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Wichita Means Business 2/11/17 B

Feb 14, 2017|

Andy Smith with Financial Engines and The Investing Sense Show - Segment 2

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Automatically Generated Transcript (may not be 100% accurate)

Thanks for listening to which some means business intending to San again this Saturday morning. As we were talking about just briefly in the last segment. We have Randy Smith from financial engines on the air with us today and he's the co host of investing cents which is on can assess Andy. Before I get back into that the main topics that are covering today how can listeners contact. Investing sense and you and your money a financial engines. I would just get out of the web site financial engines dot com. You can enter your zip code you can eat. Cease Scott Wolf bird art advisor there and tank too great I eat. He gets what people. You know are trying to do with retirement planning and saving for college in all this stuff than you can talk with them you know scheduled timed it to go in that really financial engines dot com you can learn a lot more in in really get more of a taste of of the types of things that were talking about here this morning. While we're kind of NN I guess what I would call on nervous time with all the changes and everything we talked about it in the last segment and the new administration. And as people probably haven't concerns and don't really know. But the best next step would be but one question I have is what what should someone consider if they're going to retire during the next four or eight years during that the term Petit presidency. The most important thing that we're trying to get people ready for is to to create an income plan. Forms some sort of retirement paychecks of the income plan that's gonna they can change. As the world changes around you you have to be flexible. And you have to state flexible. Annuities they're not gonna do it. There what they want you to think that they can guarantee. 678%. In. You know you kind of skipping down the yellow brick road and there's nothing to worry about but these are not flexible things the world gonna change. Politics. Are gonna change the market's gonna change. So this income planned this retirement paychecks per unit it's gonna take you all the way through retirement. You gotta be diversified and and stay diversified. Competent there's some other parts as well that that are very much kind of retirement oriented number one. You got to figure out and optimize the Social Security strategy. Just claiming at 62. It doesn't cut it anymore because he could be leaving tens of thousands hundreds of thousands of dollars on the table and federal benefits. If you don't go about the right way. T have this income plan optimizing Social Security strategy your building health care costs. In two year plan right now. Because obamacare is gonna change. Costs are gonna go up I mean we're we're seeing things already. That you have to plan for. To build these health care costs into your plan now to that if he can make. You can make your income plan as difficult as possible to succeed. And if you find a way to make it work. Well then all the better which you don't want us to talk to some advisor talked to some broker. And they they want everything they watch it think that everything's going to be okay and it actually the straight line 8910% return and you never have to worry about it. Well built taxes into it built cost of living adjustment into it build healthcare and to build market. You know market correction in two. But this didn't come plan is going to be that the key because we're gonna see a lot of change the trump we're gonna feel like a change in the markets. Here over the next four years you gotta have it in income plan that's flexible. It has Social Security health care built into it and the final thing is is to really watch interest rates interest rates if you. If you are using an adjustable rate mortgage it's gonna he locked a home equity line of credit. Sometimes small business loans Ken can reset. Without you remembering it at times low and so is rates go up that could take a huge chunk out of your cash flow. These are the things that you really have to remember if you are planning on retiring here in the next four years. In I don't think I've ever seen it time over my pass adult life where health insurance has gone down to it in costs. I mean sits down to continue to go up front. Absolutely I mean you look at some of the inflation rate that we have on our side within our without our planning software. The Galley and even six and a half percent at the minimum. And so it Q as you kind of walk people through that bit the interesting thing and that was only about this and he was beaten with a couple. And he just trying to ask them how much do you think it's gonna cost you to pay for healthcare all the way through which are. And the white said fifty you know about fifty grand husband sent about fifty grand I mean this is your kind of stay averaged 65 year old couple. So here's two people thinking that it's gonna cost them fifty grand. The paper health care all the way through retirement. Well what's Scott ended up shown them was that let your health care costs on average. May be is as high as 244000. Dollars all the way true retirement luck you're planning on a number that's 15. Of the cost. This is what breaks retirements this is what you know bankruptcy. Retirement this is what causes people to go back to work to work and totally dropped dead. At the office I mean these are not good things the plan for so. And you're absolutely right health care is gonna do not and it go up here and you gotta be able to plant for. And there's lots of advice out there just seems like almost everywhere you turn what what some of the worst investing in vice and investing fads that you've seen lately that's out there right now. And that has to do you know with the the markets and the new administration. Cheer great question. I would say one of its trading off of ideology. Trading off of your politics. Heeding the government loving the government. These are not trading strategies there is no substitute for having a personalized retirement plan that makes that that makes sense for nobody else. But you. And that planned. Is going to be able to let you check your politics at the door check your emotions at the door. So that you can look at the markets. As as as coolly and in as calculated manner as as possible so that's that that's one of the big mistakes trading off of ideology. The second one. Is. In a trading often had. Well the headlines in 2017 need to basically tweets bank from Twitter and our our president. Seems to be rather prolific Tweeter still in the overnight hours. At least tweets of the modern day's headlines. And so people what they do it. They wake up. Eight check their email they're looking at the news they look at Twitter and he would you know trump does. Is talking about either in order the stocks they like certain companies that he liked were the companies that he doesn't like. If you are trying to trade based on what you see on Twitter. You got to remember there's like 101000 hedge funds out there these artificial intelligence. They used machine reading programs. They use speak gate at they have thousands of analyst. You know throughout the industry. Do not think that you can compete with that. Based on something that you just happened to read when your crop in waking up in the morning. So those two things are really the big mistakes that we speak people make it right now trading up for their politics. And it trading opt for something that axiom where. So are there and and examples of that like I mean I noticed in in some notes that I had gotten from you that. That in turn would talk. Did about wanna auto dealers and then talk talk bad about some other company and actually for real people would would make investments off of that. They weren't it would there's a Bloomberg article that we used. In in some client meetings we talked about that some show on investing sent here. But there is this example that they used if you know state police followed. Tramps tweets. In if you bet equal amount on each company that trump praise to board a United Technologies and Fiat Chrysler. And if you bet against. Each company to be criticized wrecked stared out Boeing Lockheed Marten GM until. You would've actually lost. One point 6%. Through this particular time oh my goodness if on the other hand you took those same dollars in just invested it in the S&P 500 on the same date. Your return would have been 2%. Was that senator and knock against trump this isn't a knock against Twitter this isn't a knock against pork or Fiat Chrysler or Toyota or anybody. But this is a knock again as people think in the they can do their own investing. Just by looking on Twitter and then making investment decisions that could be as stale as 6121824. Hours. They hedge fund party made their money markets already made their money. You're the last one lot sold the bag this is why you see continued failure when you try to invest this way out here. That's a pretty he'd step away from. From a fiduciary giving you sound advice that's guaranteed to be for your benefit. It really is I mean. There are some people who have the time the temperament. And in the training. To manage their own money. And you know what they knock it out of the park for most people though they've got too much else going on. They know what they know really really well but they gotta do what they know best and hire. The rest. And so if you if you finally get to the point where you're. Rewarding the work was somebody cut or make sure that make sure that they're not button tweet you know Twitter ideas and products or. Hey we want to buy and sell this because this is what trump talked about. How long ago all I don't know like two weeks Powell. He got to got to work with somebody who's gonna sit down understand your goals understand which are trying to do and build something around knack. Rather than just push and something that they got to push to earn a commission. All right we're talking with sandy Smith he's with financial engines and one of the co hosts of the show investing stance that's earned. Every Saturday 9 AM on can assess IT's gonna follow up the sin every here pretty quick right on the air so stay tuned but Andy we appreciate you being here today. What would be some things that maybe would slow down maternal morality are our guests what is slowing down the term rally if it is. There's lots of questions right now column about corporate tax reform. And whether it will happen. Or will it happen. That this is probably the biggest market related policy which policy change that trump could make. And you looked at some of the camp that campaign document that he released on that. On the trail in terms of what highest corporate tax rate would be what the highest personal tax rate would be. But this is still selling certain. There's there's so many things that are coming at a DC right now there's so many things that are coming out. In terms of kind of first hundred days initiatives. First 200 day initiative and that sort of thing but. If you think about a lot of money debt that's out by the country right now that's ready to beat. And have. It removed back in. And as if trump consult. The corporate tax issue. And if he can make it beneficial for companies. To to get that money back to work here domestically. That's gonna solve a number of problems that's gonna answer and a number of questions for both large businesses and small businesses here going forward but that's. That's a lot of the uncertainty and at that and certainly built or if the market can't. It if they can't handle that uncertainty this could be one of the things that slows down this route. All right so if you'd like to find out more about the things have been talking about really good resource for you today would be to go to financial engines dot com. And you can check that out plots and interesting things on their very attractive web site for you to check out our he can give Scott Wolf for a call. At 3162605200. They're at they'll take good care via and they got the very good ideas that you can. You can investigate and talk further with them about its Andy let's shift gears just a little bit. I'd like to talk about small businesses we have a lot of listeners on can assess that own their own small business or maybe their manager. Our key employee so never areas of responsibility. Basically year over achievers in Wichita we think are listening McCain and assessed. And so what advice can you give them and we were like an open economy and market it's been a little slow her wish top kind of behind. The rest of the national trends come how how will this administration and this timing. Affect. I'm small businesses and any any thoughts or advice she can give. Yeah I wouldn't want you to focus on the first 200 days of Trump's presidency he's gonna focus on four major policy. Eight PA study Affordable Care Act or obamacare repeal and replace. Tax reform. Regulatory reform and infrastructure. Now of those four infrastructure may get pushed to the backseat only because. If you can deal wit. The cost. Stresses with. Obamacare. If you can resolve some uncertainty were just talking about this if you can resolve the uncertainty on the tax side. And then if you can create 88 business environment that does that does not beat chew over the head. Which of the Chilean regulations adjust to do which you know how to do work hard take money saved for your family and be as successful lives. I think piece of the things that is as and I did a small business owner write a dilemma this. These are things that were really trying to focus on because when you have the last seven outflow. That's more. That's more in my pocket. If it is it easier for me if it's less costly for me to. Run an operator business and and do the things that I know how to do and succeed in Allen. Relate and it Pia. Our producer and a benefit in my community. Actually gonna help me as as a small business on that only gonna help other small business owners do the same thing. So those three things a lot and it may not is in May not impact all of us directly. But there's going to be secondary effects there's going to be you know third level of backs. But a lot of it's gonna come down to if you have a last of an outflow if you have last for the negative. That absolutely is a positive on your balance sheet if your small business owner a lot of times your corporate business she is your personal business sheet. Or is your personal balance sheet just because the way to Canada to watch those things. And then always always in the back of your head save as much as you can. And get out of debt as fast as you can on the business. That always helps out he really does comic ash you know it is such an emotional thing is that the thing that we see oftentimes is that people want it now. What to do with the mortgage they're getting close to retirement. They've never liked that they have the ability to pay off the mortgage and they want to do like take money out of my investments. To hit to get rid. Well sometimes tedious sometimes you don't to the extent that you can let the banks due to heavy lifting if you have a low enough rate. On the personal side that's absolutely something that you would consider on the corporate side. You kind of watch those interest rates and sometimes it makes sense that they have a line of credit sometimes it makes sense to. Have a small debt with a in the business. But most of the time from what we've seen you absolutely have to watch so watch those debt levels and get them just you raced. On the corporate side because then everything after that you can say more could spend more a year year. Just that the way to your business works you feel better about everything because there's not that debt monkey on your back. And it directing everything that you are supposed to be you know. Or I were talking with Andy Smith a financial engines. And he's on the air with investing sense that it's gonna become an appear in just a little while on Canas says Andy what can we do to respond to them ideas that you share today have been people take action on what we've talked about. I would give Scott. A call there in our in our office Scott Wolf for 316260. PP 200. He's a great guy I mean he's 1 o'clock right he understands they got to work hard. You gotta say you've got lots of questions you try to make sense of the politics in the markets and everything else just call Scott. If you're if you're kind of you're if you're out about and you you're not near unnecessarily financial engines dot com. You can visit the website you can learn a lot there's links over to investing sense we're going to be on here a little bit that. Just get out the financial engines dot com you can see him beacon. Scheduled appointment with Scott that. There's a ton of stuff that people have questions about there's so many people just worried that there are missing something. We you're probably not that you probably wanna get somebody who can just sit down with an answer a lot of questions and make you feel better about all this stuff that were seen in that. Guess Scott called it out of financial engines dot com you'll be sent. That's surely appreciate you Randy being on the show today. Thanks so much for being here. John thanks for having evidently.