Complex Financial Planning: Investing - When Should You Sell an Investment?

Have you ever wondered why market fluctuations cause such a stir among investors? Or questioned if there's a better way to approach these inevitable ups and downs? Today's episode takes a deep dive into the world of investments, exploring the crucial distinction between price and value. We unpack how changes in price often blind us to the true intrinsic worth of our investments, leading to reactive decisions driven by short-term market waves.

Investing is more than just buying low and selling high, it's about understanding what you own and why you own it. We discuss the essential mindset shift required for successful investing. Delve into how to navigate market downturns without panic, to shift from a reactive approach to a proactive one. We bust the myth that a down market equals a bad investment, encouraging listeners to focus on long-term potential rather than temporary turbulence.

We don't stop at the stock market; we also address various types of investments from mutual funds to treasury bonds, shedding light on their purpose and potential. With insights on financial decision-making, especially for retirees in a volatile economy, we emphasize the importance of informed decisions. This episode is designed to equip you with the knowledge and confidence to navigate the investment landscape, and to make decisions that align with your goals and values. Set aside your fears and join us on this enlightening journey through the world of investments.

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Transcript

Speaker 1: 0:08

Welcome to Ditch the Suites, a movement awakening and opportunity for you to start getting more from your money in life. I'm Steve Campbell. With my amazing co-host, Travis Moss, we're going to share industry insights nobody wants you to know about, so buckle up and enjoy the episode. Well, welcome back to Ditch the Suites podcast, steve Campbell and Travis Moss. This is going to be our last episode in the series, if you've been tracking with us.

Speaker 1: 0:33

The whole idea was that we wanted to break down what are complex, simple questions, things that people throw all the time to us as financial professionals. That sound like simple answers, but there's a lot more under the surface. We've walked through when I should take Social Security? In episode one, we looked at. Should you do a Roth conversion? In episode two, episode three, we talked about should you retire in a bad economy. Well, in this last one popular question people ask all the time which is Travis should I get rid of an investment that's just losing money or has lost money? I know this is more complex. What are the talking points or things that, if I pose that question to you as your client, that it would be the first thing that you'd bring to mind?

Speaker 2: 1:15

I always try to relate it to what people can actually understand, because most people can't understand Amazon or Microsoft or Apple as a company. It's too big. It's like trying to understand a trillion dollars. What does that mean? I try to make it something that is realistic to us, something that we can individually touch so that my brain can have a frame of reference, because what's happening here is that fear. Stuff is kicking in and we don't know how to benchmark it. We're just afraid of loss. We're so afraid of loss, so afraid of loss.

Speaker 2: 1:59

I almost always go back to your house. There's a website called Zillow. You can go out to Zillow. Everybody knows about Zillow by now. You can punch in your address and it'll give you an estimated appraised value of your house. Now, whether or not it's accurate doesn't matter. The point is that that value will change all the time. It changes because a house down the road is old, or it changes because interest rates went up, or it changes because of whatever reason. There's all kinds of things in the algorithm of why a property value goes up.

Speaker 2: 2:38

My question is you bought a house, let's say you bought a house last year and this is your forever on. You're going to live there as long as you can think of at least a very long time. You pop up Zillow and you look at Zillow and you're looking at your dream house. Everything in this house is perfect. You love it. It's a great house, great neighborhood, everything's perfect. You paid $750,000 for the house and Zillow tells you that today it's only worth $700.

Speaker 2: 3:14

What would you do? I mean, it's a pretty basic question. Everybody would be like I wouldn't pay attention to that at all. What if Zillow told you today it's worth $400,000 or $600,000, a lot less than $750,000? You'd say, oh my gosh, I'm underwater. Some people would actually panic. I'm underwater. What's the matter If you didn't know what your house was worth?

Speaker 2: 3:39

The only way you know what your house is actually worth is you go out and you try to sell it. That's the reason why you get a value on your house. It's the reason why you're appraised, because somebody's buying it. You don't just go yeah, I should just get it out of appraisal on my house so I know what it's worth, so I can walk around with that in my pocket. No, you get an appraisal when you want to sell the darn thing or if you want to borrow against it, when you really need to know what the value is.

Speaker 2: 4:03

The question is if you otherwise would not have known the value of your property, or an estimated value or really what it is is. It's the price. Somebody would likely pay you for it. If you otherwise wouldn't have known that, if you would have closed your eyes today and woke up in 20 years and you bought the house for 750 today and 20 years is worth a million dollars, you'd say that's awesome, that was one of the best investments I've made.

Speaker 2: 4:34

But because we can look at Zillow every single day and put in our little Excel spreadsheet, we look and I go oh my gosh, it dropped. And we start to panic and I'm underwater. And you go well, if I'm underwater, it must be bad. I made a bad decision, I'm going to lose all this money. And then the little recession that you're in gets over and interest rates go back down and housing prices go shooting back up and it goes back up to 750. And then again 10, 20 years down the road, it's up to a million dollars and you go wow, that turned out to be a good investment. Same exact path. The only difference is this one you're watching every single little step along the way and not realizing if you're not going to sell it, it doesn't matter what it's worth.

Speaker 2: 5:17

I mean, really the bigger concern is is a good house? Is the foundation good? Is the community good? Is the neighborhood good? Are you keeping up with deciding so that it doesn't get mold and bugs and stuff like that? Are you doing a good job to maintain it? If you are, and if there's nothing structurally different or materially different, then the rest of it's just volatility, it's just happening. So that's the first place I start. I start with your house because most people can understand their house.

Speaker 1: 5:51

Well, and this poses the question of we can understand the house, but why do people ask this when it comes to their investments? Let's say that they bought a stock for a certain price per share and it went up in a ton of value on paper, right In their mind is what they're thinking I've made all this money on it. And then they look at it at some point down the road and then they've lost all this money on it and what do I do? Panics? That's it.

Speaker 1: 6:13

And I think when you just oppose it with the house idea, it's because we don't really truly understand price versus value in what we're seeing in the market or on a statement. So I think you've done a really nice job over episodes explaining this. But to those that might be new to digital suits or need a little bit of a reminder, we understand that if we love our house and we see it on Zillow and it's, you know the price is down, we're not going to go out and sell it. How does that help us understand that? When we're looking at investments on a statement, what are people looking at? And then how do they understand price versus value?

Speaker 2: 6:46

Well, let's stay with the house for a second. You know there's lots of people that buy a house and then they don't properly upkeep their house, right, you know? You see it, the yards are messy, or you know the siding falls into disrepair or the landscaping's not that nice, or they never update the appliances or the furnaces getting older, the roof is starting to flake and stuff like that. And so those people have an investment. A lot of times people say that's your biggest investment in your life, which is all BS. But you know they'll call the house the biggest investment in people's lives and say, okay, you know that's your investment, and they run the darn thing into the ground.

Speaker 2: 7:25

Yeah, what's happening on your investment statement, if you own investments let's say that you own a share in Apple stock there's professional management, there's intellectual property, there's technology, there's a consumer base, there's contracts right, there's a lot of money there and they're trying every day to make it better. And you're like that's a bad investment because it's down 40% this year. I should get rid of that. Well, you should also get rid of your house. Then. You know it's just, but we don't look at it like that because it's on paper, right, and it's not, I can't touch it, at least with my house. I know that it's there. You know what I mean. I can put my arms on it, I can put my hands on it. It might be a mess, but it's my mess type of thing, right. So we and we talk about it all the time price and value what you're really seeing when you're seeing investments crash and that balance going way down, is you're not seeing the value go down, you're seeing the price go down about 95% of the time, and I'm making this number up with the. I can think of, on one hand, the amount of stocks that we've probably invested in over the years that became complete dogs. I mean, just went down and probably never going to go back up. Right, for the most part, stocks are pretty darn cyclical right Now. Maybe they don't all go up. You know like, like their stocks, it'll go up hundreds of percents and there's some that are still up, only like 30 in the same time period. But in general, if you're buying high quality things and you understand what you're buying, you know what you're really seeing happening on your statement is the price fluctuations.

Speaker 2: 9:10

You're just seeing people. All you see when you look at the stock market are bids. You're seeing what other people out in the world are saying this is what I'll pay you for what you're willing to sell. For for what? For your inventory? Or you willing to sell it to me. And sometimes we go you know what? I don't want to sell it, so you'd have to make me an offer I can't refuse. Market goes up and sometimes we say you know what? I'd love to get rid of this stupid thing. It's a piece of junk. I can't believe you'll give me what you're willing to give me for it. Yes, I'll take it. Or I have to. The bank called me and said if I don't get, if I don't sell you this, they're going to come take it. So please buy it from me so I can pay the bank off. Right? That's really what you're seeing happening with your investments, and what we have to do is just the same way that you do your house.

Speaker 2: 9:59

You're doing appraisal. You appraise your investments. If you could appraise your investments instead of looking at your little Excel spreadsheet and seeing the red ones, those are the ones that are bad, and the green ones, those are the ones that are good right, if I'm up, I'm green and if I'm down, I'm red. Instead of looking at just seeing the red ones. What if you put an extra column in there that actually said that it what its appraised value was right? So if every stock you had an appraised value? So you go next to stock A and you go appraised value 100, price 80, return plus 40%. Well, that's something you bought at a serious discount. Because if you're up 40% and it's still only priced at 80, but it's worth 100, you still got 20% room to go up. Right, you're still going up. But if you looked at one and you said appraised value 100, price 40, return minus 20, you'd go that's a horrible investment. Unless you look at the appraise value and you go, wow, that's really selling at a discount rate. Now I just need to wait for the market to change on that, versus what we do most of the time. We look at the one that says appraised 100, price 150, return plus 30 and we go, ha, that's the best investment I have. I should buy more of that.

Speaker 2: 11:20

So you're telling me that if your neighbor appraised their house at $500,000, you'd walk over there tomorrow unprompted and say dude, I'll give you $650,000 for the house. Shake, let's go spit on it. You wouldn't do that. That's nuts. But we do that with our investments because we don't actually understand what they're worth. We just always use the price fluctuation because we're not benchmarking, we're not anchoring it in any way and the market doesn't do anything like that for us.

Speaker 2: 11:52

The news certainly doesn't do anything like that, right, because if the market in 2022, at the end of 2022, into the beginning of 2021, it was about 6% to 8% over price, meaning people were paying for $100,000, house $108,000. So the first 8% that the market went down, what they should have said on the news was that's good, because that was dumb. I can't believe people were paying that much. Now. It's a good price. We should get back in it. Instead, what they do is oh my gosh, this is the beginning. It's going to be terrible and it's like no, that was just a reset. That's what we would actually call a correction, not a crash. That first 8% should have gone away because there was no reason for it to be so hot. The prices were just high.

Speaker 2: 12:35

You go to the grocery store and you want to go buy a steak and for some reason, they're selling a Delmonico steak today for $35 a pound. They're selling, let's say, a flaminion for $14 a pound. Which one are you going to buy? You probably can say I'll go without that one. I'll buy the flaminion for $14. That's an incredible deal. That one's really cheap. It shouldn't be that cheap. That one's really expensive. It shouldn't be that expensive. But we don't do that with our investments. With our investments it's just like if it's red, it's good or it's bad, and if it's green it's good, and it's actually the opposite normally.

Speaker 1: 13:14

Well and even back up. That's the assumption that people actually understand the purpose, as to why they have the investment in the first place. So I think that's also a good starting point too, which is when this investment was purchased either by you because of do-it-yourselfer or professional money manager or what have you why did we actually own this particular investment? Because where we are today, did it serve a purpose? Or did we just throw money into the market and hope that it happens?

Speaker 1: 13:40

Going back to that house analogy if you and your spouse went to go find your dream home, I'm probably sure you're not going to buy a house site unseen, just based on what somebody told you, because then you won't really understand the value.

Speaker 1: 13:52

If you've done your due diligence and it's in the neighborhood you want to live in the school system, you know what you're paying. Even if you have to pay a little bit of a premium, you'll get into it because it's what you want. I think, when it comes to our investments, we don't understand the value of that, because we may not actually understand why we actually own something versus the difference of if you understand a certain stock, for instance, that sells a technology, and you know that people are still using the technology, even if they have a bad news headlines that makes the price go down, is the company still doing the things that they said they were going to do, which we know the value will go back up over time. I think understanding this price versus value if you folks listening to the show can really understand it, can really help put you in a good position of just understanding. Again a simple analogy of a house, but I know we have a couple other examples that people might be thinking through.

Speaker 2: 14:43

If you want to tackle some of those, Well, I took one of the things that you were talking about there. We have to. If we understand the investment, we can understand the severity of the issue on the value. For instance, it was quite a few years ago International Flavors. It's a company that basically makes all the flavors and all the foods like Doritos and stuff like that, behind the scenes of the food industry. Basically, they make the food taste the way it does. They had bought a company and the company had a lawsuit that came with it. It sounds expensive. It was like a billion or $2 billion lawsuit.

Speaker 2: 15:22

When that got disclosed, the price of the stock dropped like 20% or something like that. It was an irrelevancy. It was nothing but a headline. In the grand scheme of things, that stock came crashing down. If you were to look at whether or not you should buy it. Well, if you understand the stock and you understand the issue with it, you're like, even if they ended up with a lawsuit, maybe they'll cost them 5% of their value. It certainly didn't cost them 20. We got a spread here. We can make some money out. There's another company right now. I'm not going to say which one it is, but there's another company right now with like $50 billion of pending lawsuits for chemicals and their products. Well, holy heck, if the price is going down in that company, or even if it's not. If you don't understand that, that's the problem you have with that company and your portfolio. That's the one you sell, and you sell whether it's down or whether it's up. You just say nope, nope, that's too much. The company is not even probably worth that much money. Let's move on and get something else that can recover any losses that we've had A lot of.

Speaker 2: 16:34

It comes down to understanding, like you said, what you have and how severe some. Facebook is a great example. Last year, facebook got murdered. Their stock price got absolutely wrecked, whatever contributed to it? There's a lot of things that contributed to it. It's meta now. It's not Facebook. Whatever contributed to it, though, certainly was not to the degree that it was going to cause the company 60 plus percent of its forward looking revenue. That's what was happening with the price of the stock. It was as if it was losing 60 percent of its business. Really, what happened was the growth rate slowed. It didn't even stop, it didn't go backwards, it just slowed.

Speaker 2: 17:20

People dog on this thing. They just drive it into the ground because it's bad. It's bad. Well, you know what that's when you buy it because if you look at it, you go it's appraised at 100. It's selling at 30. Even if it never gets back to 90, 30 to 90 is a lot. I'm going to make a lot of money on this thing. It's understanding what you own or what's available to you.

Speaker 2: 17:44

Then you got to think about how long the future is. We are very, very impatient people. I mean, we've been spoiled over the last, let's say, decade now, because everything the markets crashed and bounced straight back COVID, the market was imploded and the entire economic world changed essentially. Yet the market rebounded like that. It was like six months from start to end of the event. It's pretty remarkable what happened. You think about this last market cycle, where the market's really been down now since January of 2022 and we're like holy cow, this is just going on forever. This year's actually been a pretty good year. The market's been up pretty good. We're a little bit spoiled on how fast we think it's going to recover.

Speaker 2: 18:33

Whenever you buy an investment, you have to be thinking I'm going to be able to hold this investment for X amount of years, because it doesn't matter what you buy, it might take a couple of years for the realization on the increase of the value of the company. Because they say markets are efficient. They're efficient on prices. They're not efficient on really the values. You know what I mean.

Speaker 2: 18:59

It's just in today's day and age, people are buying investments for a lot of different reasons. Not because they're looking for the best payoff for their money. A lot of people are just gambling. A lot of people are hedging, a lot of people are being forced to sell stuff because of margin calls and things like that. Things are happening in the market. That is not logical, is not reasonable. And then you've got indexing and people pumping money into index funds without thinking about whether or not it's a good timing or anything like that.

Speaker 2: 19:25

So you have a lot of stuff that's happening that when you put money in the market, you've got to be able to say I'm going to wait from this point to this point and I'm not going to hit the panic button. I'm going to observe, I'm going to watch, I'm going to make sure I understand what's going on, but I'm not going to call the doomsday scenario six months after I put my money in and I'm down 15% and now I'm selling off the cash because I can't stomach a loss. When you put money in the market, you have to be able to say look, it could be two or three years where I could be down waiting for my money to come back up. Because if you want to get an average eight or nine or 10% return, you're going to have to deal with down periods because the average comes from. I got a 40% year, I got an 8% year, I got a 15% year, I got a negative 8% year, I got a negative 5%. I mean that's where the average comes from, from all the goods and the bads mixed in and we're getting less and less patient.

Speaker 2: 20:23

We don't want any bads. We think that we can control that. We want all the bad investments out of our portfolio. We'll back to the economy. One right what makes a bad economy? What makes a bad investment? You know and it's a rhetorical question, but you have to go there. It's like a bad investment is not defined by just because the price went down today. If that was the case, when you go to the grocery store, don't buy the eggs when they're on sale, because they're bad.

Speaker 1: 20:50

Well and you got to think about, at the end of the day, why do we invest? We invest because we realize our career earnings are only going to grow incrementally so much. But in the stock market you have this unbelievable opportunity to own part of a company, to benefit from their growth, from their revenue, from their profits, and make money over a period of time. And we almost forget that's the purpose of investing, because there are people that what you view as trash or has gone down in value let's say you have something in your home that you want to sell Somebody else may look at what you have as a real piece of value that they can turn around, fix up and sell for quite a bit of money. We don't think about that when it comes to stocks. You talked about COVID and down markets. When you see a down market, you panic, freak out and sell your investments. It is a marketplace. There is somebody salivating on the other side of that deal that sees what you just sold, thinking that the value is off, which actually the price went down, which we just discussed and they're looking at it going that's a really good company, that's really cheap today. Yeah, I'm going to go buy that.

Speaker 1: 21:55

What would have happened if every digitalist listener became that person where you're no longer just being thrown to and fro in the wind and fear is always overriding, but you had the ability to say you know what. My goal is to make the most money that I can. I want to understand the purpose as to why I would own an investment, and maybe I have a list of different investments that I'd love to own, but maybe they're overpriced right now. The value is what I understand, but they're overpriced right now in the market. If those companies ever should come down in price, I will jump all over those because I understand the long-term value of it. Now you go from a place of fear and reacting to a place of pro-acting and excelling in a same world as everybody else. There's just intentionality behind it. So I think just understanding a lot of what you're talking about. If you folks can wrap your arm around this, it's a pretty life-giving experience that you could be enjoying.

Speaker 2: 22:47

Yeah, and I'm going to, for time's sake, I'm going to merge about four of our next points and then we'll have one to wrap up. But I've worked with people who are CEOs and CFOs and CPAs and they struggle with this. They struggle with the concept of I could own a stock and the investment could be down. So therefore, it must be a bad investment. And one of the things I'll say to them is when you were running your company, did you have a bad quarter? Well, yeah, of course we had a bad quarter. Did you have a bad year? Well, yeah, of course we had a bad year. And what do you do when you have a bad quarter or a bad year? We fix the problems and the company survives oh yeah, the company always survives. And sometimes we come out even better because we learn why would any company that you're buying in the market be any different? It's the same thing. You know what I mean? It's like it's just the ebb and flow of business. There's good years, there's bad years, there's good quarters, there's bad quarters, but not a single one of them define you. The quarter doesn't define you, the year doesn't define you, and that's the short-term focus that we have. We're too worried about. If I have a bad quarter, it must be horrible. If I have a bad year, it must be horrible. We do that on ourselves as people. I have a bad day, so what? Get up tomorrow and do a better job. That's it. Just move on. If you've got to apologize, apologize but move on. Everybody's going to have a bad day.

Speaker 2: 24:18

But when you buy a mutual fund, for instance, so you go, I don't buy stocks, I buy mutual funds. Fine, buy mutual funds, You're buying a portfolio. You're actually not buying an investment. You're giving your money to a registered investment advisor and they are putting a portfolio together for you, and so they go out and they pick the stocks or they have an index fund so it's like automatic and just picks the stocks or buys the stocks to fill up the mutual fund. You never, during the course of the day or the week or the month or the year, look at that mutual fund and say you know what that mutual fund owns General Electric. I don't know why they own that. I've lost 30% of General Electric this year. That mutual fund needs to go and sell it. You can't even see it Right. All you do is you look at the average return of the mutual fund. You go. You know what? Overall, I made 7.5% this year. That's pretty good. In order for you to make 7.5%, a whole bunch of stuff made more than 7.5%. A whole bunch of stuff lost a lot more than 7.5%. Right, Everything's going to be above or below, and there's going to be stuff and there's going to lose 30%, 40% that year. But you have a mutual fund. You got the average return. You like the average returns. You know that's good enough. And you don't go to the mutual fund and demand that they sell something, because they don't care. They don't work for you, they don't care what you think about what they're buying or selling.

Speaker 2: 25:41

When you buy a CD, you're giving credit to the bank. You're going to the bank and you're saying bank, here's my money. If that bank has a bad quarter, do you go and demand that they give you their? They cash out your CD? No, you're just like ah, you know, economy must be bad. Same thing, though the likelihood you're going to get your CD repaid is really predicated on the performance of the bank, or whether or not the bank is going to be around to pay it back to you.

Speaker 2: 26:14

When you buy a treasury bond, you're giving credit to the US government. You're making the bet that the US government is going to pay you back. If the US government is having a bad year because of a recession, you don't go. Oh geez, I guess I'm doomed here. You just go. It's the US government. They're going to pay me back because that's what they do.

Speaker 2: 26:33

Some people say we're doomed there and that's your prerogative. The whole point there is that we're looking at investments as if we've been conditioned to think that it's a slot machine at Vegas. We're completely helpless with it. If you hoard cash, let's say I don't like any of this investment stuff. I just have cash. You know what you're doing. You're making a bet that the dollar becomes more valuable in the future than anything else. You're making a bet that everything else is going to be failing. Basically, that dollar is going to be the thing that maintains all value.

Speaker 2: 27:19

We don't think about it like that. Whatever our thing of preference is, whatever thing we think we know the most, or whatever thing we made money on first, or something like that it's where we gravitate towards. When we look at an investment, it's like it was down 40% and must be broken. Before you think it's broken first, do you understand what it is? If you don't understand what it is, if somebody bought it for you, go talk to them.

Speaker 2: 27:44

What is this and why is it look broken? Should I be concerned? If they're a good money manager, they'd be like, well, if I was concerned about it, I would have already sold it for you, when we are concerned, but we're watching it. If they go, I don't know, let me look it up. Well, you probably shouldn't have paid them anymore. It's just like go back to why do you own something in the first place and what brought you to the decision to buy it in the first place? Same thing with your house. What's the purpose of it? What's the utility here? How long am I going to have this thing? Does it really matter if the price is going up and down right now?

Speaker 1: 28:18

Hey, at Ditch the Suits, we're all about bringing you great resources. You're obviously here because you love podcasts. Well, what if we told you that I, one of your co-hosts at Ditch the Suits, has now launched my own podcast? If you like the tone of obviously you've learned in this episode, I try to always bring kind of the heart of the issues that we bring, to bring it full circle as to how to apply it to your life. Well, if you want to head over and check out the One Big Thing podcast, it's an inspiration and encouragement podcast where my job is to help you, as a listener, really move the ball forward, to take you from inspiration to transformation. So, if you like podcasts, be my guest. Head over to the One Big Thing podcast today and take a listen.

Speaker 1: 28:56

Well, think about how many judgment calls that people are trying to make without understanding the purpose of it. Let's say he went through the COVID year. The market went down like it did and you maybe sold off some investments because you got freaked out and as it started to recover, you thought you know what? Let's take some quote unquote risk off the table so you start to move into more fixed income and then the bond market gets absolutely trashed. And now you're hurting on both sides. And the part of it is is that people just don't understand what they own and why they own it. And so there's a lot of retirees that think about our last episode. Should I retire in a bad economy? You know, they've been making money in stocks their entire career, building their retirement, and then they think the economy's bad. So they say you know what? Maybe I should get more conservative with my investment so this money will last longer in retirement.

Speaker 1: 29:46

Think about how detrimental that can be. Right, and we don't understand the purpose. The premise of what we're saying sounds good, it makes us feel good. It dissipates part of the feeling we've had of, I'm afraid. So taking risk off the table sounds good, but you can't ever account for a year, like happened with the bond market, where just people that were in these quote unquote safer investments got annihilated and didn't understand why. So I think, going back to this idea, should I get rid of an investment that loses money? I think really understanding the purpose of the investment, what is it helping you achieve? Again, these investments are just tools that fuel the engine to financial independence. But then understanding like is it really the price? Is it the value? So I think, as you kind of bring this last point home, I think it will kind of bring some light to what we're talking about as well.

Speaker 2: 30:34

And I think people do a good job of convincing themselves that they know why they own stuff, because one of the things that you can get in trouble there is why, no, why on a stock. It's like back to the complex simplicity, right? Do you understand enough of the broader framework? You might understand a concept. You might understand an idea. Do you understand the bigger game that's happening around you? It's like I know how to play chess and you're really good with the Rooks and really really bad with how to utilize your pods. Like you can convince yourself that you know how to play chess really good. It doesn't mean that you actually do. It means you know how to use maybe one piece particularly well. So we need to make sure that we're not tricking ourselves, that we're staying humble enough that we can be open to people who can help us with concept and framework.

Speaker 2: 31:36

Finance is interesting because everybody's going to deal with finance in their life. I may not use the example earlier in one of the other episodes, I think, with building a bridge. I may never build a bridge, so I can pretend I know how bridges are built all I want, and it's never going to matter, because I'm never going to actually build a bridge. Steve, if you don't understand finances and you're pretending that you do understand finances, that's probably going to hurt you, because you have finances that you have to deal with in your life. So that's the difference between sometimes wanting so badly to have a shortcut to figuring this out versus really spending the time and the due diligence that's needed on this stuff.

Speaker 2: 32:20

Every single thing that anybody owns has a financial value and it's fluctuating every single day. Everything you own yes, right, everything that you have. If you were a store and there's something in your inventory of stuff, if you took everything you own and you wrote it down in a piece of paper, if you were a store and that was your inventory. So you're having a garage sale. Let's say you don't sell something today. Does that mean the value zero? Let's pretend you have a painting from a famous artist, and that famous artist's work normally goes for $100,000 a painting. You found out one of them garage sales, right, and you bought it for 50 bucks, and you find out that you have a painting that's worth about 100 grand and so you try to sell it and nobody will buy it from you. Does that mean it's worth the zero? And people go out there with the stupid quotes. Value is what somebody will pay for it and not really Price is what somebody will pay for it.

Speaker 2: 33:25

Value is what is actually really, truly, intrinsically worth. It could be value list or it could be no value to it, or it could be invaluable. But that's different than the price. Everything's got a price and Sometimes the price is ridiculously high, sometimes is ridiculously low, sometimes it's a fair deal. It just depends you know who's buying it and how bad they want it.

Speaker 2: 33:50

But just because there's no buyers doesn't make it not valuable. Just because there's no buyers Doesn't mean it actually went from being worth a hundred thousand to twenty thousand. It just means you can't sell it today. That's what that means. It means nobody wants your stuff. Put it back in the car and take it home and wait your turn to when somebody's excited about what you have. That's all it is. It's patience. That's, and that's the biggest thing. Wait for another day. If you understand what you've got, if you've got people around you who understand what you've got right, if you really understand the situation you're in, if people don't want to give you what you want for it today and you want a fair and reasonable price for it, didn't just wait. Don't sell it to him today.

Speaker 1: 34:36

And you want to bring it all home we talked about. Should you do a Roth conversion? How do you think you make money available to put into a Roth? You got to sell some stuff. Well, what do you sell to fund a Roth? Do you just sell everything equally? I don't think so. You probably want to have a plan for what you're gonna sell to fund that investment. Right, so you could actually take all four of these episodes and kind of mush them up together, because you don't know if you should retire in a bad economy.

Speaker 1: 35:03

If you don't understand the role that Social Security plays, you also then don't intrinsically understand how Roth conversions can actually help you from a tax standpoint. Well, to create the money for that Roth conversion, you have to understand what you're gonna sell, and if you don't understand the purpose of your investments and what you own, then you'll just sell everything because there's really no plan. And I think that's the crux of it. People want quick answers to long to long-weighted foundational truths that have to be unique to your own life, and it cannot be a one-size-fits-all with financial planning. Just because your colleague that you work with did something one way does not mean that that is appropriate for your life. The answer does depend on each one of these scenarios, but a good financial planner will help you understand that the ins and outs of all of these things, and make a plan that's specific Enough to your life, that allows you to have the value not just your investments, but the value in your life, the value to your charities, the value to your kids. That's how you get the most from your money in life. So this has been Simple questions on paper that are very complex, in a little bit long-winded, but if you understand, it can really, I think, throw gasoline on what you're trying to do.

Speaker 1: 36:11

So, as always, if you're new to ditch the suits, do not let this be your last stop. Subscribe so you never miss an episode. You can also head over to our YouTube channel of NQR media and watch along with us, but I also hope that you'd be willing to share this content with family, friends, with people that are thinking about these things, because if you Understand these things that we talked about in these four episodes, it can really set you up for successful not only 2024, but years and years to come. So again, travis is always thanks for being brilliant. I'm just here to add some comedic relief and help you along the way, but we hope this inspires you to get the most real money in life. And thanks always for stopping by. Ditch the suits podcast.