Learning From Grandma’s Financial Wisdom

Plan With The Tax Man

Even if she wasn’t directly talking about money, Grandma said a lot of smart things that we can apply to financial planning. Let’s take some classic Grandma sayings and see how they relate to our financial lives.

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Transcript Of Today's Show:

Speaker 1: Welcome to another edition of Plan With The Tax Man, with Tony Mauro and myself to talk investing, finance and retirement. And since this is the holiday season, this will be our final podcast of the year. Here it's Christmas time. We're going to do some financial wisdom from Grandma and maybe sing Grandma Got Ran over by a reindeer. I don't know. That works well for a Christmas eve kind of song. That was always a funny one as a kid, right? Yeah.

Tony Mauro: It was.

Speaker 1: Kind of liked it but thought, well that's a strange song. But anyway, how are you doing, Tony?

Tony Mauro: Doing good. Getting ready and pretty much ready for the holidays.

Speaker 1: Are you set? You got your stuff done?

Tony Mauro: I think I'm set. Yeah, I got all my stuff done. I got a little wrapping to do and I'm ready for.

Speaker 1: Nice, nice. Well you know what, it's a great time of year. Hopefully we can get together with family. Hopefully some of us still, I don't have grandparents anymore, but some folks do or maybe you are a grandparent, right? So...

Tony Mauro: That's right.

Speaker 1: A lot of our listening audience probably are grandparents. So it'll just be a little fun to look at some of these things that grandmas or moms would say, or dad's as well, right? However you want to spin it. We just let it be fun to say Grandma, since it's the holiday thing. And take a look at some of these old axioms and then see how do they apply to the financial world. So we'll have a little fun on this podcast with Tony. So let's start with grandma wisdom number one, when it rains it pours. And we've all heard that and 22, Tony gave us a good amount of downpour throughout the year.

Tony Mauro: Yes. Definitely some wet months I would say.

Speaker 1: Yeah, good news comes in waves, right? So does bad news.

Tony Mauro: Yeah, it does. And 22 is a perfect example and every day we've talked about it before with so much news out there all the time, that it's easy to get drawn in by that. And when we have political turmoil and things going on around the world, it goes on and on and on. So there are some, I don't want to say bad times, but turbulent times.

Speaker 1: Well, think about 22 in just the perfect storm that has financially been created because of the COVID things and so on. So you have COVID, right? You have shut downs, you have supply chain issues, that creates inflation. You have the gas issues, you have the war going on overseas, which is adding to the gas issues. So then we've got to figure out how to combat inflation. So now we're raising the rates, which is causing the bond market to not do well. So it rains, it pours, right? It's just a whole bunch of stuff and it's tougher to navigate that and it's certainly understandable when people get nervous about it. But again, that's where a good strategy can come into place because it does seem hard to find a bright spot with all that.

Tony Mauro: It does. And on top of that, don't forget that with the whole COVID thing, the feds doled out billions and billions to try to help keep businesses alive.

Speaker 1: Which added to our inflation. Right.

Tony Mauro: It's just adding to this, we're starting to see the remnants of that. But with all that going on, and of course the news always focuses I think on the negative, it's more prevalent than ever. So stick to your plan and visit with your advisor or advisors and make sure that you're still on track. This is not one of those years where there's performance numbers are not going to be probably great, but although we have managed to make a little bit of a comeback, but I think the key there is we're going to have some of these and you got to stick to your plan and massage it as you see fit and get some new goals for the upcoming year.

Speaker 1: Yep. Exactly. So yeah, been tons of stuff going on. Now in the next one here we've got from grandma, it's the, well, you never know, right? And it's probably true that we'll never know with 100% certainty. They're talking about inflation for example. We were just talking about that. Well it's transitory. Well then they come back and they were like, okay, we were wrong. So you never know, right? Now we got November's numbers, Tony, at the time we're taping this podcast and it's down a little bit. The official number is down to what, 7.1%. I still think most of us feel a lot more than that in our pocketbook depending on what you're buying. But again, you never know is very true. It's a very true grandma thing that can certainly apply to the financial world.

Tony Mauro: It is. And I think with, if you have a good plan in place and you're willing to spend some time with your advisor and talking through things and making sure that the plan's still on track to meet whatever goals that you have. Because and really the idea of every plan at the end of the day, besides hopefully creating the life you want, is trying to balance that risk, that uncertainty, the stuff that happens, the bad stuff that happens. And just mitigating that, keeping it to a minimum when these types of years happen. And if the market always went up, you know what would happen. We wouldn't have any problems.

Speaker 1: And I think we thought it did for a while until it reminded us that it did not, right?

Tony Mauro: And that something, yeah, up until this year, it's like, boy, everybody wanted a piece. But...

Speaker 1: Well, with so much uncertainty in the financial services world in general, even in normal times, there are some things that we do want to have some certainty about and that's income streams for example, right? So we got to have some of those things in place to help when we do have so much uncertainty in other areas. And that's usually the idea of having a proper portfolio so that when the market is down you have some other things and so on and so forth.

Tony Mauro: Yeah. And we'll talk about it here in a second, but to have some diversification in your portfolio is exactly spot on as far as hopefully you've got some things in there that are doing well right now. And that's the whole idea of having somewhat of a balanced portfolio rather than just, well I want to shoot for the stars all the time because when bad things happen or when it rains, like we talked about, that's really going to be tough to recover from. And if you're close or in retirement, you really got to watch things because you can't afford to do that at all.

Speaker 1: Yeah, well you're talking about the diversification. So that goes to grandma number three here with a bad apple spoils the whole bunch, right?

Tony Mauro: That's right.

Speaker 1: So you're going to have the proverbial dog from time to time in your investments, or you're going to have a down market. And I mentioned earlier with the raising of the rates cause the bond market to go down, but the old traditional thinking was, well it's a rough stock market, we'll go to bonds, right? And that's proven to be problematic this year too.

Tony Mauro: You know what I've seen a lot too in this area. I've had a lot of tax clients come to me and they're mid to high level executives in some of the bigger companies in town and are saying over the years, I'm just starting to look, believe this is what they're saying and they're in their late fifties, and my whole 401K or retirement plan is in my company stock, as they just keep giving it to me. And then of course now all sudden they're starting to get a little more worried because they're in there, they know what's going on. They don't want to have just all their eggs in one basket, so to speak, in case the company starts to falter a little bit. And I've been telling them, well you need to diversify, you need to get rid of some of this and get some diversification. So if that happens and you're 65 or 70, you go to call it quits, you're not going to be on the short end of the stick.

Speaker 1: Yeah. Yeah.

Tony Mauro: So it is interesting.

Speaker 1: Well [inaudible 00:07:36] and diversification, it's such a difficult animal sometimes for various different people to grasp. So somebody might say, well hey they've come in to see you. And they go, well Tony, I went and I bought six different mutual funds from three different companies so that I would be diversified. And we've heard those kinds of things before and unfortunately that's just not diversification. I mean, maybe it was, but typically once you go in and look at those six different mutual funds, there's so much overlap that they basically have the same thing, right?

Tony Mauro: Yeah. They have the same thing and it's going to be better than just being all into one particular, maybe let's say equity or stock.

Speaker 1: Right. Yeah, if you had four versions of literally the same stock.

Tony Mauro: The same stock, but there's a lot of overlap in there. It might not be as tax efficient as they want. It might not meet what they're looking to do. But you know what I think the biggest thing about diversification, and I kid with clients, I tell them you don't like it because you don't think it's sexy. It's boring. And sometimes they just get crazy and say, no, I want this because I want to go for something.

Speaker 1: I want some sizzle.

Tony Mauro: Yeah.

Speaker 1: Yeah. Some little sizzle on the side. Yeah.

Tony Mauro: But I say well, the non-sexy stuff works over time and that is the way that we try to point them and then have some fun with the [inaudible 00:08:56].

Speaker 1: Yeah, because if you do have those multiple mutual funds like say, and they were all tech heavy and tech took beating this year, well that's tying that back to grandma there with that bad apple. So tech was a bit of a bad apple this year and it might as fold a whole bunch. So that's why you got to have a little bit more diversification. All right, let's do number four. What can you do with, I heard it straight from the horse's mouth. That's a classic one that your grandma might say. She's like, well I heard it right from the horse's mouth, that such and such and such and such.

Tony Mauro: That's right. Well there's a lot of different ways to go with this in the investment world. Really sometimes what I see is, especially in some retirees, that they tend to get, I hate to use the word sold things, that they have no idea what it is. And that they're basically getting some information that may or may not be quite as accurate as it needs to be. And they really need to I think ask questions basically if you can from the company, but you got to get all the facts. You want to make sure you that everything's disclosed, everything's out front and you feel comfortable with what you're doing in this kind of thing.

Speaker 1:

Well a lot of times you guys actually do that as well, right Tony? So if somebody comes in and they're saying, hey, I've got this investment and it's whatever they think it is, you just call the company directly and find out for sure. Don't go through the person that sold it to you, let's actually call the custodian and find out exactly what's going on. And a lot of times that happens around fees. People will think that they have a product that they have no fees or something or whatever the case is. And you really have to just go straight to the horse's mouth, so to speak.

Tony Mauro: You do. And fees usually is centered around, a lot of people don't know what fees they are paying and fees do come into play. There's nothing for free. But you want to at least know what you're getting into, especially if it's going to somehow maybe lock your money up and you didn't know that. So you want to have that out in front of you before you make a decision.

Speaker 1: Okay. All right. Final grandma piece of wisdom here, or mom or dad or whoever you heard this from, super classic. We've all heard it growing up, if your friends all jumped off the bridge, would you do it too? And from a financial standpoint, this could be that hot item. We could just look though further than talk about FTX, right?

Tony Mauro: Exactly.

Speaker 1: Or whatever the case might be. And crypto really has probably been this item for the last couple of years for many people, to your point earlier about being sexy, right? I need something more sexy. Well-

Tony Mauro: That's the sexy right now. Yeah.

Speaker 1: I wanted to get into crypto. Well what's crypto taking a as... Take FTX off the table and it's still taking a beating this year. I think at one point Bitcoin was what, at 60 grand, now it's at 30 or something. It's like cut in half.

Tony Mauro: Well we had a tax client last year, and he's a younger guy, but his losses were tremendous in crypto. Just tremendous.

Speaker 1: Well you see all those memes and jokes, right? Hey, I'm a crypto millionaire. And then the next day, oh I'm crypto broke. And the next day, hey, I'm a crypto millionaire. Oh, I'm crypto broke.

Tony Mauro: Yeah. But it is true, people ask their friends, they ask their family no different than when they ask him about tax advice and things and they'll call us up with tax stuff and say, well my buddy's doing this, maybe I should do it. And I ask him, well is your buddy a tax account? Is he a CPA or what does he do? And they laugh, they'll say, oh no, he just got this idea. Or he heard. And then you've got on top of all that, and I think where a lot of this comes is, you can spend days and days and days on the internet searching and you get all kinds of advice. And the question is, is it credible, number one. And then even if it is, you probably should ask your own advisor, what do you think of this? Because you might have a little bit of interest in it, but I certainly don't think you should do it just because a friend or neighbor or other family member is doing it because there are situations different than yours.

Speaker 1: Yeah. Well, and no matter what grandma's saying it is, we all hear these things. There's certainly ways we can take financial wisdom from some of that stuff. And that's the point of whether you're getting some advice from a friend or a colleague or a coworker or the television or whatever the case is, or even a podcast, right? That's all great, grand and wonderful. But until you go see exactly how it relates to your situation, you're not going to know. So Tony and I, you and I could be talking about something that is not the right fit for someone listening and they won't know that for 100% until they actually put a whole plan together. And that's really the point, right, is to get that information so you can see, hey, how does this affect me and how will it affect me and my future retirement? And that's what you guys do day in and day out. The time we're taping the show, Tony, you had to delay just a little bit because you were working with a client who had a little issue you needed to take care of. And that's exactly what you do. It's all about the relationship.

Tony Mauro: It is.

Speaker 1: So folks, if you need some help as always, I know the year's winding down, but don't let that be an excuse not to reach out. You can always get onto the calendar for the first and next year probably would be anyway, considering that everyone's schedule is getting compressed here at the end of the year. But just make the call and let them know you need some help. You can find Tony and his team online at yourplanningpros.com. That's yourplanningpros.com. He's been helping families get to and through retirement for 20, what, five years now?

Tony Mauro: You know what? I'm coming up on my 27th now.

Speaker 1: 27th. There you go. So he's been doing it a while. He's an EA and a CFP, certified financial planner. So just reach out and have a conversation. Make sure you do so before you take any action anyway. And don't forget to subscribe to us on Apple, Google, Spotify, whatever platform you like to use. Again, find it all at yourplanningpros.com. Tony, my friend, have yourself a great holiday. I hope you and the family enjoy, and all our listeners as well.

Tony Mauro: All right, we'll see you next time and have a great holiday.

Speaker 1: Absolutely. We'll see you next time right here on Plan With The Tax Man with Tony Mauro.

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