Investments Don't Do Good | Series 7.1

Voiceover Audio: 00:00:00

Welcome to the Enjoy More 30s Family Finance

Voiceover Audio: 00:00:03

podcast. The only podcast dedicated to making life more

Voiceover Audio: 00:00:06

enjoyable for young families by hitting on the financial topics

Voiceover Audio: 00:00:10

that tend to weigh on us, stress us out, and distract our focus

Voiceover Audio: 00:00:13

from simply enjoying life.

Joseph Okaly: 00:00:16

Hello, and welcome to the next series here on the

Joseph Okaly: 00:00:20

Enjoy More 30s Family Finance podcast. As I said, at the end

Joseph Okaly: 00:00:24

of the last season investments aren't my favorite thing to talk

Joseph Okaly: 00:00:28

about, surprisingly enough coming from a financial advisor.

Joseph Okaly: 00:00:31

But sometimes I think that I may be kind of the only one out

Joseph Okaly: 00:00:34

there. So investments are what people have the most questions

Joseph Okaly: 00:00:39

about. Investments or what people you don't make movies

Joseph Okaly: 00:00:42

about but the mentalities that go with that the 'make it big'

Joseph Okaly: 00:00:46

mindset, from what I have seen more often hinders the way

Joseph Okaly: 00:00:51

people are able to operate and way they go, then then how it

Joseph Okaly: 00:00:55

helps. So why I'm doing this series is because I want to help

Joseph Okaly: 00:00:59

you reframe how you view how you utilize your investment. So it

Joseph Okaly: 00:01:03

can be done in hopefully, a more constructive way and hence, this

Joseph Okaly: 00:01:08

series is called Raising Your Investment Mindset.

Joseph Okaly: 00:01:11

As always, if you like what you're hearing, please make sure

Joseph Okaly: 00:01:13

to subscribe or follow us on Apple podcasts or really

Joseph Okaly: 00:01:17

wherever you listen to. Clicking that star, leaving the review,

Joseph Okaly: 00:01:20

it really really does help us reach literally millions of

Joseph Okaly: 00:01:23

other young families out there that are just like you. Now if

Joseph Okaly: 00:01:27

you want to hear a focus on finances that are related more

Joseph Okaly: 00:01:30

to your general mindset, maybe to your parent's mindset, or

Joseph Okaly: 00:01:33

even helping your kids with their own money mindset growing

Joseph Okaly: 00:01:36

up, please make sure to check out some of our past seasons

Joseph Okaly: 00:01:40

that dive deep into those areas. We started this year off even

Joseph Okaly: 00:01:43

with a New Year's focus mindset, getting right in the right

Joseph Okaly: 00:01:46

direction in the new year. So definitely check those out if

Joseph Okaly: 00:01:49

you have not already.

Joseph Okaly: 00:01:51

This series, though, like I said is about raising your investment

Joseph Okaly: 00:01:55

mindset. How you approach investments as a tool to help

Joseph Okaly: 00:01:59

you reach your goals. So just like a podcast entitled Raising

Joseph Okaly: 00:02:03

Your Healthy Mindset would focus on a holistic view vs giving you

Joseph Okaly: 00:02:07

just you know, five minute crash diet tips. This series isn't

Joseph Okaly: 00:02:11

about stock picking or the next best crypto asset. It's about

Joseph Okaly: 00:02:16

giving you the opportunity to better understand investments

Joseph Okaly: 00:02:20

and their place in your overall plan, the opportunity to not

Joseph Okaly: 00:02:24

perhaps be afraid of investments, because they are

Joseph Okaly: 00:02:27

some unknown that you were really never taught about in

Joseph Okaly: 00:02:30

school. The opportunity really to potentially avoid some of

Joseph Okaly: 00:02:34

those pitfalls that we've seen many people out there making.

Joseph Okaly: 00:02:38

Today, we are starting off with Investments Don't Do Good. This

Joseph Okaly: 00:02:42

is one of my biggest pet peeves. So I will apologize in advance

Joseph Okaly: 00:02:47

if you are listening and find me up on the soapbox. So maybe it

Joseph Okaly: 00:02:52

is just guys. But I so often hear people say, you know that

Joseph Okaly: 00:02:57

dude does really good, alluding to maybe the amount of money

Joseph Okaly: 00:03:01

that individual makes or something. But have you ever

Joseph Okaly: 00:03:04

just stopped and wondered what the heck that even means? Is

Joseph Okaly: 00:03:07

there some scale that I'm not aware of out there where you

Joseph Okaly: 00:03:10

pass above a certain threshold in the sky, and now you're in

Joseph Okaly: 00:03:13

the 'doing good' camp? The truth is that whoever is likely

Joseph Okaly: 00:03:18

whispering this into your ear is saying so because they either A)

Joseph Okaly: 00:03:22

see this person buying a lot of stuff and so they're just

Joseph Okaly: 00:03:25

assuming they have plenty of money or B) they somehow found

Joseph Okaly: 00:03:29

out how much this person happens to earn and to them, that sounds

Joseph Okaly: 00:03:34

like a lot. Either way that person is doing their own

Joseph Okaly: 00:03:37

internal judgment type comparisons to arrive at that

Joseph Okaly: 00:03:41

conclusion.

Joseph Okaly: 00:03:42

To take this even a step further, think about if someone

Joseph Okaly: 00:03:45

you know is driving across the country. You say to their

Joseph Okaly: 00:03:48

parents, "Hey, how is Beth doing on her cross country trip?" If

Joseph Okaly: 00:03:52

her parents say "she's doing good", you basically know well,

Joseph Okaly: 00:03:57

well, nothing, right? You probably assume she's alive. But

Joseph Okaly: 00:04:00

is she doing good because she seen a lot of cool stuff? Is she

Joseph Okaly: 00:04:04

making really good time across country? Is she just driving,

Joseph Okaly: 00:04:07

you know, really economically from a fuel perspective? How is

Joseph Okaly: 00:04:11

she doing good? And when it comes to your investments, I

Joseph Okaly: 00:04:15

want you to think about and be able to better determine what

Joseph Okaly: 00:04:19

'doing good' means to you, and how to therefore then better

Joseph Okaly: 00:04:23

evaluate it. The goal then for today's episode, so the 'if you

Joseph Okaly: 00:04:27

can say this at the end of the episode, then you have

Joseph Okaly: 00:04:30

succeeded' statement is "I now understand what I want my

Joseph Okaly: 00:04:35

investments to do and how I should be evaluating if they're

Joseph Okaly: 00:04:39

doing that." So again, "I now understand what I want my

Joseph Okaly: 00:04:43

investments to do and how I should be evaluating if they are

Joseph Okaly: 00:04:48

doing that." As you could probably tell we often get

Joseph Okaly: 00:04:52

people saying that their investments are doing good. This

Joseph Okaly: 00:04:56

like other scenarios really means almost nothing other than

Joseph Okaly: 00:05:00

the person is currently arbitrarily satisfied with the

Joseph Okaly: 00:05:03

performance investments. Again, as we've talked about on many of

Joseph Okaly: 00:05:07

these different episodes are the tools that we're using to help

Joseph Okaly: 00:05:10

us reach new goals. They are the fuel, but just like launching a

Joseph Okaly: 00:05:14

spaceship, the fuel isn't the goal. If the goal isn't to just

Joseph Okaly: 00:05:17

have a lot of fuel. The destination, space in this case,

Joseph Okaly: 00:05:21

is the goal. So we need to adjust our thinking, first of

Joseph Okaly: 00:05:25

doing good from some performance number on a piece of paper that

Joseph Okaly: 00:05:28

makes us feel good or bad, because that's really just

Joseph Okaly: 00:05:31

saying that we now have more or less fuel than we have before.

Joseph Okaly: 00:05:36

But do we have enough fuel? Do we have the right fuel? Doing

Joseph Okaly: 00:05:39

good therefore should mean on track to have the fuel we need

Joseph Okaly: 00:05:44

to get us to our goal, that destination. So if my

Joseph Okaly: 00:05:47

investments are doing good, that means they're on track to having

Joseph Okaly: 00:05:51

the fuel that I need to get me to the goal that I'm trying to

Joseph Okaly: 00:05:55

reach.

Joseph Okaly: 00:05:56

If you earn 15% a year, let's say on your investments, which

Joseph Okaly: 00:05:59

is a completely unreasonable expectation long term, by the

Joseph Okaly: 00:06:02

way, for anybody out there listening, but you are not going

Joseph Okaly: 00:06:06

to be able to meet your goal, then who really cares, right? I

Joseph Okaly: 00:06:10

mean, great, I have more fuel for my rocket, but I still can't

Joseph Okaly: 00:06:13

make it to outerspace. I'm going to blow up in the atmosphere,

Joseph Okaly: 00:06:16

still really not that useful. This is why I say investments

Joseph Okaly: 00:06:20

are far less important in the grand scheme of things than

Joseph Okaly: 00:06:23

planning. The planning is what gives you clarity, and the

Joseph Okaly: 00:06:27

planning is what makes things possible. So Joe, are you saying

Joseph Okaly: 00:06:31

I should just ignore my investment performance

Joseph Okaly: 00:06:33

altogether? No, I am not saying that. But if you're going to

Joseph Okaly: 00:06:37

dive into the performance, you need to do it properly. Properly

Joseph Okaly: 00:06:41

means comparing it to its peers. If you told someone about your

Joseph Okaly: 00:06:45

investments, it should be number one, they are or are not, excuse

Joseph Okaly: 00:06:49

me, they are or are not keeping me on a path to reach my goals.

Joseph Okaly: 00:06:54

And two, they are or are not doing well compared to their

Joseph Okaly: 00:06:59

peers. Again, they just can't do good on their own compared to

Joseph Okaly: 00:07:03

nothing.

Joseph Okaly: 00:07:04

Sometimes when someone has an existing investment, they say it

Joseph Okaly: 00:07:07

is doing good. And what this oftentimes translates into is

Joseph Okaly: 00:07:12

the area their fund is focused in may have done particularly

Joseph Okaly: 00:07:16

well. Let's say your account went up 30% in 2021. You would

Joseph Okaly: 00:07:21

say, "Hey, this is the best fund ever, I'm never going to sell

Joseph Okaly: 00:07:25

it." However, let's say that when we looked at your account,

Joseph Okaly: 00:07:29

all you owned was a real estate fund. While the real estate

Joseph Okaly: 00:07:33

category index actually went up over 45%, 45%, in 2021. So your

Joseph Okaly: 00:07:41

fund in reality did quite poorly. We compared it to its

Joseph Okaly: 00:07:45

peers, what other funds like it should have done and your fund

Joseph Okaly: 00:07:49

in this example, missed the mark by 15%. And this is true, by the

Joseph Okaly: 00:07:54

way regarding the real estate category index this last year.

Joseph Okaly: 00:07:57

It is also important to note that the year before that in

Joseph Okaly: 00:08:01

2020, it went down over 11%, just to illustrate how it like

Joseph Okaly: 00:08:06

most every category should be a piece of a portfolio and not

Joseph Okaly: 00:08:10

representing the entire thing.

Joseph Okaly: 00:08:11

The point though, is a huge trap we see so many people fall into.

Joseph Okaly: 00:08:17

So if you don't have the desire or the ability to properly

Joseph Okaly: 00:08:21

compare and evaluate your different funds, then you need

Joseph Okaly: 00:08:24

to in my strong opinion either A) hire an advisor who knows how

Joseph Okaly: 00:08:28

to do this for you, or B) use an allocation fund that has a

Joseph Okaly: 00:08:32

manager who can make sure you aren't overly concentrated in

Joseph Okaly: 00:08:36

any one area. So as we get to the end of this episode here,

Joseph Okaly: 00:08:41

let's circle back to the goal statement that we said at the

Joseph Okaly: 00:08:43

beginning. That statement was "I now understand what I want my

Joseph Okaly: 00:08:48

investments to do, and how I should be evaluating if they are

Joseph Okaly: 00:08:52

doing that. I want my investments to get me to a goal.

Joseph Okaly: 00:08:57

So are they on a path to do that? And are they doing so

Joseph Okaly: 00:09:01

effectively when I compare them to their peers?"

Joseph Okaly: 00:09:05

So thanks for tuning in today. Join us next week for the

Joseph Okaly: 00:09:08

episode called Buy High Sell Low. We're going to talk about

Joseph Okaly: 00:09:13

how overall everyone knows buying low and selling high

Joseph Okaly: 00:09:17

makes sense, but why so many people wind up doing the exact

Joseph Okaly: 00:09:21

opposite.

Joseph Okaly: 00:09:22

Overall, if you're able to implement what we covered today,

Joseph Okaly: 00:09:25

fantastic as always, less to worry about and more focus on

Joseph Okaly: 00:09:28

just going out there and enjoying life. If you're wanting

Joseph Okaly: 00:09:32

help with these things, though, if you have questions you need

Joseph Okaly: 00:09:34

help in clarifying, you can either head on head on over to

Joseph Okaly: 00:09:38

the ASK JOE section on the show's website. EnjoyMore30s,

Joseph Okaly: 00:09:42

that's 30s.com. You can also connect with me directly by

Joseph Okaly: 00:09:46

visiting my wealth management firm's site New Horizons Wealth

Joseph Okaly: 00:09:49

Management at nhwmllc.com. Until next week, thanks for joining me

Joseph Okaly: 00:09:55

today and I look forward to connecting with you again soon.

Voiceover Audio: 00:09:59

The conversations on this show are

Voiceover Audio: 00:10:01

Joe's opinions that are provided for general information purposes

Voiceover Audio: 00:10:04

only. They do not constitute accounting, legal, tax, or other

Voiceover Audio: 00:10:07

professional advice for your specific situation. You should

Voiceover Audio: 00:10:11

always seek appropriate advice from a financial advisor,

Voiceover Audio: 00:10:13

accountant, lawyer, or other professional before acting upon

Voiceover Audio: 00:10:17

any content or information found here first. Joe is affiliated

Voiceover Audio: 00:10:21

with New Horizons Wealth Management LLC, a branch office

Voiceover Audio: 00:10:24

of TFS Securities, Inc., and TFS Advisory Services an SEC

Voiceover Audio: 00:10:28

Registered Investment Advisor, Member FINRA/SIPC.