Episode 23: How to Expect the Unexpected When it Comes to Your Finances

ABOUT THIS EPISODE

On this episode of the Build Your Life Podcast with Financial Expert John Browning, we're discussing how to deal with the unexpected when it comes to your financial future.

Unexpected occurrences can and will happen to everyone. But learning how to plan for them in advance takes skill. Listen in as John discusses helpful tips such as: how much cash to keep in reserves, how to develop the right mindset for dealing with unforeseen events, and how to mix your portfolio to best protect you. 

For more information, visit www.GuardianRockWealth.com to learn more about what John can do for you. Or, give us a call at (312) 372-5000.

 

 

Welcome to the building your life podcast with John Browning. Building your life is a relaxed and unedited conversation with financial expert John Browning. John's the founder of Guardian Rock Wealth in Lake Forest, Illinois. He's also the author of the Book Build Your Life, not a portfolio, a guide to your financial future based on your personal values. Now you can purchase John's book on Amazon, or you can stay around to the end of today show and I'll tell you how to get a free copy milk right to your door. I'm Michael Lawn, your host for the next few minutes as we chat with financial expert, business owner and author John Brown Good Day John. How are you, sir? I'm doing fine. How about you? You know, things are things are peachy here. It's just, yeah, having a having a great week and just thinking about how how good life is, even when things don't always go by way. We were talking about the last the last episode. You probably remember, we were talking about well, we've done goal setting in the past, and then last episode was being a DIY investor and we talked about some projects and in different things right and sometimes my projects don't go the way I think they should and the result was kind of unexpected. Something unexpected happens, and so I was mixing some mortar and one of my projects, we were doing some wall work and I followed the direction and John put put the powder stuff and added the water they told me to and it mixed it up and it was way too liquidy and that was unexpected, and so I had to go to the big box shop and buy more stuff because it was just something that happened that I didn't anticipate. I followed the directions as supposed to turn out right, and then it costs you more money because you had the boy kidden and time and I think I spent a total of two hours of just running back and forth and getting everything prepared. I'm like, where's my day going? But that's just what happens. Yeah, yeah, it is.

It's but it's unexpected things happen when I'm doing projects and UN it's unexpected things happen in life that affect our finances. You know, we've just come through one. I'm when we're still in it really the pandemic, the covid coronavirus pandemic, so impacting us, still impactings and probably will for a few months, but how do you how do you advise clients when you're talking about finances and planning their life in retirement planning and all of that? How do you how do you invite your clients to, I guess, prepare for the unexpected, because it's coming sometime right. How do you how do you go about dealing with that? Yeah, it's definitely coming. The unexpected. One of the things you can expect is the unexpected and we see it when you deal with people. Is Part of your everyday thing that you do. You Begin to realize that that unexpected thing does just happen all the time and the number one thing. And it can be difficult to do, especially if the markets, say the markets on fire. You know, it's just is just going higher and higher and higher, and it's it can be hard to keep cash reserves available because you feel like you're, you know, the Theomo if you're missing out right. But it's so necessary just to keep enough cash reserves so that you can do what you need to do, not just for your everyday life. We have a lot of clients that are living from their investment of investments, and then we've got another subset of clients that also are are preparing to live off of their investment so they can make their own paycheck. But the especially for those that are already in that stage where they're at or near the point where they're living off of their investments, making sure you have cash flow from your investments and also making sure that you have cash reserves not...

...just for the daily needs of life, your monthly bills, but also in the event that something unexpected might happen, because the worst thing that can happen is the market has a say, a thirty percent correction and something else unexpected happens and you need to actually liquidate a portion of your portfolio at those lower prices and then, as we've seen just this year, the market had a real v shaped recovery where it just hit the bottom in March, was horrible and then very quickly recovered. So we did, unfortunately, have one client that, frank unfortunately, just just panic and just like I would say always, but I know you never say all these are never right. Almost always, it seems like, when this happens, you know, they just I've got to go to cash, I've got to go to cash, and this is right during March, and I said I personally think, but I can't tell you for sure that I think this is probably close to the low point. We don't care, I want to go to cash and you know, I follow the instructions at that point, went to cash and sure enough, it was almost exactly the low point in the market. And they still have gone back. So they've lost all that upside that they had already lost them downside. So that's something. You don't want to be in a position where you have to and you also don't want to be in a position where you pianic, and having enough cash reserves can help with that panic because I've got what I need. I've got ready need in cash. Just because the market went down doesn't mean that I have to panic sell. So that's the number one thing that you can do. There are other things, though, as well that you can do to guard against too much volatility, and volatilities one of those big words. It just simply means movement up or down, but people tend to think of it as just moving down because that's what everybody pays attention to. The pain of moving down is much greater than the joy of...

...moving up. Yeah, that's good, I like that. I'll put a different pan, I can. I can I say the the pain of moving down is much greater than the pleasure of moving up. Yes, there you go. That's it. I want to he's in now. I like that. That's a good quote. You did put that in your book. I should have. Should do they now forget another? That's right. So there's some other things you can do. Having good cash full. That's really important. Having cash reserves is great. Other things to protect yourself. Going back to your goal setting, making sure your goals are in line with all of this, as you set your goals for retirement, making sure part of the goals are to have enough cash reserve and cash flow to help mitigate some things. And you in your planning, you you actually plan for things like this right, for market fluctuations and unexpected things happening with your clients. You you, that's part of the planning right. Absolutely, and and having that cash flow is super important as well because, as we've seen over the past many years, but especially here recently, the the income produced by your traditional sources of income, fixed income, which is bonds, has gone down so much the people in retirement of really been been hit hard if they've been depending on the bond portion their portfolio to pay their daily bills. So what we have done in the past several years as we've shifted to more dividend paying securities and things such as that. And some people are afraid of dividend paying equities because, well, there are a lot more risky than a bond, and you know, I would tend to tend to agree with that. But there's some things that have happened in the market place over the past ten and twenty and even thirty years that have changed the way that fixed income interacts with your portfolio. where it used to be, fixed income was there and fixed income would...

...move up about the same amount that equities would move down and it acted as a really great tool. But now that interest rates are so low, that relationship has changed. In an addition to that, that fixed income is not even paying you the income that you need on an ongoing basis. So we carefully dig into and choose dividend paying equities to help provide for some of those daily needs and pay very close attention to the daily cash flow needs of our clients. Wow and that that all flows out of conversation and knowing your client, because you have lots of clients and they all have different guys flow needs. So you have to know each one, and that's why you spend so much time getting to know your clients and understanding who they are and what they're really wanting as they build a life, not just a portfolio, right, but also as they go through this the these turbulent times we're in now, but really, let's just say unexpected times of market fluctuations or of things happening in life. It doesn't even have to be tied to the market. It could be something in your in your town that would cause something to happen. Right, how do you, how does somebody recover what? Let's talk about it, mindset. What's the mindset somebody needs to have to endure these fluctuations in life as it relates to our finances? and and how do you counsel people? You've talked many times that you feel like you're a counselor sometimes how do you work with people to help them have the right mindset before, during, an after an unforeseen event? Well, before is the key thing. They sure you've really talked with them and really understanding them, really understand them before in the problem is with with many people inclutting myself, and I'm sure you can identify this with this as well, is you think you can handle that type of downside, but when it actually happens and you actually see your...

...portfolio value evaporate in a month or couple months, whatever it might be, it becomes real or very quickly and and can you really handle that? So if you we don't understand ourselves well enough. It's really difficult for me to understand the client, but I spent a lot of time trying to trying to do that and trying to get them in the right mindset of what this means. And again, the key is having the right portfolio mix for that individual. So whether that means, you know, a larger portion of fixed income or give it in paying equities or even a particular product, that these products are actually available today and they get they get some bad press, but when used appropriately, there are products out there today, even for smaller portfolios, that can limit your downside risk and having some of those in place for individuals that just really have a hard time watching their portfolio fluctuate to the downside can be just a life saver. Can Save you those ulcers, that can save you those sleepless nights and nobody needs those. Well, that's right, and they those came many times when we are when we are seeing, or maybe watching, I won't say too closely, but watching our account go down for whatever reason. But if that mindset of beforehand, knowing that we're planning for this, this is part of the plan, that things are going to happen, they're going to be there's going to be a season perhaps when the when they economy tanks and the the portfolio goes down, but we've got these other safety valves in place and what we need to do is stay the course and make sure that we're on track and review the goals to make sure that you're going to live the life that you're the were planning for you. Right, it's about your life and not losing your life through worry and fear, but...

...trusting what you've put in place with them, John, so they can have the life they want because of the portfolio that you've put around them. That's right. And it really is all about balanced, one of our favorite words. Right, right, and it's because if you if you just can only handle safety, then you should put your money into a money market fund or a CD with a guaranteed return, you know, and it we don't say that word like ever. Right, are products out there that have that, and but you pay for that too. Some of those products are that provide that type of return are extremely, extremely expensive. You pay for that. And in addition, if you just have it in a money market fund, especially now with rates where they are, you you were likely at some point to actually be losing money because inflation will be higher than you're very safe mutual fund. So there's you're always paying for it, and certainly if you're if you're just living in fear all the time and that's all you do, then then you're you know, you your home or whatever your you stay at home, you don't go in the car, you don't you don't ride your bike, you might fall off. You you know, you don't do anything, and that's not a life either. That's not building a life. That's beautiful. I was hoping to go there because you were reading my mind, because that is not building a life. That's really why he wrote your book, as you want people to build a life, not a portfolio. We don't want to go around say look at my portfolio. We will say look at my life looks lot what I get to do, and I get to do those things because I have a portfolio that that sustains me today and in the future and it sustains me through the ups and downs of life, because unexpected events happen and sometimes they come to us through the market and sometimes they come to us through left field. We just never know when they're coming, but...

...for most of us they come and they're unexpected to us. But you and Guardian rock wealth and your planning process, you plan for that and you make sure that your clients have good cash reserves, good cash flow and options that when something comes it's not the end of the world, and you help counsel them and talk with him and make sure that before, during and after an unforeseen event you're there and you're there because you become a friend more than just a financial investing guy that I use right, right, right, and you know it's not it's not all bad either. It's sometimes when things go really, really well, you have a whole different mindset, and this is where people are completely different. Right you just really have to get into what their mindset is, because we have dealt with some people that they have a really great game in a particular security and they don't want to take that game and invested somewhere else. So they don't want to diversify that game because it well, is just going to go higher. Well, it might not go higher and well, I'm afraid of the taxes. This is something here all the time. But the risk of not taking some games when you have them, it can be, in a way, almost as great as, as you know, an actual loss. Sometimes you can, you really need to take those gains, and you know that. We were happy that we did that in the beginning of two thousand and nineteen. There were some some businesses that had really appreciated. We took some of those gains and so I'm we're going, well, no, no, I have to pay taxes on it. But then in marks they were like, oh, we're really glad we be diversified and we didn't have so much in that one particular stock. So there's all sorts of things that you really should be doing to control and adjust your mindset and also control an adjust your portfolio, and it's something that we do...

...all the time. It's ongoing. It's not something you can walk away from for a few days and not pay attention to. That's him well and that's good. That's a good that's a great point, because so many times as an investor we're looking at today or maybe this quarter, and you've got a longer term perspective because you're really helping me get to wherever my goals have set me for retirement. And Yeah, it's easy for me to say, well, the stock is growing, is grown as grown, and you're sitting here going yeah, but let's take some off the table and put it over here. We can still stay in it, but let's take some of those games and redeploy them over here, because we want to help mitigate unforeseen risk and help you have a better portfolio to build the life that you're wanting to build. So you've got a broader perspective, I would say, then individual investors most of the time. Is that accurate? Yep, that's exactly right. That is exactly right. Okay, all the more reason to reach out to John and just have a conversation with him and and talk with them about investments and goals and what are you wanting to do and how do you handle the unexpected things that come to life and not living fear and not be anxious about, especially finances, because that will just eat your lunch. You said something early, John. I want to just reacather how to expect the unexpected, and that's that was really cool, because we need to expect the unexpected. And I've said something for my kids years and you know, I would always, you know, sneak up on them and scare them or whatever, and I'd always look at them and say, when you least expect it, that's right at it. Yes, and that's just been kind of a phrase we use run a front of the same holds true in our finances, in our in our life. When you least expected expect it what our pastor has many times said. Right now you are either getting ready to go into, you're in the midst of or you're just coming out of a crisis. So prepare for it, and I think the same holds true in our in our financial...

...life. So we're all there. We need to make sure that we're building a life, living life on purpose and planning for the future. John Talks a lot about it in his book. So reach out to John, get a copy of his book and Guardian Rock wealthcom and go to the what is that? The contact US page or the about US page, John be about his page actually run on the home piece. They can fill out fill out their information and we'll get an email and we'll contact them back. But also there's a contact us that you can click on and and we're happy to respond. We absolutely will respond. That's great and that's that's the one thing. Yeah, they will. There's through email, phone call, zoom call, whatever. Just reach out to the have a conversation, see how they can help you build a port build a life, not just a portfolio, and live with the expectation that the unexpected is coming and plan for it now so that when it does happen, you just keep going. So, John, that's that's a great we can come back and talk about this one a lot, because this is something that just really resonates with with me and with a lot of people in how do we protect ourselves, how do we plan for it well, and then having somebody to reach out to when it does occur to say wow, how do I navigate this, John, and to know that it's okay, we've got it covered, here's what we need to do. Having a having somebody like you, is great. So thanks for thanks for helping US understand a little bit more about financial life and how to plan for the unexpected. John. Well, I guess I enjoy it. It's what I love to do, so I'm happy to talk about it. Awesome. Well, will be back on another episode talking about something else. So be sure to listen to a previous episodes and there's a lot of information there. Reach out to John and get a copy of his book and join us for the next episode coming up soon. Thanks John. Have a great day all right. Thank you. Thanks for listening to the building your life podcast with John Browning. Be Sure to subscribe to this podcast so each new episode will be be sent to you automatically when it is released. Have a terrific...

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