The BetterWealth Podcast: Recent Episodes
Scott Stauffer
Scott Stauffer shares his views on achieving better wealth through enlightened discipline on his BetterWealth Podcast.
In the final step to a better investment experience, we talk about one of the biggest behavioral influences that will really benefit us. This concept applies to numerous facets of our lives and not only in how we handle our personal finance. When looking at it from a bigger picture, this can really affect how you look at life in general.
Learn more about Step 10 in this podcast:
We are surrounded with financial media that tries to sell us products, make us believe they can pick winners or time the market better than anyone else. The truth is the financial media makes money by selling these ads, not by giving financial advice. There are five strategies you can use to help you ignore the headlines and stick to your plan to yield the financial results you want.
Learn more in this podcast as Scott discusses step 9 of the 10 Steps to a Better Investment Experience - Ignore the Financial Media.
The 10 steps to a better investment experience isn’t about using leverage, beating the market, or using the best stock trades in the market. These things are often the packaged items you see in Wall Street products that’s marketed as a solution to meet your financial needs. The 10 steps are here to help you get a better investment experience through understanding how capital markets work and how to participate in them.
When it comes to investing, a lot of people struggle to separate their emotions. The markets go up and down and we can’t really do anything about it. If we become reactive and try to change our portfolio to accommodate new conditions then we are just hurting our investment strategy.
Learn more about managing your emotions in this podcast:
Market timing is an attempt to predict the future by buying investments when prices are low and selling when prices are high. However, it’s very difficult to predict the future direction of the stock market and those that try to time the market often underperform. Scott shares the steps you can take to make your experience with investing better and improve your overall investment experience.
Learn more about Step 7- Avoid Market Timing in this podcast:
Diversification is important. We diversify in our everyday lives. We seldom wear the same clothes every day or eat the same foods for breakfast everyday. We change our route to work to avoid traffic and we change how we communicate with others to improve our understanding. We are constantly diversifying how we live because we know it is good for us, because it increases our opportunities for success. We need to practice this for our investments as well. Learn more in this podcast as Scott discusses step 6 of the 10 Steps to a Better Investment Experience - Practicing Smart Diversification.
Scott Stauffer shares more on the right risks to take when it comes to investing. In order to get a better concept of how to take the right risks, we have to understand the common mistakes people make. Learn more about Step 5 of the 10 Steps to a Better Investment Experience in this podcast:
In this episode, Scott shares the fourth step of the 10 Steps to a Better Investment Experience. In this step “Let the Markets Work for You”, we will discover how using a glass of milk, and to be specific, seven tablespoons of milk, will help you better understand how to let the market work for you. Learn more about Step 4 in this podcast:
Scott Stauffer shares why trying to chase past performance has left many investors disappointed, and how studies have shown that the past performance of a money manager does not ensure their future success. Scott also shares his insights on why it is better to let the market work for you instead of chasing a money managers past performance.
Learn more with Scott Stauffer and his team at Better Wealth in this podcast.
10 Steps to a Better Investment Experience
Scott discusses Step 2 to a Better Investment Experience – Don’t Try to Outguess the Market. In this podcast, Scott shares how trying to outguess the market, can be related to a jar of jellybeans, and how we need to change our mindset from what we have originally been taught when it comes to investments. Learn more in this podcast with Scott Stauffer.
When it comes to investing, things can get complicated very quickly. But it doesn't need to be that way. This is the first in a series of podcast called "10 Steps to a Better Investment Experience" which offers ten ways to improve your experience with investing. Step #1 is Understand Market Pricing and one of the best ways to understand market pricing is a take a closer look at how a pencil is made. In 1958, Leonard E. Reed published an essay about the combination of miracles needed to create a pencil. We can relate that to the work of Eugene Fama called the Efficient Market Hypothesis. Fama wrote that professional investors trying to beat the market through stock picking always had a poor record. Why is that? Well, that’s where the pencil comes in.
Podcast notes can be found in our Blog Post click here for more details
One of the first things to consider when talking about retirement, is people’s goals and concerns. What idea do you have about retirement? Where do you want to go? How do you envision yourselves after retiring? There are a lot of things to consider and look at. In this Episode, we start with the questions you need to answer to uncover, all aimed at answerring the bigger question, "Can I retire?"
Successful people are usually successful because they are willing to do the things that other people are not willing to do. It’s not necessarily because they are smarter – but mostly because they have the discipline do the simple things really well. Building wealth is similar. You don’t have to be smarter. You just need to have a plan and stick to it. You need to learn to save and invest. You need to be disciplined.
Some of us can lose weight without consulting a nutritionist. Many of us can get into shape without the help of a fitness instructor. But most of us would lose more weight faster and get in better shape sooner if we had a team supporting us.
This team would consist of professionals who knew more than us about nutrition and exercise and were really good at teaching what they knew so that we could apply it to our lives.
Choosing the right team for you does matter so that you are on track, in control and achieving what matters.
One of the best tools available to help investors build their wealth is an Investment Policy Statement (IPS). Generally, an IPS is a written document that should articulate your goals, outline how you are going to attain your goals, identify your desired asset allocation and provide the information necessary for tracking and making sure you are on track to attain your goals. Your IPS should not be a cookie cutter template used for any investor with the same model portfolio.
Trying to make sense of the investment headlines we read in newspapers, magazines and various investment publications can confuse the best of investors. Our rule of thumb is if you can’t control it, then don’t worry about it. Understand that it is normal for the market to go down. What you don’t want to do is change your long-term course based upon fluctuating, short-term data.
This is why it is so important to identify your long-term goals and write them down. When people follow their natural instincts, they tend to apply faulty reasoning to investing. They tend to follow the crowd and more often than not, the crowd is wrong.
Every investment incurs a cost to be created, managed, distributed and regulated. Some of these are costs are transparent, easily identified and comparable. Others are not. I wish there was an easy way to make sure every investor knew the costs of their investment portfolio and whether it is below, at, or above average. One of the best questions you can ask any financial advisor, brokerage firm, custodian or financial representative is “How do you get paid?” Then probe further, “Is there any other way that you get paid?” Keep on asking that same question over and over until you understand how everyone gets paid.
In the long run, you want to align yourself and your portfolio with low-cost or cost-effective investments and advisors. You want to work with people and firms that have a clear fiduciary standard to put your financial interests ahead of their own. You want to find good coaches and teachers who can help you reach your goals and are willing to be transparent at every step of your journey about how they are compensated. Ultimately, you will need to decide if the investments they recommend and the services they provide are valuable to attaining your financial goals.
It’s hard to know when it is a good time to “sell” an investment. But most of us know when it is a good time to “buy” an investment. It is important to remember the market will decline three to nine percent around five or more times a year. A more closely watched decline is considered to be a correction, defined as 10% or more, and it happens on average, once per year. When the market declines more than 20%, it’s usually called a bear market and happens once every 3-4 years on average.
Warren Buffet has insightful advice regarding investing: “Be fearful when others are greedy and greedy when others are fearful.” When the market is down 10-20% or more, it is generally a good time to invest some extra cash for the long-term investor.
Academic research has identified specific characteristics or “dimensions” of risk that produce higher expected returns over the long run. Over the long run, stocks out-perform bonds, smaller companies out-perform larger companies, value companies out-perform growth companies, and higher profitable companies out-perform lower profitable companies.
Once you have established how much you should have in stocks, then “tilt” your stock portfolio to the areas that drive long-term returns. For your bond portfolio, there is no need to take on more risk than you carry in your stock portfolio, so stick to bond portfolios that are designed more for principal protection than the highest yield (income) possible.
Once you start saving, make sure you have the proper asset allocation. This starts with selecting the right amount of stocks and bonds that fit you and your goals. It’s more than just a risk tolerance questionnaire. It’s knowing how fast you want to get to your goals and what risks are acceptable to you along the way. Everything is a trade-off but asset allocation – the balance between riskier assets (stocks) and less risky assets (bonds or cash equivalents) is what matters most in determining the risk and return for your portfolio.
There are no shortcuts to building wealth. You never know what market segment will outperform or underperform from year to year, so don’t try to guess by timing the market. You are better served by setting up your balance to “fit” you and your goals and then rebalance regularly. Don’t fall in love with your company stock. Remember, in a well-diversified portfolio, there should always be something down or underperforming your other investments each year.
You can determine whether you are saving enough later, but in the short term, you need to start the discipline of saving and investing. Investing really is delaying a current “want” for a future “need” so just get it started and learn to increase your savings every year. While an advisor can help you make specific allocations for your saving priorities, you should generally be maxing out your 401k/403b/457 plans, Traditional IRA, Roth IRA, regular investment accounts, etc.
If your company provides a match, make sure you are contributing at least the amount to get your full match. Participate in employee stock purchase plans if they provide a discounted purchase price. Take advantage of every beneficial saving opportunity provided to you because there are no scholarships or student loans for retirement.
This is the first step. Most people don’t know exactly what they are going to do in retirement or exactly where they are going to live. But without at least a basic goal, you won’t know how much you should be saving each year for your retirement or your child’s college education.
Your goal(s) can be very detailed or broad. In the beginning, it really doesn’t matter. What matters is that you have goals and that you write them down. It’s also never too late to start planning for a financial goal. If you have a belated start or don’t really know what you want, that is okay because goals change, lives change and what’s important changes. However, what doesn’t seem to change is people wishing they had started goal planning and financial planning sooner.
When it comes to investing and building our wealth, we can’t control whether the market goes up or down. We can’t control whether interest rates fluctuate or what decisions the Federal Reserve will make for key interest rates. We can’t control whether the economy is heading into or out of a recession nor can we control what happens in Greece or China. We can’t control what happens with inflation, the price of gasoline or the cost of our basic food items. The list goes on and on.
Thankfully, these items actually have little impact on our retirement plan, college savings strategies or any long-term financial goal for which we are saving. As you might guess, building our wealth has a lot more to do with the things that we can control.
So, if you want to be on track, in control and achieving what matters, then you need to focus on what you can control. The remaining rules of BetterWealth are disciplines you can control.
Scott Stauffer, Managing Partner, of BetterWealth, has been a teacher, coach and mentor and is not complacent with plug and play strategies for clients that don’t adapt to individual conditions and prepare for how things can change when it comes to game time. Just as athletes require the discipline of maintaining a positive attitude, setting goals, managing their emotions and staying focused, Scott understands his role as a wealth advisor is to accomplish this by helping to educate clients each step of the way.