Good and Bad Financial News
Aug 5, 2020
We take some financial good news/bad news situations and ask Isaac his thoughts on them. As most people prefer, we’ll give him the bad news first.
Here are just a handful of the things that we'll discuss:
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Transcript
John Stillman: Hello, and welcome to Wright Money Tips. I'm John Stillman alongside Isaac Wright, president of Financial Dynamics and Associates. He's also a chartered financial consultant. You can find them online at financialandestateplanning.com. You can call (804) 777-9999. Isaac, I have good news and I have bad news. Which one do you want first? Is I believe how that classic line goes.
Isaac Wright: Yeah, you normally want the bad news first though I would say, then you get it out of the way.
John Stillman: So that's how we'll do it. I'm going to give you the bad news first in all of these statements that I'm about to give you.
Isaac Wright: Okay.
John Stillman: So I'm going to give you a statement and you can explain why the good news in these statements maybe is not exactly enough to offset the bad news, okay?
Isaac Wright: Okay.
John Stillman: So you'll see what I'm talking about in a minute. I say the bad news is that this mutual fund has not performed very well at all, but the good news is, the fees are really low.
Isaac Wright: Yeah man, no, we actually talked about this recently on radio, I think sometimes the world we're living in now is basically everything for the cheapest amount of money. But cheap doesn't always equal good. Vanguard for example has extremely low cost of funds, ETFs and so forth, but especially in today's world guys, I mean, if you look at rates, if you look at some of the rates that are out there today, for example in bonds, or just if you go to the bank or what have you, I mean, right now, I think maybe looking at ways to actively manage some money could be more helpful and may be more expensive, but the value proposition is really what you need to be focused on.
Isaac Wright: So in the realm of what we do here, I just want to be clear, we are obviously going to be more expensive than a do it yourselfer that's going to buy a passive index fund in the SP 500. The question is what check in points do you have, what kind of strategies do you have? And can you track whether or not you're earning your keep, not just on investment advice, but maybe on financial planning, taxes, estate planning? And you start valuing that, then all of a sudden it changes the rules of the game.
Isaac Wright: So please understand that you do want to have a competitive fee and you want to try to be able to minimize those fees where you can, but there's also, in my opinion, I think a very significant difference in fees versus value. And I think working in a relationship environment that's trusting, you can get to the truth of that.
John Stillman: All right. So very good. There's the bad news and the good news that maybe isn't quite enough. All right, how about this?
Isaac Wright: Yeah?
John Stillman: The bad news is you don't have enough money to pay for your nursing home care, but hey, the good news is that Medicaid will step in and pay for it.
Isaac Wright: Yeah, I would call that almost misleading, but the good news here is this. If Medicaid is going to step in, guess what has to happen first? You are going to be broke. It's not like Medicaid steps in immediately. So let's say you have a hundred thousand dollars to your name. You ain't going to be able to keep that, a hundred thousand and then Medicare, Medicaid is going to step in and cover those expenses under most circumstances. Most States have a minimum amount of money you're able to keep. If you are married sometimes that's a little bit more obviously than if you're by yourself, but let me just be very clear, neither one is very much in terms of how much money the government's going to let you keep before they have to start footing the bill, which makes total sense, especially in today's world.
Isaac Wright: So just know that when it comes to, if you are someone who has accumulated money, I always tell people, if you're in this 250,000 to maybe $1 million range, at the cost of care today, it can ratchet up to be a hundred, $150,000 a year. It doesn't take very long to really run through a good chunk of money, if not all of it anyway. So don't think that, hey, Medicaid's going to be your savior. Medicaid truly is going to have a lot of restrictions and you have to really spend down all your money before you even consider having a Medicaid, AKA the government step in.
John Stillman: All right, last one for you, Isaac. I have bad news and I have good news. The bad news is that your portfolio just lost 40%. Hey, but the good news is it'll come back eventually.
Isaac Wright: Yeah. Let me tell you where people get burned here because obviously this just happened, the stock market dropped 30% in just over 20, 22 business days here, the first quarter of 2020. And a lot of people move to cash and waiting for whatever is going to happen happen and feel like they'll get back in the market. Well, guess what? Not too many people really thought about the fact that the market would recover to where we're at less than let's say three, four months later. So how many people lost out not only in the way down, but really the way back up. So you're kind of double-dipping those losses.
Isaac Wright: And I'm not saying we're out of the woods. I mean, no, I think there's a lot of opportunity here for the market to still do reasonably well because the federal reserve and the government in general is really pumping so much money into our system. But the main thing is this. Is do not, and I think this is important, when it comes down to the amount of money you have either looked at your portfolio and lost over a short period of time or vice versa, don't panic.
Isaac Wright: And I think that's easier said than done, but it's a lot easier not to panic when you have a financial plan that has a balanced approach to risk and reward. And having, I would say again, whether this is me or somebody you currently work with, and if you're not working with anybody, I would encourage you to give me a call because our team is really good to be able to drill down on some of the things that we're covering here. But I think the most important thing is before you make a big decision on moving around a lot of money is to be able to have somebody that knows who you are and has the financial acumen, maybe the background to be able to offer some advice around these decisions that ultimately can really pave the way for you to have to work a lot longer.
Isaac Wright: And a great example of that is really this year, John. I mean, so many people when the stock market was crashing in March, were jumping out of the market. I mean, how in the world do you not even consider that, to be honest with you, when the market's down one, 2000 points in a day. I mean, that's kind of the world we were living in right there in March. Then here we go at the end of the second quarter of 2020, and one of the best market years in 30 years, over 30 plus years, the best quarter.
Isaac Wright: So please, if that doesn't teach you to maybe have somebody that can be able to help at least be a conversational or mediator towards some of the decisions that you want to make on your money, it could be well worth it for you. So John, we wanted to keep a quick segment out today. I know we're heading through the second half of the year, but we'll just want to say, listen with all this craziness in the world today, please, you can control aspects of your own financial affairs and we're here to help.
John Stillman: And if you'd like that help, the number to call is (804) 777-9999. 777 9999. Isaac, one final one for you. I have good news and I have bad news. The bad news this episode is over. The good news is it's a podcast, so you can go back and listen whenever you want.
Isaac Wright: I love it. We'll be back at it here in a couple of weeks, man. But yeah, it's been a good year for the podcast, it's been a good year for a lot of people reaching out to us both from this and the radio show, some good topics we've covered that's generated some good conversations this year. So we're here to help.
John Stillman: We'll talk to you again very soon right here on Wright Money Tips with Isaac Wright.
Announcer: Information is for illustrative purposes only and does not constitute tax, investment or legal advice. Always consult with a qualified investment, legal or tax professional before taking any action.
Announcer: Advisory services offered through JW Cole Advisors Inc. JWCA, Financial Dynamics and Associates Inc. and JWCA are unaffiliated entities.
Isaac Wright: Yeah, you normally want the bad news first though I would say, then you get it out of the way.
John Stillman: So that's how we'll do it. I'm going to give you the bad news first in all of these statements that I'm about to give you.
Isaac Wright: Okay.
John Stillman: So I'm going to give you a statement and you can explain why the good news in these statements maybe is not exactly enough to offset the bad news, okay?
Isaac Wright: Okay.
John Stillman: So you'll see what I'm talking about in a minute. I say the bad news is that this mutual fund has not performed very well at all, but the good news is, the fees are really low.
Isaac Wright: Yeah man, no, we actually talked about this recently on radio, I think sometimes the world we're living in now is basically everything for the cheapest amount of money. But cheap doesn't always equal good. Vanguard for example has extremely low cost of funds, ETFs and so forth, but especially in today's world guys, I mean, if you look at rates, if you look at some of the rates that are out there today, for example in bonds, or just if you go to the bank or what have you, I mean, right now, I think maybe looking at ways to actively manage some money could be more helpful and may be more expensive, but the value proposition is really what you need to be focused on.
Isaac Wright: So in the realm of what we do here, I just want to be clear, we are obviously going to be more expensive than a do it yourselfer that's going to buy a passive index fund in the SP 500. The question is what check in points do you have, what kind of strategies do you have? And can you track whether or not you're earning your keep, not just on investment advice, but maybe on financial planning, taxes, estate planning? And you start valuing that, then all of a sudden it changes the rules of the game.
Isaac Wright: So please understand that you do want to have a competitive fee and you want to try to be able to minimize those fees where you can, but there's also, in my opinion, I think a very significant difference in fees versus value. And I think working in a relationship environment that's trusting, you can get to the truth of that.
John Stillman: All right. So very good. There's the bad news and the good news that maybe isn't quite enough. All right, how about this?
Isaac Wright: Yeah?
John Stillman: The bad news is you don't have enough money to pay for your nursing home care, but hey, the good news is that Medicaid will step in and pay for it.
Isaac Wright: Yeah, I would call that almost misleading, but the good news here is this. If Medicaid is going to step in, guess what has to happen first? You are going to be broke. It's not like Medicaid steps in immediately. So let's say you have a hundred thousand dollars to your name. You ain't going to be able to keep that, a hundred thousand and then Medicare, Medicaid is going to step in and cover those expenses under most circumstances. Most States have a minimum amount of money you're able to keep. If you are married sometimes that's a little bit more obviously than if you're by yourself, but let me just be very clear, neither one is very much in terms of how much money the government's going to let you keep before they have to start footing the bill, which makes total sense, especially in today's world.
Isaac Wright: So just know that when it comes to, if you are someone who has accumulated money, I always tell people, if you're in this 250,000 to maybe $1 million range, at the cost of care today, it can ratchet up to be a hundred, $150,000 a year. It doesn't take very long to really run through a good chunk of money, if not all of it anyway. So don't think that, hey, Medicaid's going to be your savior. Medicaid truly is going to have a lot of restrictions and you have to really spend down all your money before you even consider having a Medicaid, AKA the government step in.
John Stillman: All right, last one for you, Isaac. I have bad news and I have good news. The bad news is that your portfolio just lost 40%. Hey, but the good news is it'll come back eventually.
Isaac Wright: Yeah. Let me tell you where people get burned here because obviously this just happened, the stock market dropped 30% in just over 20, 22 business days here, the first quarter of 2020. And a lot of people move to cash and waiting for whatever is going to happen happen and feel like they'll get back in the market. Well, guess what? Not too many people really thought about the fact that the market would recover to where we're at less than let's say three, four months later. So how many people lost out not only in the way down, but really the way back up. So you're kind of double-dipping those losses.
Isaac Wright: And I'm not saying we're out of the woods. I mean, no, I think there's a lot of opportunity here for the market to still do reasonably well because the federal reserve and the government in general is really pumping so much money into our system. But the main thing is this. Is do not, and I think this is important, when it comes down to the amount of money you have either looked at your portfolio and lost over a short period of time or vice versa, don't panic.
Isaac Wright: And I think that's easier said than done, but it's a lot easier not to panic when you have a financial plan that has a balanced approach to risk and reward. And having, I would say again, whether this is me or somebody you currently work with, and if you're not working with anybody, I would encourage you to give me a call because our team is really good to be able to drill down on some of the things that we're covering here. But I think the most important thing is before you make a big decision on moving around a lot of money is to be able to have somebody that knows who you are and has the financial acumen, maybe the background to be able to offer some advice around these decisions that ultimately can really pave the way for you to have to work a lot longer.
Isaac Wright: And a great example of that is really this year, John. I mean, so many people when the stock market was crashing in March, were jumping out of the market. I mean, how in the world do you not even consider that, to be honest with you, when the market's down one, 2000 points in a day. I mean, that's kind of the world we were living in right there in March. Then here we go at the end of the second quarter of 2020, and one of the best market years in 30 years, over 30 plus years, the best quarter.
Isaac Wright: So please, if that doesn't teach you to maybe have somebody that can be able to help at least be a conversational or mediator towards some of the decisions that you want to make on your money, it could be well worth it for you. So John, we wanted to keep a quick segment out today. I know we're heading through the second half of the year, but we'll just want to say, listen with all this craziness in the world today, please, you can control aspects of your own financial affairs and we're here to help.
John Stillman: And if you'd like that help, the number to call is (804) 777-9999. 777 9999. Isaac, one final one for you. I have good news and I have bad news. The bad news this episode is over. The good news is it's a podcast, so you can go back and listen whenever you want.
Isaac Wright: I love it. We'll be back at it here in a couple of weeks, man. But yeah, it's been a good year for the podcast, it's been a good year for a lot of people reaching out to us both from this and the radio show, some good topics we've covered that's generated some good conversations this year. So we're here to help.
John Stillman: We'll talk to you again very soon right here on Wright Money Tips with Isaac Wright.
Announcer: Information is for illustrative purposes only and does not constitute tax, investment or legal advice. Always consult with a qualified investment, legal or tax professional before taking any action.
Announcer: Advisory services offered through JW Cole Advisors Inc. JWCA, Financial Dynamics and Associates Inc. and JWCA are unaffiliated entities.
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