On this episode of "On the Money" Ruedi Wealth financial advisors and Dr. Fred Giertz discuss how saving for retirement is like hiking up a mountain and Smart Beta investing.
Retirement Planning and Mountain Hiking (19:32)
“People preparing for retirement are a lot like people standing at the foot of a mountain; they have this huge intimidating thing in front of them that they know is going to take a while, and they know they are going to have to come up with some sort of plan to get there.”
- Paul R. Ruedi, CFP®
Read more: The Retirement Mountain
“One of the most important things to remember about both mountain hiking and retirement planning, you have to understand your personal situation and set reasonable goals.”
- Paul R. Ruedi, CFP®
“A plan to retire at 55 is going to be drastically different than a plan to retire at 65 when you have Medicare and don’t have those additional health care costs. Not only that, you have 10 years less of portfolio withdrawals.”
- David Ruedi, CFP®, RICP®
“If you start choosing goals that are way too lofty, it might lead you to do some dumb stuff like taking too much risk in your investment portfolio, or concentrating in an individual stock to try to retire at 35.”
- David Ruedi, CFP®, RICP®
“Everyone wants to retire at 40 and spend $100,000 per year, and unless you are making a ton right now that’s not really possible. Sometimes as an advisor you have to, not be the bearer of bad news, but the bearer of realistic expectations. I tell people my age you will probably start, right now, shooting for something like 65 for retirement age. But you will likely exceed those goals.”
- Paul R. Ruedi, CFP®
“When I go to 401k plans and someone will say ‘when you do think I should start saving? – it’s usually a new hire or young person - I refuse to answer the question and always ask someone who has been at the company for 30 years to answer it. They jump right in and put down a lecture that I couldn’t give.”
- Paul A. Ruedi
Read more: How Much Do I Need to Save for Retirement?
“I think some people will say ‘I’m doing just fine for myself.’ But that’s kind of just said in a vacuum – there’s no measurement to it; you’re not benchmarking yourself against anything. Maybe you’re just putting money away and it isn’t really aimed at anything, like a specific retirement date. You’re bobbing like a ship at sea with no direction. Meeting with an advisor can point you in the right direction and put you on the right path.”
- Ryan Repko, MBA
Smart Beta Strategies for Retail Investors (45:00)
“Smart Beta is a catch-all term for investing in specific groups of stocks with particular characteristics. Usually that characteristic is that they have a higher expected return than the broad market. Now instead of trying to pick stocks, people are trying to reap the returns of specific groups of stocks that behave a certain way.”
- Paul R. Ruedi, CFP®
“Not a lot of people like the idea of owning the market and just accepting market returns. But just because you can’t pick stocks or time the market doesn’t mean you can’t reap higher returns – there are certain groups or subsets of the market that seem to have higher returns than others. For example, small companies have a higher expected return than the broad stock market.”
- David Ruedi, CFP®, RICP®
"Usually, there is some excess risk or a reason for the premium returns."
- David Ruedi, CFP®, RICP®