How Do I Protect My Money During a Crisis? Should I Move My 401k To Cash? With Asset Management Specialist John Muse

Speaker 1: (00:00)
I would say anything that you buy right now as far as in the market, you need to go into it. That, you know, I'm looking at this at least a three year time horizon. Um, because you know, the, the market is very volatile. Uh, right now I'm what you buy today, that's $20 a share could be 15, you know, the next day. And so any money that you put in there in the market, right, it should not be scared money, so to speak. Uh, you should, you should be able to say, Hey, this a three year time horizon, no. For those individuals that are and retirement plans and they are five years or are further away from retirement and they're already invested and they've experienced some of this downturn, uh, then you know, everybody's situation is different if they're already invested. It really depends on what they're invested in. And eh, you know, they have a draw down inside that a 401k which they most likely do his best to stay the course.

Speaker 2: (01:00)
Hey guys, what's up? So thanks for joining me for another episode of the glam life of real estate podcast. Today we have a special treat. We're going to be talking with a guest that is near and dear to my heart because my husband and I both work with him personally with our finances and I wanted to bring him on the show expecially in the current times we are in, we were actually planning to just have a normal discussion about financial planning and retirement accounts and all that good stuff. But in light of the current environment that we're in, if you're listening to this in a different date, we're in March and April of 2020 and we have what's called the Corona virus pandemic. And so we are dealing with a lot of uncertainty, a lot of volatility, a lot of fear in the marketplace and economically with people losing jobs and that kind of thing.

Speaker 2: (01:43)
And so I just wanted to have him on the show to talk to us. So we're going to be talking to John muse. He is somebody that we trust, um, and is a family friend. And so we're going to have him on to share his expertise of what's going on currently in the market, how you can set yourself up for success financially, whether you have money in the stock market, your retirement accounts, that kind of thing, what to look for over the next few months and year. So first of all, before we get to that, we're going to um, read a quick listener review. This comes from Greg Bray. He says it's so helpful to get such great insights from people who are succeeding and willing to share what has worked for them. So really appreciate that Greg, and for all of you guys that have submitted reviews, truly, truly from the bottom of my heart, I really appreciate it.

Speaker 2: (02:28)
The core of this podcast is to really provide value and to share with you guys everything that I know and everything that I can get guests on here to teach so that you can grow and be a better version of yourself in whatever area you're looking to be in. And anytime I have a review like that, it's just great because I know that we're getting that job well done and it also helps me to know what you guys are liking about the show. So if you haven't already, take a quick second. Whatever your device you're listing on, go ahead and make sure that you're subscribed to the show and if you haven't already done so, if you don't mind just very quickly about 10 or 15 seconds, submitting a five star review if that's what you feel is worthy at the show and also your thoughts and feedback on what you're liking about the show so that we can do more of it for you guys. So without further ado, we're going to get to the interview with John.

Speaker 3: (03:14)
You're listening to the glam life of real estate podcast where we talk about everything from productivity tips, social media strategies, business hacks, and more to get ahead of the curve and crush it as a real estate sales professional. Whether you office out of a model home or your car where leopard print and high heels never go out of style. Here's your host, top producing real estate agent, social media strategist and for baby mama, Stephanie, Linda mood.

Speaker 2: (03:46)
All right guys. So we have a special treat today. We have somebody that I work with and my husband works with actually personally for our finances. And originally when we were booking the show in this interview we were just going to have a conversation about when you're self employed, when you work on commission, how to plan for your financial future. So maybe some budget guidelines, all the things on retirement. Cause I nerd out on that a lot. But in light of the current pandemic and the coronavirus, if you're listening to this, it's currently March, 2020 about to be April, 2020 that we thought that we would still keep this interview, but maybe we would shift the focus to the current economic climate. What it means, you know the stock market's been really volatile here lately. What to do if you're trying to figure out, you know, your money, you're investing, what the market looks like ahead, how this may be different from past events we've had like September 11th or 2008 and then in a few months have my guests back on the show to talk about more of the normal stuff when things settle down. So without further ado, I am so happy to introduce you to John Hughes. He is a registered principal with LPL financial, he is a financial advisor. I use him personally and I wanted to have him on the show to talk to us today. So welcome John.

Speaker 1: (05:01)
Hey, thanks. Thanks for having me on.

Speaker 2: (05:03)
Absolutely. So to kick everything off real quick, why don't you start with just kind of like who you are as far as what you do. One of the reasons my husband and I chose to work with John and I'll have him talk a little bit more about it, is he's what I'm called in real estate in the financial planning world as a fiduciary. And that's really important to know. I'll let him talk about what that is and what that means. And then we'll kind of get into some of the meat of the show, but kind of give us an idea of what you do, how you help people and um, all that good stuff.

Speaker 1: (05:34)
Sure, sure. Uh, yeah, yeah. Basically I work with people, individuals and businesses to, you know, help develop goals for them. Financial goals. Those could be retirement goals. It could be a short term, uh, education goals for their children. It could be for the business owner, um, retirement business plans for the owner. It could be, um, short term, um, savings for the business owner, you know, for some of their safe money and just building a program for them and kind of mapping that out and reviewing that and then helping them choose investments to meet those goals. Cause not all investments are created equal and everybody's situation is unique. And so that's kind of what I bring to the table to kind of pulling everybody in the right direction and get us going towards those goals. So.

Speaker 2: (06:26)
Awesome. So tell us real quick, like, what makes you different than the average financial guy that maybe you see the commercials on TV? Like why would people work with you and trust you over somebody else?

Speaker 1: (06:40)
That's a good question. You know, the, the financial industry obviously for a lot of reasons, you know, at times didn't have good reputation.

Speaker 2: (06:49)
Hey, I feel ya. I've got, it's like we're in the same industry as lawyers and agents, so I know exactly what you mean. Yeah, exactly.

Speaker 1: (06:57)
Provos right there. And so, you know, basically, Mmm. When I started out in the industry, I worked for, you know, a big, a large wire house type firm that you see a lot of these commercial school and right. Uh, probably a year after the tech bubble busted, I moved and went independent with LPL, which is a LPLs, an independent firm. And so one really neat thing about being independent is we don't, uh, have quotas per se. We don't have proprietary products that we're supposed to put our clients in. And so out of all the investments that are out there, um, you know, I can, I can choose, Hey, what's best for my client? What's has the lowest expenses for my client? What has the best performance? And so by doing that, I'm not, uh, how do we say beholden to the, to the corner office based on profitability or what products they want to sell that day, if that makes sense. And so I feel like being independent, um, you know, I don't have those constraints that someone might not say anything bad against any of the other firms. Um, but that's just, you know, that's just how we operate.

Speaker 2: (08:16)
It's, I look at similar to like my husband works for a builder and he's in a certain community in a certain city and he can only sell that community in those four plans. And I'm a real estate agent and can go anywhere in the metroplex. So I look at it like, yeah, very similar and one's not bad or good, it's just he can only sell his product. So of course he's going to make his product as attractive as possible. But if somebody is looking for something different and they want to go to a different city, I could work with them in that other city cause I'm independent.

Speaker 1: (08:44)
Right? That's right. Exactly.

Speaker 2: (08:46)
Okay, cool. So, and then did you touch on fiduciary? I don't remember if you said anything about that.

Speaker 1: (08:51)
Well, I mean obviously I'm in the fiduciary. We are bound by, uh, ethics, uh, to oversee and do what is right for our clients and do no harm. And you know, so that is the main thing, um, with us and it should be industry-wide and obviously that's how we get a bad name not doing the right thing. Um, and that's typically when you read about, uh, advisers is, is typically in the negative. It's not going to be in the positive that Hey, you know, my client during the, the great downturn of 2020 or the great pandemic of 2020, you know, I only went down 10% versus 50%. You know, and so a lot of that comes into play as far as you know, doing the right thing for your client and making sure you know your client and know their risk tolerance in their objectives. And if you know that, then the fiduciary aspect of it comes easy.

Speaker 2: (09:46)
Right. And the reason I wanted to make sure we talked about that at the very beginning of this episode guys, is because if you're sitting there listening, either you've had a bad experience with financial planners cause I have, um, or you're just trying to figure out what the angle is cause maybe this is you're thinking this is a sales guy. Like truly he's here to help [inaudible] you know, given his time today. So I just wanted to set your mind at ease that anything we talk about is really just to help. That's what the core of this podcast is about. So kind of moving along with everything that's happened with the Corona virus, with businesses getting shut down with, if you're not shut down every, you know, cells are halting, whether you're in real estate, any kind of industry, you're in, restaurants. I know everyone's probably trying to figure out where do we go from here. We thought that maybe by Easter we were going to come out of some of it and now they're saying that a lot of this hasn't even peaked in a lot of the cities. So just in general, like what are you seeing from an economic standpoint? And then maybe we'll dig into like everything, everyone's individual, okay, what did we do with our retirement and what does that look like and all that kind of stuff.

Speaker 1: (10:50)
Well, you know, from a, from a economic standpoint, you know, you can kind of, and, and your listeners, you know, if they were in the market or are in the business in 2008 during the mortgage crisis and meltdown, uh, you know, that was mainly a financial institution issue. Um, this time we're not really having a financial institution issue. We are having, for lack of a better term and you know, just a sudden break to our whole economy and that's obviously has massive layoffs. Now there's, there's good aspects and bad aspects to all of that. Uh, obviously the bad aspects is if you lose your job, that's a bad, you know, that's a problem. Um, the good aspects of it, we're going to have, um, extremely low interest rates for some period of time. They're not going to be ramping those up anytime. And when things, you know, start to turn and this too shall pass and 30 days, 60 days, whatever it may be.

Speaker 1: (11:53)
Um, a lot of those jobs, you know, will start coming back online, but they're not going to immediately just raise interest rates overnight because, um, you know, two of the biggest drivers in the economy, Mmm, is home-buying and, and, uh, car buying. And so those are, those are two huge issues right there. And so those answers rates are going to stay low and that's good. That's good for businesses to be able to borrow. That's good for businesses to be able to forecast and plan. So, you know, I would, I would say, um, you know, in the big scheme of things, it will pass. Uh, it's not pleasant right now. The economy is obviously not flooded. Uh, but you know, as we start ramping back up, uh, we will get back on the right track and, and you know, it may take six months to a year, um, you know, for things to be back to way. Maybe they felt normal if, you know, we don't all know what the new normal is, but, um, you know, I'm optimistic in the sense that we're headed in that direction.

Speaker 2: (13:03)
All right. So that gives us a little bit of of peace knowing that obviously this will pass. When you talk about the home and car buying, are you hearing anything, especially on the home buying front about loans being harder to come by or the restrictions on credit scores or anything that they've adjusted their, or is that out of your wheelhouse?

Speaker 1: (13:23)
It's, it's somewhat out of my wheelhouse. I'll go. I do work with a, you know, a lot of, uh, loan processors I guess for, for lack of a better term, if that's the lingo and I'm not sure about that. Um, but you know, I have a lot of them. That email, I was just emailing with one yesterday that's, you know, doing a closing today for a client. And so, you know, um, you know, just needing this form or that, you know, a copy of that statement. So it hasn't seen, I haven't seen anything different or heard anything different, you know, on that front. Uh, as far as, now again, it's not my wheelhouse outside of, you know, I obviously pay attention to new starts and new loans and applications, you know, when those come out. Um, but, uh, you know, but I haven't heard that it's being restricted or money's getting tighter. I will say, um, you know, typically after every downturn, yeah, money does typically get a little tighter. This time could be different because to just kind of how we slammed on the brakes and then when things pass, we're going to start back up. So we'll just have to kind of wait and see there.

Speaker 2: (14:33)
So the stimulus bill, that's what you want to call it? I don't that they're passing, it's like what, 2 trillion and it could expand that to 6 trillion. You know, when you listen to that, are there, do you have any concerns? Like obviously it's going to people that need it with relief because they can't, maybe their bills, they've lost their job unexpectedly due to, no, you know, it wasn't their fault, but is that going to, how does that, like as a normal American hearing that, should I be worried for like in 20 years, like what that means? Or do we even know what that means as far as, obviously it's going to have to get paid back. Does that mean inflation's coming? Like what does that entail?

Speaker 1: (15:11)
Yeah, I mean, that's a good question. You know, I would, I would, I would have to in, this would purely be a speculation and a guess on that. But when you're run in a that larger deficits, at some point taxes will have to go up, you know, to pay that debt. Right now, the U S is in somewhat of a unique situation because we are the world's currency. And so us being in the world's currency, um, we have a little bit more of an advantage that other countries do not have in the sense that, uh, they can always print the $4 trillion that they need to, you know, to, uh, flood the market. And, you know, how that plays out over 20 years. You know, I don't know. But I would think at some point, and this is purely purely a guess, but you know, in the next 10 to 20 years, they're probably have to address, uh, Mmm. So security ages, those sorts of things. And when they addressed that, you know, maybe they, they start looking at the deficit in and have to raise taxes. At some point it will get addressed and, you know, but it has been my experience that Congress never really will do anything until the crisis is coming down the road at them. And we're not in that crisis yet. So, you know, that's typically how things get addressed. We're more, uh, reactive, right?

Speaker 2: (16:40)
So when we look at the market, like if we look at the stock market, people have 401ks they've got, um, maybe their looking at gold or silver. Maybe they're looking at, okay, now do we invest our money in real estate? What should people be doing with the stock market? If they have money in the market, should they leave it? Should they wait? Should they try to buy socks and things that are maybe really low right now based on if they've gotten hit hard light travel. Like is there any strategy there or is it just, Hey, stay in place. Let's wait this out. What would, what would you think?

Speaker 1: (17:12)
Yeah, I mean I really can't give a, I can really the only blanket answer I could give that without knowing the individual or knowing their risks or their objectives. Uh, I would say anything that you buy right now, Mmm. As far as in the market, you need to go into it. That, you know, I'm looking at this at least a three year time horizon. Um, because you know, the market is very volatile. Uh, right now and what you buy today, that's $20 a share could be 15, you know, the next day. And so any money that you put in there in the market, it should not be scared money, so to speak. Uh, you should, you should be able to say, Hey, this a three year time horizon, no. For those individuals that are in retirement plans and their, uh, five years, or are further away from retirement and they're already invested and they've experienced some of this downturn, uh, then you know, everybody's situation is different.

Speaker 1: (18:14)
Um, and if you can hear my lab he's, he's discussing with a male man, uh, but, um, you know, if they're already invested, it really depends on what they're invested in. And, eh, you know, they have a draw down inside that a 401k which they most likely do his best to stay the course. Having said that, with a caveat, you know, I don't know their individual situation and how they're invested and so, but you know, right now, uh, I would say, Hey, if you're five years away from retirement, you know, just hang in there. This too will pass

Speaker 2: (18:50)
because sometimes the reaction when the market, you see the volatility is just to pull it all to cash. And can you speak to that and what the, maybe the pitfalls are in that regard as if you were to do that. You're selling now it like you haven't, I always look at it like you haven't lost any money until you sell. Right? Like your account may be down, but you technically haven't lost that money until you actually do the transaction.

Speaker 1: (19:15)
That's right. You know, and you know, timing the market is, you know, just next to impossible. So I can't tell you and no advisor really can tell you. Um, you know what the bottom is of the market, where that bottom was, what days is the right day to buy and what day is the right day to sell. And so, you know what, I feel that, uh, in my particular case, what, you know, what we bring to the table at LPO is, Hey, we try to, you know, keep you diversified and not have you strung out there so to speak. Um, where, you know, if we do have some bumps in the road and I would say, you know, this is a ditch, this is not a bump, but

Speaker 2: (19:57)
this is a crater. This is a fricking grand Canyon. What are you talking about?

Speaker 1: (20:02)
So, you know, when we're, we're in that ditch, uh, you want to be diversified in the stats and the right mix based on your age and how far you are from retirement. And so, you know, that's, that's really, um, you know what I can say without looking at everybody's individual portfolios, I mean, I, I obviously I know you and know your husband and so I know your situation and have you diversified appropriately based on your objectives. But you know, everybody that's out there. Um,

Speaker 2: (20:33)
yeah. So let's take that as an example. Like, we don't have to give it like granular, granular, but if you were to look at us, I'm what, I'm 38 Leroy's 46 we called you about two weeks ago. Kind of like, Hey, we're not freaking out but what's going on? Right. Do, and I want you to tell the audience your response and tell them what you told me. As much as you want to share at work. I mean, it's fine about the account, you know, how you have a diversified because I was like, Oh sweet. Like worrying and we're still yelling so we could technically have 100% of it in the stock market. Right? I mean that's, yeah.

Speaker 1: (21:08)
Yeah. You know, basically, you know, in, in your particular case, you know, 50% of the assets were, it was basically a 50, 50 model. And so, you know, 50% or more fixed or conservative investments inside the portfolio and 50% were in the market per se. And so, you know, when we're, when we're looking at that and building that in the portion that was in the stock side or the market side, um, you know, those are in different sectors. Uh, but you know, we're also looking, we're in blue chip type stocks that are paying dividends. And so we're looking to, um, not have, you know, and this is true with most of my clients is, uh, most of them are not, uh, aggressive or are super, uh, risky as far as, I mean, they may take a fly here or there on particular stocks, but in most cases they're going to be somewhat conservative. So we just try to build that model. And so 50, 50, um, someone around, you know, mine and Leroy's age, you know, that's kind of the model and, and you're just lucky you got lucky cause you married, right. And kind of fell in the right mix. So,

Speaker 2: (22:23)
so when I called you, you were like, Hey, your accounts haven't even really changed. I mean, you're, you're not negative for the year. So I think it's important to point that out because we have someone that's trusted, that's educated and we're letting them do what they do best. Just like when my clients hire me to do what I do best because they know the market and they saw an emotional. So what do you say to those people that are like, Hey, like I did call you a week ago. I was like, Hey, like what could we buy that it's opportunistic right now we bought a couple of shares of Amazon cause it's like pretty expensive still. But is there any industries that you're looking at that you're like, Hey, this would be like a decent buy? It's, it's low just because of volatility, it's going to go up at some point. Or because of the way things are changing, there's a better trajectory just because of the industry that we're in. Like grocery or online retailers or something like that.

Speaker 1: (23:15)
Yeah. Um, that's a good question. You know, and I think we specifically were talking maybe more like airlines and cruise lines.

Speaker 2: (23:25)
I was like, Hey, is there something that's like a dollar that we should look at it come back in a few years?

Speaker 1: (23:31)
Yeah. I mean, here's the deal about those. And they're very well, I mean, some of those could hit it pretty big. I mean, we don't know. Um, now I have the benefit of, of being through a few of these craters as you would call them in the past. And you know, sometimes, uh, once the dust settles, uh, you know, one airline may not make it, you know, or it may not happen overnight or one cruise line may not make it and it may not happen overnight. They may get some money, you know, to kind of initially help them on the way, but it, but eventually they may not make it in. So I don't know if this kind of early stage, which one, who's going to be the winners and who's going to be the losers of that or if they're going to be any losers at all.

Speaker 1: (24:16)
Um, now, now I'm a little concerned as far as the, the retail industry as far as, um, you know, how many of those are going to come back. I mean that's kind of a different animal when you're talking about as a lot of those that are shut down when everything is kind of trending more towards own line, um, of the Amazon's of the world or you know, what have you. And so, you know, we're just kind of have to wait and see where we're really just, you know, just now, two weeks into this shutdown. And so, you know, maybe we'll have a bit of a little bit better idea, you know, when we do this again next time, be able to point the right directions. Who's going to be the winners going forward in the next, uh, next bull market when it comes and it will come. You just don't know when.

Speaker 2: (25:04)
So we talked a little bit about earlier about the volatility of the market and we were talking in the, in kind of the pre show about the VIX. Can you talk about the VIX? Explain real quick what it is and where it's at. And that's, I think why you made that three year timeline as far as if you're going to buy something, it needs to be held for that long because of this factor.

Speaker 1: (25:22)
Yeah. Yeah. There's, there's something called the VIX, which is the volatility index of the, of the market. And you know, for lack of a better term, this thing will attract fear. It'll track fear, force selling, capitulation, whatever you want to call it. And you know, a lot of times what happens in a market like this, um, you may have hedge funds that maybe you've read about, which obviously don't have a good, uh, good, uh, reputation and a lot of cases, um, but they, uh, will borrow a lot of money on margin. And when things don't go their way, they start having to sell everything that's not bolted down in their portfolio. And that can in turn make the VIX go up and that can create some panic. And when the VIX goes up, then us individual retail investors can get scared and we can make some decisions, uh, panic type decisions, which can make the VIX go up.

Speaker 1: (26:18)
And so the VIX, you know, the range of the VIX that has been trading, it's been trading in this range of around 51 to about 85, which is a pretty big swing. And I will tell you that, you know, it's really, if you're not gonna, if you don't go into the mindset of any money that you're putting in the market, um, that VIX needs to be 31 or less. Um, if it's short term money, you know, if it's money that you're saying, Hey, three years, five years, this is for retirement, you know, it's fine. It's going in your retirement plan or your staff or however you're set up through your employer. Um, you know, that's fine. But, um, you know, if it's not retirement money and it's just, Hey, this is some of my safe money, you just need to have that mindset that, um, you know, it's, uh, you need to look at it as a three year investment, as long as, as long as that VIX is trading that high. So the VIX, you know, if trading below 31 that's, that's good for Stephanie. If it's trading above that, um, that could be bad unless it has three year time horizon.

Speaker 2: (27:26)
So if you've got, if you're an employee and you do have a 401k, you know, there's some options of where you can put your money, but let's say you're self employed or maybe you are an employee, but you're still wanting to be investing right now, would you, what advice would you give people? Would you tell them to continue to stay in the market and put more money as the months go by in the market? Or would you say, Hey, keep what you have in there and then maybe start buying metals like silver or gold? Like how does silver and gold come into play? Cause we, anytime there's any kind of downturn, we always see the gold commercials, like on the news and stuff

Speaker 1: (27:59)
there. Yeah. Um, you know, there's a place for everybody's portfolio for some of that in it. Um, now I would, I would say that probably no more than five to 10% are your portfolio should comprise of those, those type of commodities. You know, talking about volatility, uh, from just a gold standard, I mean the, the gold, uh, the volatility on that, it's been trading for between 40 [inaudible] 50 and about 1700 and kind of back and forth. So it in matter of fact, you know, today is straightened down. And so, you know, it's pretty volatile on that. So it's really just a hedge and um, but you know, there's a place for it. But I would not put a lot of eggs in one basket there. I wouldn't, I wouldn't call William Devane off the commercial and put all your money there even though, even though even though he is.

Speaker 2: (28:56)
And then what do you think about real estate? So real estate investing, what do you think real estate prices will do? And I know it's hard cause it's hard to do a blanket statement. But in general, do you think we're going to see the value decline? Like we didn't know eight or do we know yet? What are your thoughts on that?

Speaker 1: (29:13)
I don't know that I, I know yet as far as the declining, yeah. I tend to more skew, we're going to see some issues in the commercial real estate side for sure from a lot of these retailers. Um, you know, when you're talking strip malls and malls and big box stores, uh, you know, I think we're going to see some issues there. And that really comes to the whole aspect of the retail side. Um, from a maybe in the most two family type, um, area, apartment communities. Um, but it's too soon for me to see, you know, as far as, and this not, you know, it's not my wheelhouse as far as that. Um, but yeah, that was a pretty big drop in Oh eight. So we'll just, we'll have to see. I don't, I don't foresee if this is really going to be 30, 60 days of this, you know, home prices being, um, cratering just because interest rates are going to be so low and, and so, you know, I would think if anything, you get a lot of refunds and, and new purchase once things calm down and people can catch their breath.

Speaker 2: (30:21)
And they were, I was listening to the news last night and they were saying, you know, a lot of times these kinds of events cause things that were already in motion just to happen faster. So I think we all knew that they were talking about like certain retailers like Macy's and Kohl's and they were closing their furloughing all these employees and they're not sure if they're going to come back or not. And they were like, that was probably going to start happening just with the market that we're in with retail and online versus brick and mortar. It's just forcing it to happen a little bit faster.

Speaker 1: (30:49)
Right. I think that's exactly spot on. That's kind of the way I'm looking at that. And, you know, we'll see, um, you know, how that does come back. But, um, that would, that is a concern as far as the commercial aspect real estate.

Speaker 2: (31:03)
So let's, let's talk about, or there's opportunities. So if we do, if we've got someone listening that's either maybe hasn't started their investment, Mmm. Uh, what do you want to call it? Their investment career there. Ha, they don't have anything in the market or you do have stuff in the market and you, you're thinking you're going to keep buying. What's the silver lining of today's current economic climate? If that's their scenario right now?

Speaker 1: (31:29)
Yeah, that's a good question. Um, you know, anybody that, you know, not in the market, uh, are not investing, you know, then I would say, Hey, this is the lowest it's been in three years. Uh, we're a little bit higher than what it's been three years as far as market was. Um, and so if not now, then you know, when, now I would not rush right out to your friendly neighborhood broker and, you know, put all your money in. Uh, but I would, you know, build a plan or suggest a plan of dollar cost averaging into that market. And maybe you do, uh, and I'm just speaking in generalities, whether it's $50 a month or you know, 500 a month or whatever, but to invest in that market that way. And that could be through your retirement planners or a just a regular brokerage account.

Speaker 1: (32:20)
But you know, I would suggest doing something like that, that way by dollar cost averaging, you're, you're, you're buying into this market at a lower value and over the course of time that shows that you'll have a lower share price of what you're buying. And so that's, you know, that's good for investors in the run. And, you know, typically after all that's been said and done and we've been through mortgage crisis at nine elevens and tech bubble busting. And I can go back to, um, before I was even in the business to, to go fours and, um, the Vietnam Wars all embargoes and 74 and um, assassinations and 68, I mean, just total political unrest in the late sixties, early seventies. And you know, if you invested in 1968 and just dollar cost average into blue chip stock fund, nothing fancy, just a plain Jane blue chip stock fund, uh, at the end of 10 years, your investment would've doubled.

Speaker 2: (33:22)
So tell me what dollar cost averaging means in case someone isn't know listening.

Speaker 1: (33:26)
Yeah. That that basically means, you know, someone's on a, uh, a set plan of, you know, whether it's $50 a month or $500 a month, and they're just systematically invest doing that investment each month. And so some months they may buy at a lower price when the market's slower, so months they may buy at a higher price. But if you, if you're doing that over time, that gives you a typical in historical, uh, experience that'll give you a lower share price and that's better for you, uh, over time. And so you're not investing at all with the high of the market or the lower the market. Um, because we don't know what those highs are and those lows are any given day. We just pick a day and we're going to do this and we're gonna commit to this. And you know, typically in a plan like that, that investment should double about every seven years.

Speaker 2: (34:18)
All right, so let's, I love this part. So you guys know I'm a huge nerd when it comes to this kind of stuff. I love the concept of compound interest. So Einstein said it was the eighth wonder of the world. And I have a compound interest calculator on my phone and anytime my husband and I are looking at making a big purchase, sometimes we run the numbers and go, well wait, if we had that extra payment and instead we did this with it, we would have blank amount in 20 years. So if you're a parent out there or you're, you're young and you're maybe like in your 20s or 30s and you're like, Oh my gosh, how am I ever going to save for retirement? How am I ever going to save for my kid's college? Can you just speak about what compound interest is, the power of it and why everybody should start it some point, even if they don't have a lot of money to invest.

Speaker 1: (35:03)
Sure, sure. Um, you know, basically the compound interest you put money in today are a once a month less. Let's just say that we're putting that, uh, let's say we're putting $50 a month into an investment account. So we're putting 600 bucks a year and over the course of 10 years, you know, that money Mmm, is going to double about every seven years. And that's because of the compound interest. You know, if you're getting an average in between nine to 10% a year in that, and I'm just basing this off of historical returns, if we run all the way back to 1927, um, historical returns every seven years, that money will double just from the compound interest inside there. Even though you're continually adding money, you're getting that seven to 10% a year return on top of your money. So year one, let's say you're getting, uh, compound interest on 600 bucks in year two, you're getting it on 1200 didn't, it just continually adds up and adds up and your money is working for you. May make the money your slave, so to speak, instead of you slaving for the money, um, make the money work for you.

Speaker 2: (36:19)
So can you run an analysis and say, okay, like let's say you're 22 years old right now and you did $50 every two weeks until you were age 70. So $100 a month.

Speaker 1: (36:34)
Let's see here. How would you say for a, uh,

Speaker 2: (36:37)
let's say there are 22? Yeah,

Speaker 2: (36:44)
50 bucks every two weeks. 25 books a week essentially. So that means one less meal out. It's [inaudible]. It's something everybody could do because here's the thing, I get so frustrated because I feel like this is stuff that could be taught like in high school, that's just, we, I meet with so many sellers that are in their fifties and sixties that they're not as prepared as they thought they would be for retirement. They're happy to use their houses or income essentially and cash it out. But if they would have done this back in the day, even in a smaller amount, they would be in a totally different position. Yeah.

Speaker 1: (37:19)
I mean just, just that, uh, and I ran it. I just ran this at 30 years, so let's say 22 and there'll be 52. And so, you know, maybe at that time period there, they're really starting to think about retirement. Most of the time I see people that they may be in their early fifties to late fifties because they're just now starting. But even if you start early, um, you know, over 30 years at 50 bucks a month turns into roughly 53,000, uh, dollars. And, um, you know,

Speaker 2: (37:51)
no dude, 50 bucks a month or 50 bucks every two weeks. So 100 bucks a month.

Speaker 1: (37:56)
A hundred bucks a month. Yeah. Okay. Okay. Okay.

Speaker 2: (38:08)
Cause I think a lot of people think, well, I don't have a lot of money. I can't do anything. And so I really want to highlight the fact that this, this could change your life. This could give you the ability to pay for your kid's college start when they're, you know, not even born yet. Start when you're pregnant,

Speaker 1: (38:24)
that'd be roughly 106,000. And I just, I did that conservatively at an 8% return, you know, a year over those 30 years averaged out some years, you know, you may get 25% returns some years you may get negative five. Yeah. And so that's kind of the beauty of that. But you know, that's a hundred K um, for whatever you may need before you're even retired.

Speaker 2: (38:48)
And then you start to double it, even if it starts doubling more because of more time than it grows even faster.

Speaker 1: (38:57)
That's right. That's right.

Speaker 2: (38:59)
So for everyone listening right now, we're going into April, what's any advice you have for them as they're watching the news? They might be watching their accounts go down, go up every day's a different day. Like what's the best piece of advice you'd give somebody?

Speaker 1: (39:15)
Yeah, I would, I would tell somebody, you know, have a plan. Mmm. You know, evaluate that plan, but, you know, don't panic right now. Cause you know, it's been my experience that some of the biggest mistakes are made, uh, when you're panicking her in fear. And so, you know, if you're concerned about your, your accounts or what's going on, you know, I suggest you talk to that and express that to your advisor and, and discuss, you know, your goals and how you're invested. But if you don't know, uh, if you don't have an advisor and you're not sure what you're doing and you know, uh, I would say find somebody you like that you know, seems to care about you and what's going on with you and your family and, you know, pick their brain and, um, you know, but I wouldn't do anything, um, with the way the market is right now, uh, unless I, you know, got it. Professional advice or opinion, Oh, my particular portfolio. So I wouldn't tell him by just, you know, rush out and hit the sell button. Right.

Speaker 2: (40:22)
What do you think is the worst case scenario? It may not happen, but like, what's the worst thing that could happen? Do you think that people may need a brace for, with the current, with what we currently know?

Speaker 1: (40:33)
I, you know, I think probably the worst case scenario that I could foresee would be an extended period of unemployment. A lot of these jobs not coming back in. How many of that you know, is [inaudible] are we going to have unemployment at a prolonged period of time? That's, uh, 10, 15%. Um, you know, obviously that's going to hurt the economy. Um, if we have a prolonged period. So I really think it's, it's, you know, what are these jobs, these retailers, these restaurants, those are really some of the areas that I'm concerned about. Better a big parts of the economy and, and the people that work in those are big part of the economy. And so, you know, how long does that last? Uh, you know, from a, I'm from a small business standpoint, you know, what businesses about what don't. So it really will come down to, you know, how high is that unemployment figure and you know, how is that going to, uh, how long is that going to last?

Speaker 1: (41:35)
And so, you know, that's, that's kind of the unknown, you know, and if it's at 15, 20%, uh, for a prolonged period of time, that can be bad. Now, you know, if we get past this and, and that unemployment is, you know, 10% or less than, you know, and nobody wants to be an employee. I mean, it's a terrible situation, but if it's 10% or less, you know, that's manageable. And so, um, you know, we'll just, and like you had referenced earlier, you know, a lot of this just provided the impetus to where we were headed anyway. And, and so we'll just kind of have to see how that shakes out.

Speaker 2: (42:13)
Do you think this will impact our relationship once this is all over with China as far as, do you think more things will start coming back to the U S maybe we'll be willing to pay more for some goods and services?

Speaker 1: (42:24)
Well, I, um, you know, that's, that's, without trying to be political in that answer, I would think that that would be a good idea that, you know, our meds are not made over in China. 90% of our meds made over there. That's already been happened into, uh, a lesser degree. Uh, when the new administration got elected. I mean, they pushed that pretty heavy. Um, as far as this, um, supply built that it basically just ran through China. You're already prior to this having a lot of companies that are diversifying their, their manufacturing side to a lot of those other Asian countries and pulling out anyway. And so this I think is going to provide an impetus for more of them to diversify and pull out to other areas. Um, you know, for me, you know, I'd, I say, Hey, bring it back. The people that work here, uh, that could work those jobs and, and I'll, you know, pay more and, and not complain. Uh, you know, but, uh, we'll just have to wait and see. Uh, ultimately, unfortunately a lot of that is made by, uh, uh, shareholders and major stock holders, a corporation, and a lot of that bears down to, uh, you know, the profits of the company. So we need, we need everybody to be as patriotic as you are, Stephanie, to get those, get that back in the U S Eric

Speaker 2: (43:54)
at first. All right, cool. So, so don't freak out if you have questions about your investments, ask your advisor, find one and we'll get John's information here in a little bit in case you want to call him. And then I do ask every guest five questions at the end just to get to know you a little bit better. So you ready? Sure. All right. What's one thing that most people don't know about you?

Speaker 1: (44:15)
Uh, probably that I'm more of an extrovert than what I may seem. Being on a Oh, on a podcast with you. Well, yeah. Are you more reserved? Yeah, I'm, I'm more reserved. But you know, it's funny, me and my wife were talking about this other day. I was like, you know, this kind of isolated thing and I'm like, I'm okay with that. You know, I don't have to go out and socialize them. I'm okay. So he's like, yeah, a lot of people don't know that you're really okay if you didn't see anybody all day, you just didn't say did zoom calls all day.

Speaker 2: (44:53)
So what's the best piece of advice you've ever received?

Speaker 1: (44:58)
Um, you know, really that got me in this business, uh, is my, I had an advisor at a young age before I transitioned into this business and, and he, uh, basically taught me the, the, the idea that, Hey, that you, you really, your clients, he recruited me in a sense to get in this business and he said, Hey, your clients really need to know that you care about them and their will being before they care anything what you tell them. And so, you know, that probably has been the best advice I've gotten. Uh,

Speaker 2: (45:36)
what's the best piece of advice do you want to give to the audience? You may have already done this, but it's part of the question, so I'm asking it anyways.

Speaker 1: (45:43)
Sure. Yeah. I would just say, Hey, Mmm, this too shall pass. Um, you know, not to panic, you know, just, uh, do the things we had discussed is forced call your visor if I'm one. And um, you know, yeah, hang in there. We've seen all this stuff before. It's just a different, uh, this time. It's a pandemic. Last time it was a mortgage crisis at the time before that, it was a nine, 11 time before that it was a tech bubble. There's always going to be some kind of impetus.

Speaker 2: (46:16)
Do you think this is worse than those are just different?

Speaker 1: (46:19)
Uh, yeah, it's worse in the sense that we're going to have, it's worse than nine, 11, uh, in the sense that, uh, we're going to have more unemployed. I mean the airlines or a big cog even more so now than they were then because of the travel. And so you're, you're getting all the airlines in the mix. So it's a bigger deal there, uh, in the sense of that. And so that's gonna, um, require some bail out, for lack of a better term for them, although not that big of a difference than the bail out of the car manufacturers and the mortgage crisis. So it's similar in some respect to some of them. I mean, each one has its own, uh, impetus, so to speak, or own trouble spot. Um, this one, it just happens to be the airlines. Last time it was the banking and, and, uh, carve manufacturers and, um, time before that was, you know, terrorists in the time before that were tech companies. Right. So, you know, it's always something, um, that drives it. Um, but, uh, you know, so I see it as a problem, you know, it's a big problem, but it's nothing can't handle.

Speaker 2: (47:31)
All right. So next question is, what's one of your favorite books or the one that's had the greatest impact on you?

Speaker 1: (47:36)
Uh, probably one of my favorite books is code King and capital, which, uh, Mmm, really details the 89 90, Mmm. Crash as far as in the junk bond market. And I'm really getting in the weeds here. Uh, but I, you know, I've learned a lot from that book and that discuss is, uh, you know, basically how companies got leveraged up in the late eighties, which led to the recession, uh, in the nineties 90 91. And, uh, you know, I've learned a lot from that book and it's taught me a lot. And so, um, that's my favorite book right now, but you could ask me again in the next month. I might have a new one.

Speaker 2: (48:17)
Awesome. No, that's awesome. What's your current morning routine?

Speaker 1: (48:22)
Uh, really the same course I'm working where they kinda, LPL kinda has us working. I'm from home right now. Um, but you know, we're going in the office when we have to, but, you know, typically a routine's real big for me and so I have it all laid out as far as, you know, I'm up at this time. I have a devotion I do in the morning, you know, and then it's, it's really, uh, off to the races as far as, uh, I check pretty much every market, uh, worldwide. And I'm looking at, you know, what's going on in the world, what to expect here. Uh, what news may come out. And then, you know, the rest of the day, then I'm scheduling points or working from our clients. And so that my day typically starts around six or so. And you know, I try to end it a four or five if I'm, if I can, unless, unless, unless we're driving a crater. And sometimes it lasts into the, to the night, but then you get up and do it again.

Speaker 2: (49:18)
So this question is just based off what you just said about the other markets. How do you think the U S market will fair compared to other markets?

Speaker 1: (49:26)
Uh, well, you know, we, uh, for lack of a better term right now, you know, if we catch a cold, all the other markets get the flu. And so, you know, yeah. So, so, uh, we will sell fair better. Uh, we are the world's only superpower. And so we're in, you know, we're in good shape. We have the world's currency. So in the long run we will, we will fare better. And you know, prior to this, this is where most of the money float was flowing anyway. Most of the other markets had been crashing for some time or already intercessions Europe has been in recession, has been in recession. China had been hurting ever since. So, uh, we started with the terrorists and negotiating with him. So, you know, we're going to be okay.

Speaker 2: (50:16)
Last question. How do you unplug and unwind?

Speaker 1: (50:21)
Well, that's a good way. A good thing, good question. Um, sometimes when my wife takes my phone away from, that's one good way. Uh, you know, but typically we try to, um, by eight or nine o'clock at night, you know, we're done with the technology and you know, maybe we'll do a devotion ourselves and then, you know, just have 30 minutes of quiet time. And that's the S I'm not saying I'm 100% perfect at it, but we try to do a good job.

Speaker 2: (50:50)
And you, you routinely take walks with your dog at lunchtime, right?

Speaker 1: (50:54)
I do. Uh, more walks here lately just cause I'm staying home eating too much. But typically we'll run, you know, I'll run him at lunch and, and you know, I have my routine at lunch. I mean impress you eat and know that. I didn't know you knew that. But yes, uh, I run him at lunch and eat lunch. I live very close to my work, so I'm very fortunate and so I can come home and that's my lunch routine and I pretty much have my whole day mapped out. Yeah,

Speaker 2: (51:22)
you're not going to, you're not going to gain the quarantine 15. They keep talking about, Oh my gosh, I'm on a fast, I'm on my, they too fast right now and Leroy's I've got bunk cakes in the fridge that I had from a few days ago. So I'm like, those are calling my name right now, but I'm trying to be strong just to try to do something good

Speaker 1: (51:43)
to have Chick-fil-A cookies or anything. So we've, you know, we've done pretty good the last few days, but last week we, we were not good at all.

Speaker 2: (51:51)
Same year. We let the stress and we let ourselves indulge a little bit with all the news. So cool. Well I wish we had better circumstances to have this call under, but I appreciate your time and then we'll bring you back to talk more about just normal fun financial stuff, how to get ahead, how to invest in your accounts. But I thought it was appropriate to just talk about the current market and if people had questions or fearful about you know, what to do or how to navigate these times. So I think all that, your advice was, it was really valuable and timely. So I appreciate the time. How do people get in touch with you if they want to check you out online or reach out to questions?

Speaker 1: (52:29)
Yeah, they can. Uh, they can email me John dot muse@lpl.com or they can go to my website, uh, John E as in Eric muse.com and uh, they can plug me in there and get in touch.

Speaker 2: (52:44)
Sounds good. Well we appreciate your time and we'll talk soon.

Speaker 1: (52:48)
All right, thanks. Definitely glad to be here.

Speaker 2: (52:50)
All right, so I hope this was helpful for you guys. I feel like a lot of peace when I talked to John, even if everything is going Cray Cray with the market, people are losing jobs. We've got a lot of uncertainty. This too shall pass and if you have any questions or want some advice, don't hesitate to reach out to him as well as you know, whoever that you currently have working with your financial planning and that kind of thing. But if you haven't started yet, maybe you're younger, maybe you're older. There is never a bad time to start investing from the standpoint of it just you got to start somewhere and you got to start. Whether it's a little bit, whether it's a lot, especially if you're younger, if you give it time to grow, that's going to be super important as you get older because then when you get older is you're going to get more financially successful.

Speaker 2: (53:42)
You can put more money in it. Those different accounts like we were talking about with compound interest. It's only going to help you build a legacy for you and your family so that you can make money or slave instead of being a slave to money. So hope this was helpful for you guys. If you haven't already, don't forget to join the Facebook group. You can go to the glam girl, boss.com forward slash Facebook. I would love for you guys connect with me on Instagram. You can find me at miss Stephanie at Lindamood. Also, you guys know, I love hearing what you're thinking about the show. Go on to iTunes real quick. Submit an online review. I will feature you on the show. Tag me on Instagram. If you're listening to the show, screenshot the episode you're watching and we'll talk soon.