Did you know that while the S&P averaged 10% a year over the last 30 years, an average investor only did 4% a year? To date, most average investors earn below average returns because of underperformance. Now, what are the factors that cause them to lag the market? How to correct these to avoid a further meltdown?

This week in the No Payne, No Gain podcast, Bob and I will talk about the top reasons why most investors get below average returns and how you can avoid making the same mistakes on your own investment. Also, we will reveal the people you have to be aware of who come with good intentions but give you bad financial advice. As always, we will reveal the best and worst advice from the financial media in this week’s financial propaganda.

[spp-player url=”https://nopaynenogain.podbean.com/mf/play/twg3ua/NPNG_039.mp3″]

And lastly, for our spotlight segment today, we have our financial advisor at Payne Capital Management, Aaron Dessen. He will take charge of the show to break down a real retirement plan for you.

This episode is not one to overlook, so tune in to the No Payne, No Gain podcast now!


Below Average Returns

If there’s one dirty little secret you should know beforehand about the financial world, it is that most investors actually fail. Most of the time, these failures have nothing to do with the stock market but merely because most investors continue to make poor financial decisions.

[02:57] – When things are volatile, just like the Coronavirus outbreak, the toughest thing to do is to do nothing but sometimes that’s just the best strategy.

[05:09] – Think about your money as a bar soap. Never buy and sell a lot because there are transaction costs and taxes to be paid. In the end, you’re slowly diminishing those long-term returns with all the transactions that you’re executing.

[06:36] – Never ever sell stocks in a down market.

[07:39] – Bob quotes one of the wealthiest people on the planet, Warren Buffett: “Be fearful when others are greedy and greedy when others are fearful.”

[08:03] – Science works. Ryan says it’s been academically proven that a disciplined approach to investing delivers better returns.

[08:39] – Always have a diversified portfolio. It’s two steps forward, one step back, and that one step back is for rebalancing, not for panic.

Good Intentions Matched with Bad Advice

Oftentimes, we run to the people we trust when we need a piece of sound advice, financial advice per se. First in line would be your family and friends, sometimes your accountant and so on. Maybe it’s time you should start considering taking a detour and run to the nearest financial advisor alternatively.

[13:08] – Your family surely has good intentions for you but they could also be giving you bad financial advice.

[14:06] – It’s best to spot that your financial situation is so much different than everybody else’s. Unless someone grasps all the nuances of what’s going on with you, any advice given to you can be blanketed and what may be relevant to them might be completely wrong for you.

[15:13] – Friends are the worst because friends love to tell you about the winners, but not about the losers.

[16:18] – CPAs are not necessarily the ones who are going to give you the best advice when it comes to your money because a lot of times they give very dangerous advice.

[17:22] – Don’t go for the jack of all trades when it comes to getting financial advice. You want to have your accountant, your financial advisor, your estate planner all working together and not commingling their advice.

[18:24] – The worst culprits are the financial experts on TV. They’re not worried about your financial situation rather they’re thinking about how they can be the most provocative and get the most viewership that’s in complete contrast to what your financial goals are.

Financial Propaganda of the Week

Occasionally, Bob and I scour the daily financial news which only offers obscene and profane financial guidance and offers ill-advised financial decisions that you think are helpful but let’s face it, it’s time to expose the facts. Here’s what we have for this week:

[23:42] – Bob says when you’re a long-term investor, one thing you should always expect is the unexpected. The coronavirus has been around for a couple of weeks and suddenly the market took notice and then went down 13% in one week.

[24:37] – You need to have a process-driven strategy. You have to have a portfolio based on your family’s needs and goals and not event-driven. The whole purpose of investing is to generate the return you need to achieve your goals.

[25:18] – When the market goes down, the yields go up. With this big opportunity, your future retirement income is actually now on sale.

[27:47] – Ryan doesn’t recommend investing in mutual funds. They are very tax-inefficient because they have to pay out capital gains every year.

The Mailbag

This week, Dan Irving answers our listeners’ questions about their finances.

[34:56] – Question #1: “I haven’t decided on a specific retirement date yet. But hopefully, it will be sometime in the next four years. With all of the recent market volatility, should I just move my retirement savings to cash until everything blows over?”

[37:51] – Question #2: “I want to put in a screened-in porch, but the only way I could pay for it would either be taking an extra $20,000 out of my IRA this year, and I’m already taking About $25k for my regular income from there, or taking out a home equity loan to cover it, which is better?”

Spotlight Segment

Our special guest for this week’s Spotlight Segment is none other than Aaron Dessen. He breaks down a real retirement plan and uncovers his client’s pain points so you can avoid the same mistakes when planning your financial freedom.

[45:13] – A gentleman in his early 60’s is thinking of retiring soon. He’s focused on leaving something behind for his heir and wanting his money to outlive him.

[46:20] – One of his pain points was he’s worried about what’s happening in the markets. He believes that the bull run has gone on too long and worried about inflation in the next downturn being so severe that it’ll take forever to return. Now, he’s stuck in cash not knowing what to do next.

[48:20] – Most investors now have too much money in Large Cap US companies unaware of the fact that all that’s going up at the same time tends to go down at the same time too. Without building some protection in your portfolio, you can put yourself in a really bad position for retirement.

[49:09] – Another pain point is to reduce the amount of risk that he’s taking. Arron was able to increase his income by over $20,000 by diversifying his portfolio and scaling back a high concentration in the S&P.

“You do need experts. No one is a jack of all trades..”

-Bob Payne

To download 5 Ways to Maximize Your Retirement Accounts and Save on Taxes in 2020 and the Highlights from the new SECURE Act, text BULLISH to 555888.

If you have saved over $500,000 for retirement and need a plan based on your retirement goals, Bob and Ryan will create a 360 Financial Portal just for you! Text or call 844-752-6692 to check out the 360 Financial Portal with no strings attached!

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Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Payne Capital Management, LLC), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Payne Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Payne Capital Management, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Payne Capital Management, LLC’s current written disclosure statement discussing our advisory services and fees is available for review upon request.