On this episode of “On the Money,” we discuss Warren Buffett’s shareholder letter and important times to meet with a financial advisor.
The economy, deficits, and interest rates: (0:43 – 11:51)
“I think the good news is overwhelming the prospect of higher interest rates”
– Dr. Fred Giertz
“This is a kind of odd period when everything seems to be going right as far as low unemployment and low inflation, but that may not last forever.”
– Dr. Fred Giertz
Commentary on Warren Buffett’s shareholder letter: (11:52 – 32:34)
Investing in the stock market = ownership of companies
“I never really say the ‘stock market’ with clients, I always refer to them as the great companies of America and the world. Warren Buffet points this out in his own way when he says ‘stock investments are not just ticker symbols, Charlie and I view the marketable common stocks that Berkhshire owns as interests in businesses, not as ticker symbols to be bought or sold’”
– Paul A. Ruedi
“It’s almost easier to lose sight of the fact that you are owning companies nowadays, because most people that are investing are investing in diversified mutual funds or ETF’s. Sometimes you look at that and you see the S&P 500 index fund and it’s easy to forget that its actual ownership in 500 of the biggest companies in the US.”
– David Ruedi, CFP®
Simplicity is Key
“I think a big point of what Warren Buffett is saying is investing doesn’t have to be complex, it can be relatively simple. And I think we see that time and time again when we meet with new clients, or potential new clients, who have been conditioned to the mentality that investing is very elite, you have to have a very deep and broad understanding. And we come in and explain our approach to investing and they are almost dumbfounded at how simple things really can be.”
– Ryan Repko
“There’s a certain sophistication in simplicity. I think when it comes to our investments, that’s a really sensible approach.”
– Paul A. Ruedi
Important times to meet with a financial advisor (32:35 – 53:04)
On Life Events and Financial Planning
“There are key turning points throughout your life that potentially could have a significant impact on your retirement, and if you are able to acknowledge when these turning points might be, you can meet with your advisor and that advisor can make sure you capitalize on some of these.”
– Ryan Repko
“You can account for many things in a plan but you can’t account for what is unexpected. You just have to know things will inevitably come up.”
– Ryan Repko
When you get a new job
“There are financial implications: maybe you get a pay raise, and with that pay raise you have the possibility of an increased lifestyle; the possibility of spending creep – you make more money and you spend more. I’m not saying because you earn more you should immediately put all the excess into investments, I think there is obviously a balance of rewarding yourself for good work. But this is a real good time to meet with an advisor to see if you can potentially step up your (savings) contributions.”
– Ryan Repko
When you get a lump sum
“I think without guidance you might not know what to do with it. There’s obviously the potential for people to go blow it, but there are also people who may just leave it sitting in cash. I think sitting down and really thinking through the fact that now you have opportunities you didn’t have before because of this lump sum, and what am I going to with that, can be very helpful.”
– David Ruedi, CFP®
“A lot of times it comes down to how much can a person safely withdraw from a lump sum, and make sure that it actually lasts a lifetime or a certain number of years. People left on their own might not take anything out – because they are worried about depleting it. Or they may take out more than is sustainable and end up depleting it at some point.”
– David Ruedi, CFP®
When you have your first child
“Some of the things I thought about, and anyone should think about, when they have a child is making sure you cover your child or children and covering your wife and family in the event you pass away early.”
– Ryan Repko
“Health insurance: your new child will need their own insurance.”
– Ryan Repko
When you are preparing for retirement
“Several years out would be the ideal timeframe because if you are looking (at retirement) a couple years out you can maybe make some tweaks beforehand.”
– Ryan Repko
Enjoy the show?
Make sure to listen to past episodes of Paul Ruedi’s “On The Money” Radio Show
Read blog posts by the Ruedi Wealth team
Disclaimer:
It’s important to recognize that past performance is not an indication of future results.
You should not make any investment decisions without first consulting your own financial advisor and conducting your own research and due diligence.