s going to get along and we’re going to do trade deals with the rest of the world and trade will come back and maybe there’s some level of tariffs, but there will be some resolution around it. We just don’t know what that looks like and we won’t until we can see it only in retrospect. But there will be a day and maybe it’s six months from now, maybe it’s a month from now, maybe it’s a year from now, but we’ll look back and say, oh, that was the week and oh, that’s why fear subsided. That’s why fear subsided. And so it’s not a good bet to think we’re gonna stay in this heightened state of fear forever because history just doesn’t show that. Christa. So that’s my message today, is that we can watch the vix. We’ve had a scary year.

Wes Moss [00:08:23]:
We don’t know when it’s going to end. But you can go back over history and always point to a week or a month or a few months where, oh, that’s why things started to get better. The story’s still being written, but it will have a similar resolution to the, the anxiety we’re feeling as investors right now. We just don’t know what it is just yet.

Wes Moss [00:08:44]:
Okay, well, are you ready for some questions?

Wes Moss [00:08:46]:
I am absolutely ready. Stop talking about fear and start talking about real life. How do we solve our financial questions? Happy to do so.

Wes Moss [00:08:54]:
Okay, well, this is from Anonymous in Maryland. I’m 36.

Wes Moss [00:08:57]:
We call her Annie in Anonymous.

Wes Moss [00:09:00]:
I’m 36, earning $76,000 a year and contributing 6% to my Roth 401K. My employer matches into a traditional account 100% of the first 3% and 50% of the next 2%. I have $51,000 in my current Roth plus 52,000 in a Roth from a previous job. My husband recently took a lower paying job to support our growing family. So I’m now the sole retirement saver. With a combined income of 1 16K, a second child on the way and no raises in two years. Increasing my contributions is tough. I know I’m behind on the typical 3 times salary by age 40 benchmark.

Wes Moss [00:09:36]:
What should my savings goal be? To get back on track by 67. And if I switch to a higher paying job in 1 to 2 years with a 10k to 20k bump, could that help me catch up by age 40? It would involve a longer commute, which I don’t love, but I could handle when the kids are a little older.

Wes Moss [00:09:53]:
So she is Anonymous Annie. Annie’s in a situation where think about your. Your mid-30s and life is just getting more and more expensive. Right. Your 20s, it’s just not that expensive. And you can. You have roommates and you. Things are light and you can maybe save a little bit.

Wes Moss [00:10:13]:
Then you get your mid-30s and you have a bunch of kids and you’re trying to work and your spouse is trying to work and you have this. It just. You maybe have a mortgage. Everything gets really expensive and you’re supposed to save all at the same time. So it’s a really hard period of time and it keeps getting worse. We actually reach peak spending in America in our late 40s and then it starts to come down. That makes sense because our kids are typically out of college by the time we’re in our late 40s or early 50s. That’s usually peak spending.

Wes Moss [00:10:45]:
It’s everything that you have to spend normally on and some sort of college and school tuition.

Wes Moss [00:10:51]:
Sing it. I’m in.

Wes Moss [00:10:52]:
You’re in it. I’m not quite there yet, but I’m pretty close. Christa. So this is a tough spot, but it’s always a tough spot. Any Saving? Really about 10%, 6% on her own. And the way her match works out, it’s about 4. So it’s really 10% and that’s actually really good. Sure, 15 would be better, 20% would be better.

Wes Moss [00:11:16]:
But the fact that you’re able to continue to do the essentially 10%, six plus the four, that’s really good. If you can just keep doing that. If you do the math, she’s got about a little over 100,000 saved already. If you just do some really simple math on saving that 6% plus the match, you do that for 30 years, there’s 30. She’s about 36, or let’s call it 36 to 66. 30 years, just doing that and increasing your savings, say the salary. Her salary goes up by 2% a year, so still not a huge additional savings. She still ends up with over 1 million and a half dollars at a 6.

Wes Moss [00:12:02]:
And I look at this as just a 6% rate of return. So conservative rate of return, just doing the 10, essentially doing 10% because of the batch that still gets you a million and a half dollars. And now granted, in 30 years, is that going to feel like a million and a half dollars today? No. But it’ll still be a really, really good base to be able to retire on and have an income from. There will be a time when hopefully you’re both able to work more full time. Maybe your spouse is able to get back to a slightly higher salary and then you start saving those raises. So instead of a 10 a year, maybe it’s 12 a year or 15 a year. But it is the methodical nature of doing it every single year.

Wes Moss [00:12:48]:
Even when it’s really tough. Right now when you’re in almost peak spending, you still get to a million and a half, get to 2 million, 2 and a half million depending on how much you’ve saved. I’ve seen it happen over and over and over again. I think she’s on a great job.

Wes Moss [00:13:01]:
And doing it into a Roth, that 6% that does have, that saves you on taxes later.

Wes Moss [00:13:07]:
So saves on taxes later. Absolutely. We’ve got a quick break with weather traffic. This is Wes Moss along with Christa DiBiase. More MONEY MATTERS straight ahead. Go, daddy. Good morning. Welcome back to MONEY matters.

Wes Moss [00:13:49]:
Here it’s Sunday morning. Wes Moss, your host, my good friend Christa DiBiase here in studio.

Wes Moss [00:13:56]:
We are back to answer your investment questions. Kathleen Oklahoma says if I’m still employed at age 72, am I required to begin taking our RMDs or can I wait until I retire at 73?

Wes Moss [00:14:10]:
Kathleen Kathy. Kathy okay, so there are, so now the, the RMD age is, remember it was 70 and a half and it started moving higher, meaning that you, you didn’t have to take your required minimum distributions. Remember what that’s all about? That’s, that’s the government saying, look, you saved all this money pre tax and we don’t get any revenue from it until you start pulling it out of the account and we’re going to tax it like ordinary income. That’s what RMDs are all about. It’s hey, I want, I’m knocking on the door and saying, okay, by this age you got to start taking money out so we can collect our taxes. It’s moved up to 73. So and it continues to move higher over the next several years. The RMD age is actually going to continue to go up, I want to say to something like age 75 out into the future.

Wes Moss [00:14:56]:
But for now, if the rule around this is that if you are still working and you’re working full time or part time and you have a company 401k, your RMDs get delayed, you don’t have to take them. So the answer is if, look, if you’re still working and you’ve got a 401k at work, you don’t have to do your RMD. Now let’s take this, Kathy one step further. What else could you do to take advantage of the fact that you’re working at 73, which maybe you want, you want to be working, maybe you don’t. If you have other IRAs that you could consider moving those IRAs into the 401k, we always think about rollovers from 401 to IRS. You could consider there’s a lot to think about here. But imagine you had all of your retirement assets in the company 401 and you’re working, guess what? No RMDs for that period of time. So that’s just another way to think about how to use the rules to your advantage.

Wes Moss [00:15:57]:
When we get back, I want to talk about there’s lots of talk about missing the best days in the market. And of course, we don’t want to miss the best days, but we tend to think, well, it would be nice to miss the worst days too. Wouldn’t that be nice? We did some research around trying to hop out between the raindrops and miss the worst days. But the math on that actually gets really interesting as well and the ability to even do that. So I want to talk about those numbers when we get back. More MONEY Matters straight ahead.

Wes Moss [00:16:33]:
It’s WSB’s Money Matters with Wes Moss, certified financial planner and chief investment strategist from Atlantis Capital Investment Advisors. Wes talks to you about investing and saving for the future.

Wes Moss [00:16:46]:
Good morning and welcome back to MONEY matters. Here it’s Sunday morning. My good friend Christa DiBiase here in studio.

Wes Moss [00:16:54]:
Hello, Wes.

Wes Moss [00:16:55]:
We ready to go into market timing?

Wes Moss [00:16:58]:
Let’s do it. And then I do have some more questions from you.

Wes Moss [00:17:00]:
I’m excited to get questions. The reason I want to talk about this today is that I hear about this a lot. I would think our listeners have heard these statistics. I’ve obviously talked about it here on the show. It’s almost become maybe this is just me because I’ve talked about this a lot, but it’s after hearing about it and reading about it a lot over the past month, you hear about the adage of if you miss the best days, your rate of return goes down a bunch, Right? And it’s just a few of the best days. So if you’ve missed just 10 of the best stock market days over a 30 year stretch and what happens, your rate of return drops in half. And that makes sense, right? You’re missing out on gains. And really what you’re doing is you’re missing out on rebounds.

Wes Moss [00:17:43]:
So the next iteration of that is what If I were to just miss the worst days, what if I were to get out when markets were dropping? Well, of course that works really well. So if you miss the again, you take a 30 year stretch, 1995 to 2005, you’ll see that that overall rate of return, and we just did this research as of, I want to say last month, average rate of return, 8.3% for S&P 500 fully invested. But if you miss just five of the worst days in 30 years, your rate of return jumps to 10. So it works. Of course it works. If you miss 20 of the worst days in the market, your rate of return on average jumps almost 14%. I think that is of course why we have the inclination to try to dance between the raindrops and get out before markets drop.

Wes Moss [00:18:37]:
Sure.

Wes Moss [00:18:38]:
So it intuitively makes sense and then mathematically it makes a lot of sense. You miss bad days and your overall rate of return goes. Goes through the roof. The problem with that and the reality check around that is that here, and this is, if you look at a chart, you’ll see that almost all the, the rebound days are almost touching. Historically, right. At this very similar rate of time as the worst days, the rebounds come after the worst days. Then you get rebounds and you get terrible days again. And we’re kind of in one of those cycles right now.

Wes Moss [00:19:10]:
But if you look mathematically, 80% of the 50 best days in the market, this is over 30 years. So 80% of them happen within just one month of the worst days. So they’re all really close together. And I think we’re in, we’re in one of those periods of time. Terrible days. Great days. Terrible. Great.

Wes Moss [00:19:31]:
So the reality is that if we’re looking at trying to get and miss the worst days, which intuitively makes total sense, then we almost invariably miss the good days as well. We miss the rebound days. So it’s not even really, I would say it’s. I don’t know, I guess nothing is impossible. But I would say it’s virtually impossible, Christa, to be able to do that. So what if you were to miss. There’s some more math and history. If you were able to sidestep just the really volatile peak period.

Wes Moss [00:20:00]:
So you miss the best days and the worst days. You say, I know I can’t time worst and best. So I’m just going to miss those really shaky periods and just be invested. When things are maybe to escalator mode, we talk about 2022 or 2023 and 24 were kind of escalator years. What’s interesting about that, if you do the math, that doesn’t really work all that well either. So if you’re fully invested over that same period of time, this is 95 through April of 2025, fully invested, 8.3%. You miss the 10 best days and you get to sidestep 10 of the worst days. It’s 20 days, you’re, you’re out of volatility.

Wes Moss [00:20:40]:
Your long term rate of return only goes up to 8.5. So you can 8.3, 8.5 and you’re doing something that’s virtually impossible to begin with, but it doesn’t really help anyway. So the point here is that because we’re not able to time it perfectly, even if we get out of these volatile periods, we still don’t really gain a whole lot of ground. Just another way I think, to look at the reality of how we need to invest, which is not trying to time, it’s timing and being in invested over time, taking our lumps when things are bad, but then enjoying the fruits of being of staying patient, staying objective, believing in the future. I think of happy. One thing I believe very strongly of happy retirees is that happy retirees are tomorrow investors. They’ve got a general, they’re not unrealistic, but they have a general sense of optimism. And I think that helps us get through these tough times.

Wes Moss [00:21:40]:
Like we’re kind of in right now for markets. But tomorrow investors are worried about what’s actually happening tomorrow. They’re looking way out into the future. That’s why I call them tomorrow.

Wes Moss [00:21:49]:
Okay, I love it. Okay, we’ll go to questions.

Wes Moss [00:21:52]:
Go to Q and A.

Wes Moss [00:21:53]:
This one’s from Andrew in Iowa. ETFs are great for us as investors, but how do they benefit the institution that issues them? Especially now that asset fees are incredibly low on most ETFs. I’m confused what the motivation would be for creating and issuing that product. Do those tiny asset fees really make them that much money across the whole market? Are they just sharing different investment options out of the goodness of their hearts, or is there some other way they’re profiting? Thank you for all your investing insight.

Wes Moss [00:22:22]:
So Andrew, that’s kind of a cool question. I’ve never had that before. So I’m thinking about this a little bit now. Now some companies I think about a vanguard. They are really mutual, they’re mutually owned. So they. It’s not a non profit. I think it’s different than a non profit.

Wes Moss [00:22:38]:
But the bigger they’ve gotten, the More they’ve been able to lower their fees. But besides them, let’s look at the reality of the world. Think of the big ETF providers, BlackRock, they own iShares and, and State Street. I think the brand of ETFs they have are spiders. And think Fidelity, Schwab, all these giant companies, these are for profit companies. And you’re right, trading fees have essentially gone away and now ETF fees are so small that I’ve thought the same thing. At some point if you’re charging 0.0, so there’s 1% and then there’s 0.1% and then there’s.01%. Like how do you make any money doing that? Here’s some math at.03%.

Wes Moss [00:23:26]:
So again, a third of a tenth of a percent. Christa, ultra, ultra cheap. At $100 billion it’s still $30 million a year.

Wes Moss [00:23:36]:
Not too shabby.

Wes Moss [00:23:37]:
It’s all about scale. These companies don’t have hundreds of millions and, and they don’t have tens of billions. They have hundreds of billions. In the case of the really big asset managers under management for some of the top five, they have multi trillions. So it is a game of scale. And I think that’s part of the reason we’ve been able to see rates and expenses come down. Cause these companies have gotten so big. So first it’s so much about scale.

Wes Moss [00:24:11]:
Secondly, there is a kind of a hidden revenue stream. It shouldn’t be costing you the investor. But if an institution owns a bunch of stocks in an etf, they can do securities lending on that. So that’s another hidden way they make some money. There is something called creation and redemption fees. So think about the complexity of an ETF that owns 500 stocks and it stays almost perfectly at what the index. Not exactly perfectly, but very close to what the index is. The there’s a lot that goes on behind the scenes.

Wes Moss [00:24:42]:
So there’s something called authorized participants that handle the buying, the selling of some of the positions within the ETFs and the providers make money that way too. But I would look at it and the cousin to scale is the concept of kind of loss leading. What’s a loss leader it would be doing? Maybe this is a bad example, but Costco’s $50 hot dog, that’s a great example. That’s a loss leader.

Wes Moss [00:25:09]:
That’s the ultimate loss leader.

Wes Moss [00:25:11]:
Yeah. Okay.

Wes Moss [00:25:11]:
So it is getting people in the door with something you lose money on.

Wes Moss [00:25:14]:
Obviously Costco’s not making any money on a $50 hot dog plus Coke. But if one out of a hundred people make the midday decision of, hey, I’ll go get my $50 lunch and you end up buying a flat screen TV or a bar of gold at Costco, which you do now too.

Wes Moss [00:25:33]:
Sure, 50 packs of toilet paper like I do that 50. No, you can only get two giant packs at a time actually when they’re on sale, but I’ll go multiple times.

Wes Moss [00:25:42]:
So they take a little bit of a loss. Maybe they lose a dollar on selling that lunch, but they make 20 bucks selling a TV. And that I also think is all the other services. Remember the big ETF providers, if you look at the scope of their full business, they do way more than just ETFs. They do mutual funds that have, they do have higher fees. They’ll do other ETFs that have higher fees. They’ll do brokerage accounts, securities lending, and that full suite of services they’re gonna have higher margins on typically. So I think of these ultra low fees as kind of a Costco hot dog.

Wes Moss [00:26:20]:
Okay, cost leader trick.

Wes Moss [00:26:22]:
This is from Laura in Georgia. Hi, Wes. My husband and I both work full time, but due to medical reasons we’re planning to retire in the next year or two. I’m 63, he’s 77 and already receiving Social Security. We’ve paid off over $100,000 in debt and have $250,000 saved in a traditional IRAs and 401K which is no longer Roth with uncertain markets and only needing about 20k a year to live on. If Social Security remains intact, how much should we move to cash or liquid assets? When should we do it and where should we put it for safekeeping to cover our bills? Love you guys.

Wes Moss [00:26:55]:
Love you too. Laura. Yes, I love these. Our listener really are very sweet. So we’ve got a lot of very nice notes. So I very much appreciate that.

Wes Moss [00:27:03]:
Yes, absolutely.

Wes Moss [00:27:04]:
We are trying to help and our answers here are, are we’re doing the best we can do. And they’re not necessarily the perfect answer, but I think hopefully the guidance is helping. So, Laura, the perspective I would have here is, first of all, you mentioned if it was casual, but you said if Social Security is there, you’re 63, your husband’s 77. Social Security will be there. It’s not going away. And it’s easy to scare people that it’s going to go away, but it’s not going away, particularly for somebody in their 60s and above. It’ll get maybe reduced for the 20 year olds you’re Not I would be careful if I was a 20 year old counting on what today would be a full, full, full Social Security payment. That’s probably a question, but that’s a really long time.

Wes Moss [00:27:57]:
We’re talking 30, 40, 50 years from now for you guys Social Security is going to be there. So if that’s the case and you only need 20k a year from the portfolio, well what’s the dry powder rule? Five years, let’s call could be anything but I kind of benchmark it at three years at least. Let’s push it to five for you. Simple math. Five years of spending 20K is 100K. So I would have of the 150, 100 of the two. I’m sorry of your 250, 100 of the 250 which is only 40% in the dry powder areas, which would be CDs, a money market mutual fund, a shorter term treasury fund or even a short to intermediate term treasury fund that is going to have some movement because bond prices do move if they’re not ultra short term. But to me those are all the areas Laura, that you want to keep.

Wes Moss [00:28:53]:
40ish percent in that dry powder and then for utility purposes, cash, cash, cash, not invested actually in a checking account. Six months to a year just so you’re not having to sell something. So that’s another 10 or 20 in just a regular checking account. Usually they don’t, you don’t get a lot of interest in those in the world we live in today. But I think that takes care of 5 years dry powder safety assets and the really short term, six to 12 months of just utility money. That’s what I would do it. Christa, We’ve got more questions but before that we’ve got weather, traffic and more Money Matters right here on wsb. Good morning and welcome back to Money Matters.

Wes Moss [00:30:04]:
I’m your host Wes Moss here in studio with Christa DiBiase. Thank you for being here Christa. We’re going to dive right back into, into the Q and A.

Wes Moss [00:30:14]:
All right. This next question is from Martin in South Carolina. My wife and I are 80 years old and planning to move into an over 55 age community. We will sell our current home to purchase a home in the new community. However, the difference between selling and purchasing will leave us with about $200,000 in shortfall. Our combined invest total investments are two and a half million in our IRA, 1.4 in our Roth accounts and 2.1 million in our taxable brokerage accounts. Which would be the best sources for us to take money for our new home purchase. Concerning taxes and additional financial points that you are aware of.

Wes Moss [00:30:46]:
Okay, Martin, It’s a lot of savings.

Wes Moss [00:30:48]:
It’s a lot.

Wes Moss [00:30:49]:
He’s got a lot of savings. Two and a half million IRA, 1.4 Roth and then a million over a million in taxable is what I’m seeing there. Here’s my thought, is that, you know, we go, the Roth is the quick reminder on the utility of the different accounts. They’re all good, all the savings levels are good because you have cash reserves. But from a tax perspective, a regular IRA is probably the least good. Then you’ve got a taxable brokerage account, and then the next best, or the slightly better, and then the best, in my opinion, is the Roth tax free, no matter how much you pull out. So, Martin, you have a $200,000 delta that you want to cover. We talk so much about how great the Roth is.

Wes Moss [00:31:34]:
I also noticed, Christa, that nobody ever wants to use the Roth money. It’s like, oh, I can’t take the roth. Martin, you’re 80. When are you going to use it? So this is when you use it. I’ve talked a lot about the utilization of a Roth. And if you talk to tax professionals, I’ve heard one of their opinions is often the Roth works if you use the Roth. It only works if you use it. Sure you can.

Wes Moss [00:32:01]:
It’s great for your heirs to inherit the roth because their RMDs are same thing or they don’t have RMDs. And when they pull money out, it’s tax free for them, too. So it’s a great asset, legacy asset, too. But I think in this case, because it’s only, if you’re doing the math, 200 over 1.4 million. It’s only about 15% of the Roth. So this, I think this is the time to use it. I would wash away the guilt of using the forbidden Roth money, and this is the time to use it. So you use the 200.

Wes Moss [00:32:34]:
You still have plenty in the Roth. 1.2 left versus 1.4. And you’ve done that. No taxes, no mortgage. Now. And to me, I’m giving you some permission to go ahead and at least consider using the Roth, the second best option. If you do have a taxable account and you have some positions that don’t have big gains, you can focus in on those positions util, turn that into cash and use that as well. That’d be my second option.

Wes Moss [00:32:59]:
But I, I like the Roth option, Christa. I love Having you here, I love all the questions you bring. Send us more questions@yourwealth.com contact. We’re going to run to quick news, weather, traffic. Then Jeff Lloyd joins us in studio for the upcoming hour. Straight ahead, are you facing a fork in the road and deciding between continuing your career and retirement?

Wes Moss [00:33:44]:
I’m Wes Moss, host of Money Matters. And this massive life decision shouldn’t be taken lightly. Talk with my team. If you’d like help reviewing your retirement accounts and building a financial plan, we can help you review options and offer an opinion based on your best interests. You can find us at yourwealth.com that’s Y-O-U r wealth.com.

Wes Moss [00:34:08]:
It’S WSB’s Money Matters with Wes Moss, certified financial planner and chief investment strategist from Atlanta Scientist Capital Investment Advisors. Wes talks to you about investing and saving for the future.

Wes Moss [00:34:22]:
Good morning and welcome to Money Matters. Here it’s Sunday morning in the 10 o’clock hour. Your host Wes Moss along with. Luckily we get this guy back in the studio. It was lonely without you last weekend. Jeff Lloyd, back in, back in play. Good morning. Welcome.

Jeff Lloyd [00:34:39]:
Well, I’m glad to be here. And you know, that was last month’s news. This is a new month. We’re in May.

Wes Moss [00:34:44]:
You know, I was at the office this week. It was Friday and I was in the, I was in the, we call it the experience. What is it? Client experience room? No, no, it’s the lunchroom.

Jeff Lloyd [00:34:56]:
It’s the lunch room. The employee experience room.

Wes Moss [00:34:59]:
The employee experience room. Okay. It’s a wonderful gathering place. There it is. There’s not an actual water cooler, but this is where you get water and coffee, of course. And everyone was in a great mood. And I said everyone seems in a great mood day. Well, because it’s Friday.

Wes Moss [00:35:13]:
I said, that makes sense. And it reminded me of the Mappiness project. And I was like, hey, guys, have you ever heard of the mapping? Just now. Well, well, this is where researchers rank the things we like in the world and dislike. There’s 40 of them. These are human activities. And number 40, which is the lowest. This is like the worst thing we like as humans or maybe we dislike the Most.

Wes Moss [00:35:37]:
Number Number 40 of enjoyment is sick in bed. And I asked him, I was like, what’s number 39? Like what’s the second worst thing in the world, by the way? Top things, number one, intimacy is number one, humans. Number two, exercise, sports, running. Three, going to the theater and four, going to seeing arts, which I maybe I get that art museum. I don’t know if It’s a top five thing out of 40. For me, number five is gardening. Anyway, so these are the fun things. We like the world, right? 40, sick in bed.

Wes Moss [00:36:10]:
That’s the worst. Number 39. And nobody wanted to say it because they were in the employee experience room. Nobody wanted to say, well, what. What. What is the second worst thing? I. No, we don’t know. It’s work.

Jeff Lloyd [00:36:22]:
I was going to guess going to work, even though it would. It would not be that low on my mappiness list. But it’s. It’s going to work.

Wes Moss [00:36:30]:
It’s okay, everyone. You can say it. It’s fine. The reason we love Fridays is because tomorrow we don’t have work. Now, do you consider today here in studio work?

Jeff Lloyd [00:36:42]:
No, I don’t love doing this.

Wes Moss [00:36:44]:
Now, does it take.

Jeff Lloyd [00:36:46]:
Now, does it take a little bit of work in preparation? Yes, it does.

Wes Moss [00:36:51]:
Yeah.

Jeff Lloyd [00:36:51]:
But when we get the conversation going, you know, we’re talking about new, interesting things and also, like, things that we revisit every now and then on the show just because we have to reiterate some things to. To our listeners out there about investing and staying invested in the market, in the economy. But, yeah, there’s some. There’s some work in preparation.

Wes Moss [00:37:11]:
There is. It’s about as fun as work gets. Let’s put that way. This is about as fun as work gets.

Jeff Lloyd [00:37:16]:
And that’s why work is not number 39 on our mappiness list, because we enjoy doing this, and that’s why we’re here every Sunday.

Wes Moss [00:37:25]:
I would love to see those 40 things ranked for Jeff Lloyd. I’d love to know. I’d love to know your top 40.

Jeff Lloyd [00:37:31]:
You know what?

Wes Moss [00:37:32]:
You can’t do it right now.

Jeff Lloyd [00:37:33]:
Can I tell you one of them? Because it happened this past week in Atlanta. Going to a concert. I went to the Pearl Jam show.

Wes Moss [00:37:41]:
You did. You are a long time. Tell the audience how many years and how many Pearl Jam shows slash concerts.

Jeff Lloyd [00:37:50]:
So. So I was actually thinking about this exact thing this week, and I went to my first Pearl Jam show back in 1998. Actually, it was September 3rd, 1998.

Wes Moss [00:38:00]:
98. You’re. And I was.

Jeff Lloyd [00:38:01]:
And I was doing some quick math, and I was like, you know, that. That was 17 years ago. And then I was like, wait, that math is wrong. I’ve been going to Pearl jam concerts for 27. 27.

Wes Moss [00:38:13]:
Yeah. You were a child at the time. You’re a child. But.

Jeff Lloyd [00:38:16]:
But going to concerts that would be up on the. The Top of my list. And I hadn’t been to a concert in a while, but Pearl Jam came to town, had to go number three on the list.

Wes Moss [00:38:25]:
Humans out of 40. Makes sense. I don’t go to a lot of them. The ones I do, they are some of the. It’s like the highlight sometimes in the year, particularly if you’re seeing somebody you love, like with your top three musicians, it is about as good as it gets.

Jeff Lloyd [00:38:40]:
And we’ve talked about core pursuits. And me and you went to a concert a couple of years ago and it was, it was music tourism. So we went to go see Chris Stapleton in.

Wes Moss [00:38:52]:
Oh, that’s right.

Jeff Lloyd [00:38:53]:
Greenville, South Carolina.

Wes Moss [00:38:54]:
That was pre covered.

Jeff Lloyd [00:38:55]:
That was pre covered. That’s right.

Wes Moss [00:38:56]:
That was. That was before. It was a long time ago. That was all we, we traveled. We went to Spartanburg. Right.

Jeff Lloyd [00:39:03]:
Greenville.

Wes Moss [00:39:04]:
Greenville, South Carolina. Still memorable. Still one of the 1. An amazing night with Chris Stapleton. All right. With that, we’ve got a lot to cover here on markets. I’m going to give you a choice of where to go. One, we can talk about market returns because we did just close out April, so we’re a third through the year.

Wes Moss [00:39:23]:
We can talk performance. That’s one, two. We can talk about different sectors and what’s working and what’s not working. So far in 2025, there’s a.

Jeff Lloyd [00:39:36]:
This is.

Wes Moss [00:39:36]:
I don’t know if it was this past week or it’s been a couple weeks ago I wanted to talk about this. We never got to is the 50th anniversary of Microsoft. And for some reason I remember that because I believe they started. Yeah, they started in the year before I was born. To give you an idea of what my age, I guess that’s kind of a big hint. The math’s not too tough on that one. But 50 years of a company that started essentially in a quintessential story with two guys, a little bit of money in a garage to be now a three, call it trillion dollar company. That is a pretty phenomenal story.

Wes Moss [00:40:15]:
And then that kind of dovetails into this concept of thinking about companies as actual companies as opposed to blips on the screen in stock. So companies, not stocks. And then what if you were to take your time horizon and change it to lower? So Instead of a 35, money lasts forever and you get your 4% withdrawal roll. What happens if your time Horizon is only 20 years? All right, that’s your choice. I give you gut reaction. Where do we go first?

Jeff Lloyd [00:40:45]:
Let’s go with Microsoft. Let’s go with the 50 years. Let’s go with companies, not stocks. And not that it’s a buy or sell recommendation but Microsoft was in the news this past week with earnings and saw a positive stock reaction for them. So let’s dive straight into Microsoft and the 50 Year Story.

Wes Moss [00:41:01]:
All right, so if you go back to any time you see a stock that does that well, you always wish, you wish you bought more. It’s a kind of human. We were talking about this week gonna I wish, I wish I owned more of that. Right. So it had a again not buy or sell recommendation. That’s the, that’s the reality. It’s not for everyone because it is a volatile technology stock to some extent. But if you go back to April of 1975, two guys named, well two of them, one of them named Paul Allen, the other, of course we know Bill Gates by the way.

Wes Moss [00:41:36]:
I just saw Bill Gates daughter launched a company this past week OR2 called FIA which is almost like a kayak or Expedia for clothing by the way. It was pretty cool to see she right out of college. Pretty cool. It’s a private company, technology. But anyway, let’s go back to this. We got Bill Gates, Paul Allen, little company called Microsoft at the time. And if you really, you go back, even for the first 10 years, you don’t know what, what’s going to happen to one of these technology companies. These are scrappy kids with the dream and today it’s this massive, massive company and you might think gosh, it would be, wouldn’t it have been nice? It didn’t go public until I want to say 1986 but wouldn’t it be nice to have gotten that moon? Really it’s been an absolute moonshot.

Wes Moss [00:42:24]:
But let’s just say instead, instead of Microsoft, which is a wonderful story. Bill Gates by the way will tell you part of his luck that he was there at the time when the world was changing over to software and it was kind of right place, right time. Now he says that but also he’s a brilliant individual, hard worker. But instead of catching that lightning in a bottle in those early years, what if you just put the money in the market? So what do you put just instead you couldn’t pick it. Go back to Morgan Housel’s, just buy everything. The art dealer who the most successful art dealer in the world didn’t have the greatest eye for art. He just bought a lot of art. A couple of those pieces went through the roof price wise but instead you just bought in March of 1975.

Wes Moss [00:43:09]:
The S&P 500. A hundred grand. S&P 500. And you had the patience to not jump out every time we saw One of these 20, 25, 30% corrections which happened over and over. I think there’s and bear markets during that period of time. Financial crisis down 56%. The overall market, of course, Covid tech bubble, you name it. What would the 100k be worth today? So yeah, you owned a tiny bit of Microsoft.

Wes Moss [00:43:35]:
Actually it didn’t enter the S&P 500 right away, so I don’t know when it actually did. But you just bought the whole market. That a hundred grand then would now be worth about $25 million. How do you like that? So you don’t need to find lightning in a bottle. You need to. It’s more important to participate as opposed to have the perfect call.

Jeff Lloyd [00:43:57]:
So a hundred grand invested back in 1975 in the S P500 through all the ups and downs and cycles in the market, you’re looking at about $25 million.

Wes Moss [00:44:09]:
Did I skip over that too fast? Kind of just took it.

Jeff Lloyd [00:44:11]:
I just, I just, it’s, it’s worth saying and repeating again now just for fun.

Wes Moss [00:44:17]:
Jeff Lloyd I took a look at what 10k, not a raise, but $10,000 in Microsoft starting in March of 1986 when it went public. So then you could have bought it back then. Again, this is all hindsight, hindsight, hindsight. And you never touched the dividends again. This is 11 years after it started. See what would the 10k be? It’d be worth $66 million. So hundred over 50 years turned into 25k. That’s the total market still pretty amazing.

Wes Moss [00:44:54]:
Rate of retailer, 11 plus percent compounding per year. But only 10,000 in 11 years later, $66 million. I didn’t even put 100k in that to begin. That number gets ridiculous. So that’s the story of a company that started it completely at zero half a century ago and now is really just not taken over the world. But it’s become a household name, a global name. And a company that continues to not only is in most of our offices and in the cloud, suddenly on the ground, but in the cloud.

Jeff Lloyd [00:45:34]:
Was that a Microsoft pun? Talking about in our office? Normally that’s my role.

Wes Moss [00:45:38]:
See, I didn’t even see. I’ll do a pun but not even know it. And you’re almost like a pun translator. You’re always listening and then you immediately pick it up.

Jeff Lloyd [00:45:48]:
I excel at them.

Wes Moss [00:45:50]:
Oh my goodness, there’s another one. That’s, I’ll stop, by the way, if you didn’t get that Microsoft Excel is the cousin to Word, it’s for all the math. Jeff Floyd, can’t stop.

Jeff Lloyd [00:46:01]:
You should see the people around the studio right now just rolling their eyes.

Wes Moss [00:46:05]:
Human pun translator, just shaking their head. It tells you how the synapses in Jeff Lloyd’s brain works. They’re just always on. Switch is always on. So we’ve got a lot more to talk about, of course, a wonderful story and just another lesson that we’re investing in companies and not just stocks, but the passion, the intelligence, the innovation. Are those two guys part of the army of American productivity? I think they are. All right, we’re going to run to weather traffic. Speaking of the army of American productivity.

Wes Moss [00:46:38]:
And then more Money Matters right here on WSB Radio straight ahead. Good morning and welcome back to Money Matters. Here. It’s Sunday morning. We promise no more Microsoft puns here at this hour, the or this, this shorter segment. Let’s talk about markets. JEFF lloyd, it really has been a, I guess tumultuous is not the wrong word. It’s been quite a year where we, we know that at one point from a, let’s call it max drawdown perspective.

Wes Moss [00:47:34]:
And there’s a couple of ways to look at this. We could look at it intraday and closing price, but I, I know that at some point the S&P 500 was down 20%. Now your max drawdown stats are 19, but I think that probably counts that we were down and we didn’t quite close down. Funny. But at one point we were down 20%. Intra day, the NASDAQ down almost 24%. Max drawdown and the Dow down about 16. That was the max drawdown year to date.

Wes Moss [00:48:06]:
Now where do we stand, though? We just, we did these numbers as of the end of April. So what was that Thursday or Wednesday? As of Wednesday, yes.

Jeff Lloyd [00:48:14]:
As of Wednesday, where do we, okay.

Wes Moss [00:48:17]:
Down 20, SP 500. Where are we now down year to date.

Jeff Lloyd [00:48:21]:
And this is just the price change. So it doesn’t factor in any, any dividend, just price change. S&P 500 is down about 5.3%. Nasdaq, Nasdaq down 9.7% and then the Dow down about four and a half percent.

Wes Moss [00:48:37]:
It’s funny, the averages really are doing what they are supposed they are meant to do, meaning that you, you would expect more volatility out of the Nasdaq and we’re getting it where you’d expect the least amount out of the Dow because It’s a little bit more, it’s obviously more weighted towards traditional companies. And then the s and P500 again, right smack dab in the middle, still very heavy within technology and communications. Within communications. There’s a lot of tech there as well, but it kind of splits the difference between the two. But I think the bigger point is that it’s been a tumultuous year. Yet here we are, maybe not as bad as you would have thought or maybe not as bad as it may have felt. Is that fair? When you’re talking to families, what are people if you were to say hey, how are you doing this year? What would people say?

Jeff Lloyd [00:49:27]:
Well, I think they come in with the perspective of what they’ve seen in the headlines and what they’ve seen regarding tariffs and market volatility. And they see the headlines of while the stock market’s down 20% or down 25% or a couple of weeks ago we just saw the worst two day stretch back to back two day stretch in five years. So going back to Covid. So that’s in their mind. And then when I talk to them.

Wes Moss [00:49:56]:
They’Re like and, and right.

Jeff Lloyd [00:49:58]:
Remember, just rip the band aid off. How bad am I?

Wes Moss [00:50:01]:
How bad is it?

Jeff Lloyd [00:50:01]:
How bad is it?

Wes Moss [00:50:03]:
Not to mention you’ve got all the news around how the first hundred days of this presidency you’ve got rate of return obviously falls pretty low on the list so far, at least for for April or the first hundred days. So folks are saying hey, how bad is it? And then the reality is it’s not.

Jeff Lloyd [00:50:21]:
As bad as the headlines say. Okay.

Wes Moss [00:50:24]:
You’re not just led you to, you’re.

Jeff Lloyd [00:50:25]:
Just not invested in all S&P 500 stocks and all in the NASDAQ. You are diversified. You’re invested in companies that are paying and growing the dividend and generating income.

Wes Moss [00:50:38]:
For you, not to mention the balance of fixed income which is in large part up this year. So it’s not nearly as bad as maybe the sentiment would lead you to believe. Not to mention if you look out a whole entire year, markets are up pretty significantly. With that, we’re going to run to news, weather, traffic and more Money matters right here on WSB Radio. Straight ahead.

Wes Moss [00:51:11]:
It’S WSB’s Money Matters with Wes Moss, certified financial planner and chief investment strategist from Atlantis Capital Investment Advisors. Wes talks to you about investing and saving for the future.

Wes Moss [00:51:24]:
Good morning and welcome to Money Matters here at Sunday morning. Between the break, we’re just talking about the difference between miles per hour and knots we saw Jeff Lloyd. Now that we’ve googled it, it’s easy to remember. But it’s the knots and we only. This only came up because the boys were watching.

Jeff Lloyd [00:51:41]:
Top Gun, Maverick, one of the best movies ever. I think it’s in my top five.

Wes Moss [00:51:46]:
It’s got. I love it. So when you’re looking. I think we probably bought it a couple years ago on Apple tv. So it was available. We still have it and it has 98% rating, which there is no movie that is that high. I don’t think maybe Christmas vacation.

Jeff Lloyd [00:52:01]:
There’s always going to be that hater, that 2%.

Wes Moss [00:52:03]:
But it is, it is almost the perfect film. It’s the perfect movie because it has the action. Nothing’s cooler than fighter jets. Tom Cruise is great in it. You’ve got the love story. I mean it just. It’s the perfect. It’s the perfect film and it really was the Navy.

Jeff Lloyd [00:52:19]:
I mean perfect sequel as well as a follow up to the original Top Gun which was back in the 80s. So it was how long in between films?

Wes Moss [00:52:28]:
I think that there is. Isn’t there a rumor that they’re doing another one? I know, I don’t know that you’re die. That makes it right back in your laptop. I know producer Mallory still hasn’t seen it. Can you believe that?

Jeff Lloyd [00:52:40]:
I. I can’t believe she said she.

Wes Moss [00:52:42]:
Doesn’T want to watch it because she doesn’t like sports.

Jeff Lloyd [00:52:44]:
Well, there is that football scene.

Wes Moss [00:52:45]:
Does that make any.

Jeff Lloyd [00:52:46]:
There’s a football scene in there. It’s not a football movie, but football.

Wes Moss [00:52:49]:
Beach scene.

Jeff Lloyd [00:52:49]:
It’s a beach scene.

Wes Moss [00:52:51]:
Anyway, we’re going to stay on course as we do as long term invest. We talked about not sectors. Well, let’s talk about sectors. So far this year we have some interesting data around what’s done well this year. Jeff Lloyd. Market’s down still as of the closeout of. Call it the April 30 date for that period of time. S and P 500 down around 5%.

Wes Moss [00:53:20]:
What are some of the sectors? What’s the best sector? And then the worst sector. So the best so far in 2025.

Jeff Lloyd [00:53:26]:
So far the. For the first third of the year. So for the first four months, utilities are the best performing sector from a price return standpoint, up over 4% as are consumer staples. Up 4.

Wes Moss [00:53:41]:
Adding the dividend, you’re talking 5, right?

Jeff Lloyd [00:53:43]:
That’s right.

Wes Moss [00:53:44]:
Oh, dividends, they matter.

Jeff Lloyd [00:53:45]:
Little sweetener there. Then you got health care up a little bit over 2%. Real estate up a percent. And a half and then financials up almost a percent.

Wes Moss [00:53:55]:
But what about the worst too?

Jeff Lloyd [00:53:58]:
So the worst two, consumer discretionary is the worst, down about 12% and then technology down almost 10%.

Wes Moss [00:54:06]:
I would have to imagine that the consumer discretionary, that the reason that’s the worst performing sector is a big chunk of that is I want to say is Tesla within that. So remember, these are the big 11 sectors for the S&P 500. Utilities, Staples, Health Care, Real Estate, Financials, etc. Energy, Tech, Consumer discretionary. And just like the indices themselves, just like The S&P 500 is dominated by tech, within some of these, of course there’s the tech sector, but within some of these other areas, as an example, consumer discretionary tech still plays a really big role. So and, and then the bigger the company, the bigger the weight of the performance. Because these are cap weighted indices as well.

Jeff Lloyd [00:54:50]:
Yeah. And some of those components just popping open the hood and looking into the consumer discretionary, you got Amazon like you said, Tesla, Home Depot, McDonald’s, Starbucks, companies like that.

Wes Moss [00:55:02]:
Couple statistics around this. 52% of the S&P 500 stocks had 52% of the overall index. S&P 500 have done better than the index itself. 52% have been better than the. So that meaning a stock, a little over half of the stocks are down less than 5%. And then what else is interesting, and.

Jeff Lloyd [00:55:26]:
That’S a, that’s a, a healthier number than we had seen in previous years. If you think about last year and the year before that. And in 2024 that number was only 32% of stocks in the S P 500 outperforming. And now we’re even, even lower in 2023 when it was only 29%.

Wes Moss [00:55:45]:
Yeah, and then. Which is really what we’ve been waiting for. I think we’ve been waiting for mostly because of the reverse. We, I believe in reversion to the mean. And when you have a situation where markets get super narrow, it’s not as though we’re predicting and saying, well the market’s going to broaden out, the market will broaden out. It’s really that it almost got to the point where it almost had to broaden out, which would go back to a more normal market environment. We’ve seen that. Which brings up the point which is still, it feels like investing 101.

Wes Moss [00:56:19]:
And sometimes it feels as though it’s just too simplistic to even talk about here on Money Matters. But it’s such a good reminder of diversification. And why we want diversification, of course we want. Right. Well, the world got pretty undiversified over the last couple of years. Then that goes back to investor behavior because you have a pretty long periods of time where only a few things are working. Human nature. Maybe it goes on for a month.

Wes Moss [00:56:51]:
And you say, oh, I’m going to stay diversified. It goes on six months. You say, wait a minute, the only stocks that are going up are those five or those seven. And then you say, well, I want to stay diversified, I want to stay diversified. And then another six months goes by and it’s still those stocks leading the way. Eventually people break down and eventually those, those basic fundamentals kind of, they can pretty easily walk out the door. And then the investor says, well, I’m just going, I’m going all in. I’m going all in on those.

Wes Moss [00:57:21]:
On the narrow part of the market that’s really working just in time to now broaden out, which we’re seeing in 2025. So within diversification, of course, we want to own more than a few stocks. That’s just securities diversification. But then we want capitalization diversification, meaning the size of companies. We don’t just want the ultra, ultra, ultra mega cap companies. We also don’t want micro, just micro cap. Right. Just because over time small companies have done better than large.

Wes Moss [00:57:52]:
We often don’t have the stomach for the volatility that comes with that. So we want size diversification, we want geographic diversification. We can even go as far as investment strategy diversification because there’s more ways to look at stock investing. And this goes for many different kinds of investing. Fixed income, real estate, we want to. There are different philosophies. There’s growth investing. These are companies that aren’t paying dividends but are growing really rapidly.

Wes Moss [00:58:22]:
One way to do it. And then there’s income investing or dividend investing, which is, it’s not the only way or the right way to do it, but it’s, it’s another way to approach investing and say, I’m okay with companies that are growing not quite as fast because they’re more mature, but they do return cash to shareholders. As in really almost making up for, hey, we’re only growing at 6% a year. That doesn’t sound that great when tech is growing at 25. Well, but because we’re a slower grower, we’re going to return cash flow to you in the form of dividends or could be share buybacks. And that’s part of focusing on the income side of Investing. And I don’t know if there’s a perfect answer. I think you’d be an income investor young.

Wes Moss [00:59:08]:
What I do see though is that the closer we get to retirement and the more the pot of money that we’ve saved needs to turn into an income stream. We need to start living off of it. There’s something psychologically we go back to behavioral investing behavior and psychology is such a big part of figuring out the right strategy for us is that it’s nice to see companies, I think folks that have stopped working, no more wage income. It’s very, it’s some. I don’t know if the word is comforting that gives you peace of mind to have a steady dividend flow from your investments as opposed to always eating into the principal. And that to me is income investing. Hey, I’d like to see some cash flow coming in and I’ll spend it. It’s a way to not necessarily have to dive into the portfolio.

Wes Moss [00:59:53]:
And that’s the philosophy or the style diversification. You can have that plus growth investor.

Jeff Lloyd [01:00:00]:
And we have a lot of families that do rely on the investment income that they’re pulling out on a monthly or quarterly basis. And so what we’ve seen so far through the first four months of the year is some heightened volatility, more volatility this year than we’ve seen in previous years. But I always go back to if. If a family is pulling some money out on a monthly basis, well, how do we combat that volatility? Are you still getting your. I’m making a number. Are you still getting that $5,000 a month out of your portfolio each and every month. Will you continue to get that moving forward through the year? And the answer is yes. So regardless of the ups and downs of the market, the market goes up 20% or if the market goes down 20%, you’re still receiving that monthly income.

Wes Moss [01:00:52]:
Which leads me to. It’s when we’re thinking about distribution and we’re thinking about pulling. Turning a pot of savings into a cash flow goes back to withdrawal rate. And we re ran some numbers this past week that were a little eye opening. And this stems from a. A question I’ve received now a couple times over the past couple months. And I thought, wait a minute, why does anyone talk about this? And it goes back to time horizon withdrawal rate. And when we talk about withdrawing and we know we, our philosophy goes back to the 4% plus rule.

Wes Moss [01:01:28]:
What if your time horizon is only 20 years? And when we do these studies around, we look at historical Market performance, inflation, the stock side of the equation, the bond side of the equation for a balanced portfolio over time, we think about how does money last for 35 years plus? Well, if you’re 85 and you’re asking do you need a 35 year time horizon, maybe not. Now you make the argument, yes, because money should fund my retirement and then the next generation. Sure. But I’ve had a couple questions and say, hey Wes, what if I really only want to look at a 20 year time horizon, can I take more than four? And the answer is mathematically, of course, of course you can and you can do it safely. Now my gut reaction was I think the number will be much higher than 4% if we just shrink and we only look at how historically, how do we make money last for 20 years with a 95% confidence. My gut was telling me it would be 6 and a half or 7%. Doing the math and keeping a 95% confidence that money doesn’t run out, it’s more like 5 and a half percent. Now that’s still a big jump from 4.

Wes Moss [01:02:45]:
You could even make an argument for from 5 and a half to 6, but it’s not 7 or 8% like my gut was saying. And really it’s because the impact of inflation, if you go back over periods of time, we can run into periods of time where bad markets and high inflation and we’ve got to solve for that because that could happen if that happens to be your retirement environment for the first couple of years. Good news is if you’re planning for a shorter horizon, 20 years, 15 years to make sure money lasts, the percentage withdrawal certainly can be higher than 4%. We’re going to run to news, weather and traffic, all of the above news, weather and traffic. Then more Money Matters right here on WSB Radio. Good morning and welcome back to Money Matters. Here it’s Sunday morning. Your host Wes Moss along with the great Jeff Lloyd in studio.

Wes Moss [01:04:06]:
It’s been a little while since I’ve come up with an acronym, Jeff. So it was about time. And it was Christa DiBiase who was on in the hour before us or before this, wanted a way to remember the top things you need to talk about with your financial advisor, with any financial advisor. And I started rattling off, you’ve got to talk about your, some sort of financial planning, retirement timeline and then your portfolio structure. And then you really should think about insurance, whether that’s property casualty, property casualty and life insurance, etc. And then I thought for a second, wait a minute, that’s easy. It’s just the piece. It’s just all PS.

Wes Moss [01:04:46]:
It’s 5 PS. It’s planning. It is. And there a lot goes into that, and that is planning for funding your retirement and then funding your core pursuits and then funding your everything you would like to do and your goals, your life goals. That’s the way every sort of financial conversation should start, whether it’s across the dinner table with a spouse, a partner, or your financial advisor. And then the next P is portfolio, which is we’ve got to have your money structured in order to meet those goals. And then the third P is protection. Jeff Lloyd.

Wes Moss [01:05:18]:
And the reason I know this is easy to remember is that I had my seventh grader read the five Ps. He said, what do you want me to read this for? I just said, just read, just read it. And then five minutes later I go, what are the five Ps? He goes, oh, he goes, portfolio, protection. So he remembered them, so they’re easy to remember. Number three is protection. So insurance, property and casualty and life insurance. Number four. And these last two are just death and taxes.

Wes Moss [01:05:44]:
Number four is passing it on. How do you create a legacy where your assets go to the next generation and the way you want them to go? And number five would be paying yourself and paying taxes and making sure that you have a strategy that you’re efficiently structuring the way your portfolio is structured from an account perspective. So you’re minimizing your taxes that you have to pay and you can control your income. So that’s it, Jeff. The five Ps, three Ps and death and taxes or just five Ps I don’t know which is a better way to look at it.

Jeff Lloyd [01:06:19]:
It’s funny that we’re kind of ending the show with the five P’s and the last of the P’s is paying yourself and paying taxes. Because this past week was actually the official end of tax season with the tax extension due to the hurricanes that came through Georgia. It wasn’t just April 15, it was this past week.

Wes Moss [01:06:38]:
You know, again, not only are your pun translator sensor always on, I think you’re just general tie in from financials to the real world. That’s always on too. This is just. You don’t know how not to do that, which I love. And, and within each one of those fives, and I don’t, I don’t want to give this short shrift, there’s a lot that goes into all five and they also almost, almost all of the really all five continue to evolve over time. The least amount of evolution might just be insurance. I’ve got my umbrella policy or I got my life insurance policy. But guess what? In 10 years, that might evolve, too.

Wes Moss [01:07:13]:
In 15 years, that might evolve as well. And then all the other four evolve. They’re constantly evolving. And that’s why it’s so good to continue that conversation. We’re wrapping up our Sunday conversation here on Money Matters on a Sunday morning. But you can continue the conversation with us. It’s easy to do so by finding us, me and Jeff Lloyd at you, your wealth.com and we’d love to hear from you. That’s just y o u r your wealth.com and with that, Jeff Lloyd, thanks for being here.

Jeff Lloyd [01:07:46]:
Thanks for having me back.

Wes Moss [01:07:47]:
And of all, all of our listeners tuning in. Have a wonderful rest of your Sunday.