About Exchange Trading Funds – ETF’s

July 30, 2017 – Wealth Strategy with Bryan Rigg, Your Wealth Professor
Listen In Every Week: Saturday on WRR from 7:00-8:00 am / Sundays on 570 KLIF

Biggest Mistakes in Saving for Retirement

We’ve got some segments we’re going to burn, but first, we’re going to talk about politics and examples of what’s being so impactful in politics, the pros and the cons, and why politics can be such an influence on not just the economy but the market.

Then we’re going to talk about banks as a method of investing. Everyone has a checking and savings account. When you log in, you tend to get pop‑up windows about how they want to help you with your investing and, of course, mortgages and consolidating.

We’re going to talk about banks as a method and a system of investing.

Another segment we’re going to talk about is should we actually retire if we can keep working until our last breath? Is it beneficial to retire? I know it’s something that we strive for but when you get to the point where you want to retire, do you actually want to retire?

Our final segment’s going to be about what we call ETFs, or exchange traded funds. That one sounds really complicated and thick and gooey but we’re going to try to keep it light and simple so you can follow along, as well.

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RIGG Wealth Management offers securities to Broker Dealer Financial Services, Member SIPC and advisory services through Investment Advisors Corp and SCC registered investment advisor. RIGG Wealth Management is not a subsidy area of Broker Dealer Financial Services. Neither RIGG Wealth Management nor Broker Dealer Financial Services offer legal advice. Client should consult their attorney of choice on all legal matters.

Opinions expressed on this program do not necessarily reflect those of Broker Dealer Financial Services. The topics discussed and opinions given are not intended to address the specific needs of any listener. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. Examples mentioned are for illustrative purposes only, individual results may vary. Past performance is no guarantee of future results. Investing involves risk including loss of principle. Rebalancing can entail transaction costs and tax consequences that should be considered when determining a rebalancing strategy.

SHOW TRANSCRIPT

Segment 1

Rob Dalton:  Hello, hello. I am Rob Dalton and with me, every time, is my best friend…

Bryan Rigg:  Bryan Rigg.

Rob:  We are here. We are “Wealth Strategy with Bryan Rigg.” Bryan is our wealth professor. We’re going to talk today about what we like to talk about the most. That is living and breathing finance. It’s financial wealth, financial planning, understanding the finance world.

We’re not going to get into it so deep that every one of you that are listening right now become financial experts but we do want to elevate your IQ a little bit from what you don’t know to what you’re comfortable with. We talk about it being part of a conversation, whether it’s in the car, or at the dinner table, or during commercial breaks when you’re watching television.

We want you to be able to talk about it and feel comfortable with it. We’re here every weekend at the same time to talk to you about what you can do to help yourself in the future. We want you to walk away at the end of the hour having learned two or three things and realizing that there’s a lot of self‑help things you can do. Maybe knowing a little bit more than you did when you first woke up this morning.

Also, we’re to turn to resources because the past couple weeks we’ve been talking about how you need three people in your life to help you in your life. One of those is always have a lawyer available to you and on your side.

The other one is a CPA that helps you with accounting and your taxes. Also, someone like Bryan, a wealth professor, because you need a financial advisor. It’s something that you need to help you save for the future and retirement, whether it’s Social Security, whether it’s your 401ks or your Roths or your stocks or you’re working with dividends and repurchasing stock.

Whatever it is, have those three people on a phone call, maybe even a speed dial, possibly.

Bryan Rigg runs Rigg Wealth Management. He is here every week to help you understand what you can do to save for the future.

Bryan, how’s your weekend?

Bryan:  Good.

Rob:  Glad you’re with us again. I know you get all amped up. You come in every weekend looking like you just did chest bumps and jumping jacks because you’re fired up about this stuff. You live and breathe this realm, don’t you?

Bryan:  Yeah. It’s something that it hits our lives every day. You can always do something more efficient with your finances. It’s primarily the bloodstream of the nation, in many respects. How you do with your finances, how the flow of money goes, and how you deal with it prudently.

Rob:  That’s true. Knowledge is power. That’s what you work with a lot of your clients on, is giving them the information to make the best decisions.

Bryan:  We say in the Marine Corps, “The ultimate weapon is an educated mind.” Mattis, Secretary of Defense, he says, “The most important distance on the battlefield is between your ears.”

Rob:  [laughs] OK. I’m sure it’s true in the Department of Defense. I don’t have many battlefields in my world, but finance is one of them that I’m beginning to conquer.

We’re going to stick around here for the next hour. We’ve got some segments we’re going to burn, but first, we’re going to talk about politics and examples of what’s being so impactful in politics, the pros and the cons, and why politics can be such an influence on not just the economy but the market.

Then we’re going to talk about banks as a method of investing. Everyone has a checking and savings account. When you log in, you tend to get pop‑up windows about how they want to help you with your investing and, of course, mortgages and consolidating.

We’re going to talk about banks as a method and a system of investing.

Another segment we’re going to talk about is should we actually retire if we can keep working until our last breath? Is it beneficial to retire? I know it’s something that we strive for but when you get to the point where you want to retire, do you actually want to retire?

Our final segment’s going to be about what we call ETFs, or exchange traded funds. That one sounds really complicated and thick and gooey but we’re going to try to keep it light and simple so you can follow along, as well.

Bryan, we’re going to start off with…I wanted to lead off this hour with something a little heavier. I’ve been reminded that we should never talk about politics or religion. It’s always a diversifying issue, but we’ve talked about both in the past so I feel comfortable bringing it up again.

What is it about politics that has such an impact on our investments?

Bryan:  The one thing that comes to mind is a lot of people need to be very appreciative of our government, which obviously that is politics. That’s the regulatory body that we have out there that has made sure our economy is running well, that our banks are on solid ground. It’s not always perfect.

It’s gone through a lot of trials and errors, but if we left the markets alone to regulate themselves it would be absolute chaos. What I want to give to people today is something they’re not expecting to hear. That is they should be very thankful for politics when it comes to investing.

When you look at the history of America, with how America has gotten involved with helping us with the building out regulatory foundation, helping us have an honest market that we can invest in, having a rule of law that we can depend on, allows confidence for us to be able to invest in stocks and bonds and know they’re going to be there tomorrow.

The most recent example of politics, government, getting involved and helping us…I encourage people to look at the book “Too Big to Fail,” by Sorkin. Even though there is a strong argument against government getting in and bailing out companies that have gone bankrupt like Bank of America or a lot of the automotive companies.

Rob:  Right. General Motors, sure.

Bryan:  General Motors and so on. There is another side of the equation that them getting involved under Geitner and Paulson.

Rob:  Them meaning the government.

Bryan:  The government getting involved, they prevented an absolute huge disaster.

Rob:  Because of a huge trickle down.

Byran:  Quantitative easing and so on. The trickle down of losing tens of thousands of jobs rippling into thousands of companies and so on.

These are the good things about politics that people need to be thankful for, for America. Also, they need to be mindful of how politicians can influence things. You see this so concretely now with President Trump. With one tweet, he can change a stock price. We need to be aware of this.

Also, how nations deal with one another. For a long time, when I was at Credit Suisse in 2006, 2007, they had huge pamphlets on the importance and the wisdom of investing in Russia. Now, I think today you’re not going to have too many financial advisors pushing Russia for obvious reasons.

Could there have been a different political structure in Russia that could have allowed more confidence? Yes. Has politics gone in such a direction now that would indicate that you do not want to trust Russia? Yes.

These are other things that you look at, how the political world is working, because the world is, using Thomas Freidman’s phrase, becoming more and more flat. Markets are interdependent on one another.

Rob:  They are because we think of our markets as being US only, but when you look at the global things, especially with the technology, it really isn’t…you say politics, but it’s not just US politics like in Washington DC. It’s international politics.

Bryan:  Yes, absolutely. Watching that and seeing where you think nations are going, what trends are happening, is very important. The one thing that I have been talking about for months is the energy market. You look at a lot of these nations. Russia, the OPEC nations, of course, China and India.

Energy consumption’s only going up all the time. You want to watch the political spectrum, seeing which companies are building out good relations with these different countries and to see where some of them are going where you may not want to follow. Some companies are dealing more and more with Russia. You might want to pull back.

Rob:  Right, so the good and the bad.

Bryan:  Absolutely. And then, also, you might want to say, “Hey, China’s being kind of pulled, kicking and screaming, a lot of times with having transparency.” They’re not nearly where they need to be, but they’re seeing if they’re going to play with Europe, and they want to play with Germany, and they want to be able to play with us on an equal playing field, and Canada.

If they’re going to do it, they’re going to have to have more transparency with their political spectrum. A lot of times the politics in many countries, there’s no difference between the politics and the business.

Rob:  Transparency builds trust.

Bryan:  Yes. Exactly. I think politics, even though it is a very sensitive subject matter and people usually like to come down, “Hey, do you like Trump or do you not like Trump? Do you like Democrats and not like Republicans?” What you need to look at is what policies they’re putting into place.

We are still benefiting from FDR, Franklin Delano Roosevelt and what he did in the ’30s with bringing in regulations so we would never again have the debacle we saw in October 1929. A lot of these investor acts that came out have more transparency, more regulation, more oversight because you do not want to let Wall Street regulate itself.

Rob:  No, thank you.

Bryan:  It would be horrible. Even though for all the negative stuff you throw at politics, they have a very good role in balancing out the markets to make sure that there is enough incentive and aggressiveness out there to make profits, but that uncontrolled greed does not get out of control.

Rob:  That’s what regulation helps with.

Bryan:  Absolutely.

Rob:  I get that. It is necessary because you can’t trust the greed mongers to take care of themselves beyond taking care of themselves. The stockholders are important but there needs to be some parameters and some guidelines. That’s what government can do in politics.

We’re also flexible enough to where we learn from our mistakes, like the 2008…

Bryan:  We are. It’s kind of like what Churchill said about America in World War II, that eventually, after exhausting all other options, it does the right thing. America, in general, has done that with the markets. We’re not perfect but in the history of mankind, we are doing a phenomenal job of having people grow their wealth.

Rob:  If someone wants to call and not talk about politics but about financial management, what’s the phone number they can reach you at?

Bryan:  They can call me at (972) 383‑1210 or they can visit me at my website at riggwealthmanagement.com. That’s Rigg with two Gs, R‑I‑G‑G wealthmanagement.com.

Rob:  They can talk to you about politics. It will just be a long conversation.

Bryan:  Absolutely. [laughs]

Rob:  Coming up after the break, using banks as a place or method to invest. We’ll have to talk about that. We’ll be right back.

Segment 2

Rob Dalton:  Welcome back. We’re so happy to have you with us. We appreciate you sticking through the break, and if you’re just arriving, welcome to “Wealth Strategy with Bryan Rigg.” I’m Rob Dalton, and over on the other side of the studio…

Bryan Rigg:  Is Bryan Rigg.

Rob:  He is our wealth professor. We’re here to talk about finance, and we’re not going to get all thick and heavy in the weeds. We’re going to keep this kind of light.

This first topic in this particular segment is going to be about banks. We all use them for checking and savings, maybe CDs and such. The banking industry, or banks in general, is it a best place to invest? It might be safe, but we’re going to talk about the pros and cons of using banks as part of your investment strategies.

Let me talk to the wealth professor. Bryan, using a bank, how do they use our money exactly?

Bryan:  A lot of people don’t realize, when they think that they’re not putting their money at risk when they go to banks, that the banks are actually putting their money at risk. But they’re able to hide behind some wonderful legislation that we’ve had from the government, which is the FDIC insurance.

Rob:  The FDIC, sure.

Bryan:  If you’re an individual, you have up to $250,000 insured. If you’re a couple, it’s $500,000. You can put a lot of money at a bank, and if that bank were to go bankrupt, or if there was fraud, they’re going to be able to step in, the government, and make you whole.

It’s rarely been used throughout time.

Rob:  That’s true.

Bryan:  You had Countrywide and a few other places that had horrible histories, that we saw in 2008, 2009. But that gives people some peace of mind. Whenever somebody starts saying, “I’m just going to put my money in the bank,” I tell them, “Well, you need to look at what the interest rates are.”

Rob:  At the bank, what they’re giving you.

Bryan:  At the bank, and if you are looking at it as a growth scenario, if you’re not at least above three percent, you’re not keeping up with inflation. Let’s say the bank only gives you 0.25‑0.5, which is what the rates are now. Then you’ve got to be looking at it, your money is actually earning negative. Let’s say it’s 0.5. Your account is earning ‑2.5 percent.

Rob:  Because of the rate of inflation.

Bryan:  Because the purchasing power is not keeping up with inflation. Also, to double your money, if you do it at three percent, your money’s only going to double every 25‑30 years. These are horrible investment options right now that are out there.

If we were back in the Carter era, and you had interest rates of seven, eight, nine percent or even higher, then banks might be a good place to invest, very stable.

Rob:  Sure, but we’re not.

Bryan:  Right now, if somebody’s coming to me, and they’re asking me, “Should I use a bank, CDs and so on, to invest?” If you don’t want to lose your money, and that’s your main goal ‑‑ if you don’t want to grow it, and you don’t want to lose it…

Rob:  And you want it to be secure.

Bryan:  …and you want it to be secure, that’s a good place to go.

Rob:  Banks are…

Bryan:  What people need to know is that as soon as that bank gets your money, they’re in turn going out and putting it in risky investments. They’re having several companies come to them, they’re loaning that money out, and they’re getting interest rates of 10, 12, 13 percent, and they’re pocketing…

Rob:  They’re getting it. Their stockholders and their executives are making the money on your money.

Bryan:  And giving you no share of the risk. They’re putting all your money at risk, and they’ll be able to show you, because they have the government to back them up, it gives them a false sense of security. “Your money is stable,” and so on.

Looking at banks as an investment option, that’s something. You can invest in Bank of America. You can invest in Citibank, and you can…

Rob:  That’s like the financial sector. We kind of did, using the same term, invest, we’re now switching to being an investor in the bank itself, not having an account with them.

Bryan:  Yes. Back when the banks were going bankrupt, and they were having a lot of stress ‑‑ they were distressed assets ‑‑ it might have been a good time to get invested in them.

Right now, a lot of people are saying that some of them are hitting their peak. It may not be the best place to put your money. If you’re going to do it, make sure you diversify over several positions. Don’t go just in one bank.

In general, when you look at CDs, getting back to, “Should I put my money in a bank as far as an investment?” I would strongly encourage people not to do so.

If they have a lot of their money in a bank right now, and they don’t know what to do, definitely come call us, talk to us. Let us look at the different strategies that are out there, because banks in general are not interested in helping you really grow your money.

Rob:  [laughs] No, they’re not.

Bryan:  There are some banks…

Rob:  Because they have stockholders. They’ve got people that have to answer to. It’s still a corporation.

Bryan:  Yeah. There are some captured assets, and you’ve got to be careful, because the regular banks, sometimes they have conflict of interest, but there’s some banks, like Bank of America bought Merrill Lynch.

If somebody’s going to go to Bank of America and ask their banker, “Hey, is there anybody out there you could recommend that I could use to help invest my funds?” Instead of that banker saying, “Hey, here are seven or eight different firms you want to go look at,” they’re going to encourage them to go to Merrill Lynch.

Rob:  Merrill Lynch, because they’re in‑house.

Bryan:  Or US Trust. They bought both of them. It’s a sad testimony that you have Bank of America owning US Trust and Merrill Lynch, and they’re competing against each other all the time.

I have a friend that works over there. You get a lot of nasty infighting. [inaudible 5:35] that’s with any human institution, you have that.

But coming back to whether a bank is a good place to invest your money, you want to look at if they are giving you advice where to go, are they giving you objective or subjective advise?

Rob:  I want to bring out the fact that we’re not saying, “Take out all your money and do something with it.” Keep some in there. You need that liquidity. We mentioned the word liquidity. Having instant access to money is a good thing sometimes.

But if you’re using the banks as an investment tool, you might reconsider by looking at those options, and…

[crosstalk]

Bryan:  Yeah, and keeping some always is something that’s wise to do. A lot of people call it the emergency fund. If you are a single person, a lot of the rule of thumb is you want to have six months of your burn rate, of what you need a month. Let’s say you need $5,000 per month, so in six months, you need $30,000. You might want to keep $30,000 in a bank.

But if you have $300,000…

Rob:  Do something with it.

Bryan:  Deploy the $270,000 and get it working for you.

Rob:  Yeah, start making some money on it.

Bryan:  It’s very important to do this. Getting back to the bank analogy, if you were to put $1 to work in Treasuries in 1926, it’d be worth about $25 now. If you put $1 to work in just bonds, it’d be worth about $80 now. But if you put money in stocks in 1926, it’d be worth $2,500.

Rob:  Wow, that same one dollar.

Bryan:  If you were to put it just in banks back in 1926, it was only going to be worth probably about maybe 40, 50 bucks.

Rob:  After 90 years.

Bryan:  Yeah, it’s nothing. The prudent investor is going to look at ways to grow his or her money. Going to banks is not the solution.

Banks are good for security. I always like to bring up, we’re a Judaic‑Christian society. A lot of people know this parable, the parable of the talents. It speaks…There’s a lot of spiritual lessons that can be given from this, but I look at it purely from a financial point of view.

There are these three slaves, servants of the king. The king gives one 1 talent, gives another one 5 talents, gives another one 10 talents, and then he goes away. He comes back, and he says, “What have you done?”

The person with 10 talents grew it to 20, the person with 5 talents grew it to 10, and the person who had 1 talent just buried it. He looked at the person who just buried it, and he’s the one that he’s very displeased with.

“Yeah, you didn’t lose anything, but you didn’t take what you had and grow it.” That’s what I think we need to take away from that lesson, from a financial point of view, is if you have something, you need to grow it.

Granted, the king didn’t come back midway through the growth stage, when somebody had deployed his 5 talents and hadn’t really grown it to 10. You’ve got to give it time.

The other lesson from this talent parable is you’ve got to give it time. You can’t just throw money into a whole bunch of stocks and then wait six months and hope it to grow. There’s a lot of people like that…

Rob:  And expect to retire. [laughs]

Bryan:  Yeah. I had this one client. He was a very sophisticated, independent businessman, and he brought over his portfolio. He says, “I’m just tired of it not growing.” I said, “Well, right now, we have things that are in the tank ‑‑ energy and senior loans. Let’s get invested there.”

After six months, he was wondering why there wasn’t any growth. I said, “Well, there’s dividends coming in. There’s some volatility, but you’ve got to wait. We got these at a discount.”

Usually, people say, “Well, how long do you have to wait?” A lot of times, the average growth cycle, you’re looking at anywhere between five to seven years.

You hope to have a good bump the first six months or first year.

Rob:  It’d be nice. It’s a confidence builder.

Bryan:  Yeah, and even with stocks. You’ve got to have, usually, a traunch of around seven years, when you look at it. If you start looking at it on a weekly, a monthly, or even a yearly basis, sometimes, it’s like planting corn and expecting crops tomorrow.

That’s not going to happen, so getting back to the original question, I would encourage all of those out there listening right now, that if you have a lot of cash in the bank, please give us a call. Let us look at if this is a wise decision for you, for your life goals and your emotional financial appetite, if you will.

But by and large, most people have large bank accounts. You’re not doing yourself or your estate…

[crosstalk]

Rob:  You’re losing money, because of the rate of inflation.

Bryan:  Yeah, especially right now. It is horrible rates right now.

Rob:  Yeah, they really are. That’s great, and it’s good insight, because people need to know that there are options. It might be secure, but you can make more money somewhere else. Keep some in the bank. That’s what we were saying. Don’t take it all out.

If people have questions about making the transition, what’s the best way to get hold of you?

Bryan:  They can call us at 972‑383‑1210. Again, that’s 972‑383‑1210. Also, please feel free to visit us at our website at riggwealthmanagement.com. That’s Rigg with two Gs, riggwealthmanagement.com, and send us an email. We’d love to get together.

Rob:  Voicemails on the phone, emails at the website. You answer both, and we promise that. After the break, we’re going to talk about, “Should you retire at the end of the work cycle?” We’ll be right back.

Segment 3

Rob Dalton:  Welcome back from the break. I am Rob Dalton. With me, of course, is Bryan Rigg. Hello, Bryan.

Bryan Rigg:  Hey.

Rob:  Bryan is our wealth professor. We’re here every weekend at the same time, this time, right now, talking about financial strategies, and what you can do to save for your future, your retirement, even an emergency fund now and then. It’s good to have.

Financial planning is scary, but it’s not something that we do organically, and I like to remind people that only in the last couple of generations have we really had the ability here in America to save for our future, because for years and years, and generations, thousands of years, we worked until we die. Isn’t that right, Bryan? We just did.

Bryan:  Exactly. Retirement was never in the purview of people, historically. It just didn’t happen.

Rob:  Yeah, and so it’s not genetically or organically something that we think about or know how to do. With people like yourself as an independent consultant, like to help people plan for their future, and it kind of takes some of the fear out of it.

That’s why we’re here every week, is we just like to talk to you and remind you of what you can do to change your future. You can’t do anything about the past, but we can certainly change the future.

In this particular segment, we’re going to talk about if it’s time to retire, should you retire? But before we get into the retirement aspect, I wanted to talk to Bryan a little bit. We were talking before the show started today, that you’ve got something coming up at the end of August. Tell me what you’ve got planned.

Bryan:  We’re planning a few seminars. We’re going to be doing it on the weekend, and probably one weekday. I encourage everybody who’s been listening, if you are interested in meeting my team and I, we’re going to be putting this on the website. Please register, sign up, and we hope to meet you here in about a month.

Rob:  You’re looking at maybe, actually, some face time with people, to put the majesty of your face with the beautiful voice that you have.

[laughter]

Bryan:  God help us all.

Rob:  But you’re looking at actually setting up time to meet people face to face.

Bryan:  Yeah, sit down…

Rob:  What can they expect to happen? Do you have any idea?

Bryan:  I hope a lot of people bring a lot of questions, bring maybe some of their portfolio statements, and we go over things, if they want to, just have an open forum to talk about different questions that are on their hearts, and then also for them just to get to know who we are.

As I’ve always been taught, if you break bread with somebody, or you sit down with them, and you have that interaction, there’s so much more understanding there, so much more trust and rapport that can be built.

I’m hoping to do that with the listenership that we’ve had from the people who are calling in or sending us some emails. That’ll give them that forum that they can take advantage of and get to know us better, and then hopefully find a home for their financial health.

Rob:  Even if they don’t, even if they just take the information and do something with it, it’s not about actually…We’re not having this seminar just to grow your client base, but to let people know that we do care.

We get phone calls and emails every week. Our voicemails are full, the emails are coming in, and sometimes, it’s just nice to meet with people. There’s nothing like that face‑to‑face time.

Bryan:  Yes. Information is power, and so a lot of times, when I’ve met with people for lunch and whatnot, they’re taking a lot of information from me, but they necessarily maybe not need my services at that time.

Rob:  Right, but making the contact and having that initial icebreaker, in a month or six months, they know they can come to you.

Bryan:  It’s all synergistic.

Rob:  It is, and you don’t need the stacks of statements in a shoe box, but even if they bring a 3×5 card with four questions on it, you can help with those, too.

Bryan:  That’d be great.

Rob:  That’s coming up towards the end of August, and we’ll have some more information. Do go to the website, though, riggwealthmanagement.com, for more information, dates, and registration. We hope to see you there.

This particular segment, we do want to feature, we’re going to talk about retirement. If it is time to retire, and the end of your work career is here, if you don’t need to retire, but you can retire, should you?

Bryan and I are going to get into it a little bit. Does retirement help you live a better life, in your opinion? This is based on what you’ve seen, anecdotes, clients, and just in your life in general. What have you seen?

Bryan:  No, it does not.

Rob:  It does not. See, that wasn’t the answer most people were expecting.

Bryan:  No. There are some people who can find a hobby or find a passion after they retire that keeps them energized and healthy. Quite often, somebody who retires and wants to play golf for the rest of his retirement time, finds it very boring after a while.

Rob:  Right. [laughs] It’s…

[crosstalk]

Bryan:  Also, keeping the mind intellectually stimulated is important. You may want to retire from the job that you’re in, because you may not be real passionate about the job, but it’s paid the bills. Find a passion, whether that be volunteering at the school, doing tutoring, or helping out with a travel agency, whatever your passion is.

Rob:  Something.

Bryan:  Yeah, something.

Rob:  Because you’ve done one thing for so long, it became a career, and that’s kind of lost its luster, maybe even eight years ago. But when you retire, it’s not a bad thing to find a career change.

Bryan:  Yes, and then also when you look at retirement, like you were mentioning earlier, it’s very new in the fabric of mankind. It was really brought about with the New Deal, with Franklin Delano Roosevelt. He was trying to get people out of the workforce to make room for the unemployed younger generation that was struggling so much in the ’30s with the Great Depression.

It’s not actually something that was germane to the human DNA at the time. People worked until they died for the longest time. I don’t think that we are designed, per se, to retire in the sense of sitting on our laurels and just relaxing, having a lot of fun, and travel. Some people may enjoy that, but I would say from my experience and from what I’ve studied, most people get bored of that very quickly.

Rob:  Right, because you can have a three‑ or four‑month vacation, but then what? You’ve got another 14 years you’ve got to go.

Bryan:  Psychologically, people want to feel valued, and they want to feel productive. I always think how crazy it is a lot of times, where somebody has put 30‑40 years in a certain profession, he or she is an expert in that field, and then you put them out to graze, to pasture?

No, you shouldn’t do that. There’s a lot of, I think, ways to capitalize on what you’ve done, and we’re living longer and longer.

Rob:  We are.

Bryan:  If we’re going to retire at 60 or 65, you’ve got another 20‑25 years. Are you just going to be playing with the grandkids? There might be a lot of value there.

Rob:  There is.

Bryan:  Those grandkids may really need you, but by and large, I find a lot of people talk about retirement all the time, and they don’t have a concrete goal in mind as far as the number they need. We can help you out with that if you’re in that genre, here at Rigg Wealth Management. It’s important to find the number you need to get…

[crosstalk]

Rob:  The financial number.

Bryan:  Yeah, that you are secure. But a lot of people don’t put a lot of thought into, “What does retirement really mean as far as activity?”

Rob:  Visual, a visual…

Bryan:  Visual. What does that mean? Try it out, maybe. There is a wonderful book out there by Viktor Frankl called “Man’s Search for Meaning,” and I encourage people to read that.

What he talks about is that if you can deal with any why in a certain situation, you can deal with any how. “Why should you retire, what should that look like, and how is it going to be productive?” will start being clarified if you ask the right questions.

That’s something else we at Rigg Wealth Management can do. We can help people clarify, “What does that mean? When should you retire? When can you retire?” That’s an important question.

I’ve thrown out there several times over the last months, a lot of people retire today, according to some stats, 50 percent who retire today have 50 percent less than what they need. A lot of people are in a situation where they can’t retire.

Rob:  They can’t.

Bryan:  But the people who can retire, that’s something that needs to be explored of what they can do.

Rob:  What does it all involve? It’s not just the money. It’s the time, because all of the sudden, you’re not working. I mentioned earlier in the segment about how it’s time for a career change sometimes.

I know two people that have retired, and one of them got hired back as a consultant. They’re not full time, none of that, no benefits, but just because of the knowledge base he had from working there for 28 years, he was hired as a consultant. It kept him in the business. It used his knowledge and background, his experience, and that proved useful.

The other guy, when he retired, he went into new car sales, because he has always loved cars. He had a desk job, and he was great at what he did as a COO, but he wanted to sell cars, and so he made a career change. It gave him a purpose. He didn’t need the money.

He didn’t have the pressure of a 32‑year‑old new car salesman with a family, but it gave him a purpose. Three or four days a week, he’d go into work, and he actually did pretty well, because there wasn’t the stress and pressure of having to meet a quota. It was just time for a career change.

Bryan:  There’s one person I talked to, and she was very passionate about the Bible. She goes to Bible studies all the time, and so I said, “Well, when you retire, what are you going to do?” She said, “Well, I don’t know. I’ll just probably be involved with my church.”

I said, “How much time do you spend at your church right now?” She’s like, “Well, you know, probably four or five hours a week.” I was like, “There’s a lot of other hours in the week that you’re going to have to fill up.” I mentioned that, “Hey, there’s this institute in Israel that you can go to. You can study the Bible, and you could research the books that you’re very interested in.”

She had no idea about this, but in her retirement, she’s going to go back to school, in some respect, on her own terms.

Rob:  A second life. That’s great.

Bryan:  Yeah, being active, using your brain is important, and I think a lot of people think about travel, golf, and tennis, and if you have a life partner, and you have a good relationship, and you love doing those activities together, there’s something to be said for that.

You’ve raised your kids, you’ve worked hard, you paid your taxes, and you’ve been a productive citizen. If you have a partner, or you have a group that you can do these things with, I think that is good.

But I have found from most of the people I have met, that what people talk about retirement now, it is a false sense of enjoyment, that you’re going to go off to a theme park of the twilight of your life. For the next 20 years, it’s going to be all fun and games, and people get bored of it.

That’s something that, here again, when you look at retirement, you want to be realistic about it. I would encourage people, that if you can go another four or five years of working, even if you don’t need to, I would.

Rob:  We were talking about that, because even as something as simple as social security, if you retire at 65, you can defer your social security until you’re 70. Tell us about that, the financial benefits of that.

Bryan:  If you are in good health, and you think there’s a very good chance you’re going to be hitting 80, then it would behoove you to delay, until you’re 70, your social security, if you don’t need it at 65. Because basically every year, the amount of growth you’re going to get on that social security is around eight percent, as far as the check that you’re going to get at…

[crosstalk]

Rob:  Between 65 and 70, you can make a real difference.

Bryan:  Yeah, you can. But now, let’s say you die when you’re 73, then you’re not going to make up that difference.

Rob:  You don’t know that.

Bryan:  Yeah, you don’t know. You don’t know. Some people have a lot of health problems. Let’s say they’ve had three open heart surgeries and so on, and they have the option of taking it at 65 or 70. I would encourage them to take it at 65.

Carpe diem, seize the day, right now, because we don’t know what’s coming, but if you’re in great health, you’re still running marathons at 65, and you have the ability to work two or three more years, why not?

Rob:  Why not, because retirement is more than just an extended vacation. It’s not just the money. It’s the time, because all of the sudden, you don’t have the daily purpose any more. That’s a factor people need to consider.

Bryan:  Yeah, and people get bored very easily when they’re left to their own devices. When you have structure in your life, going to a job or having a productive activity brings structure to your life. Make sure you have that structure when you can go into retirement. A lot of people don’t.

Rob:  A lot of people don’t, but they need that, and it’s one of those things that you can help with. If people are curious about proper planning, what’s the website they can send you an email from?

Bryan:  Riggwealthmanagement.com. That’s Rigg with two Gs, riggwealthmanagement.com. Please send us an email with any of your questions, and also, feel free to call us at 972‑383‑1210.

Rob:  You do answer voice mails and emails, so please, if you’re curious, just call and start a conversation.

We’ll be back to talk about exchange traded funds after this break.

Bryan:  Yeah, I think retirement…

Segment 4

Rob Dalton: Welcome back. We want to say hello to our WRR listeners. Once again, my name is Rob Dalton, and with me every weekend…

Bryan Rigg: Bryan Rigg.

Rob: We are right here Saturdays at this time, 7:00 until 8:00, burning an hour talking about financial strategies, trying to make you more comfortable with your own investment portfolio, and always reminding you to add diversity.

You can add it up with stocks, bonds, mutual funds, and ETFs, which we’re going to talk about later in the show. There’s a lot you can do with the money. Sometimes having that many options is intimidating and scary.

Bryan over at Rigg Wealth Management, and your wealth professor, he wants to make it easy. What we’ve done is we’ve agreed with WRR to be here every Saturday morning to help you break down the wall of intimidation.

We want to make the walls a little bit more transparent, and make you comfortable with the vocabulary and the terminology. It’s scary, but it’s not fearful. It’s just a little scary. We want you to learn something.

This particular segment, we’re going to talk to you, our 101.5 FM fans, about cyber security. Bryan and talked off‑air. We’ve got a couple anecdotes that we want to mention. He’s got some protocols to help people make sure that their money is safe.

There’s always a risk in losing money, but what we don’t want to do is make mistakes to have our money taken. That’s different than actually the risk management end of it all. Are there ways, Bryan, to actually protect yourself and your money?

Bryan: Yes.

Rob: We’re talking about not…I’m sorry. I’ll interrupt it to just make people know, we’re not talking about risking, losing money. It’s getting it stolen is what we’re getting at.

Bryan: Getting compromised. Just this past four months, I’ve had two of my credit card compromised. Somebody in South Africa tried to make some purchases, and somebody in Louisiana, New Orleans, did. Obviously, they weren’t me.

We had to change those credit cards. One way of doing it, be very careful about what you put in your trash. People, they estimate that everybody’s trash is gone through at some time by a criminal.

Rob: At some point.

Bryan: They put together lists, and they sell them on the black market. People try to hit you…

Rob: It happens.

Bryan: It’s happens all the time. Your statements, shred them. If you have old credit cards, shred them. A lot of times, people can use old data. You may not have that card anymore, but they can use the old data to get some of your personal information.

The one way that a lot of people in my industry got compromised a few years ago, and it’s slowed down now, because the financial wealth is industry got wise to it, is there would be cyber criminals, probably in Russia, looking at your email traffic. They would see how you would interact with your financial adviser.

Rob: Ah, like a shadow.

Bryan: Then they would basically take over your email account, and then start contacting your financial adviser, and all of a sudden have an urgent need. “I need to buy this new piece of antique furniture. I need to buy this equipment for my yoga studio.” It all sounds germane, because your client loves antique furniture.

Rob: Because they’ve watched…

[crosstalk]

Bryan: They’ve been watching, and they know how to behave. They actually even mirror sometimes the phraseology of you.

Rob: The phrases, the fonts, all that stuff, the patterns.

Bryan: They see how they address you. This is more of a warning, those financial advisers who are listening, be aware of that. Call your client and talk to them. Be aware that that’s out there, and be aware that we put in a lot of effort to make sure you’re protected.

How can people protect themselves? Be very careful about how you handle your financial information. Be very careful about what you put in email when you write your financial adviser, and he asks that he needs some information.

Don’t just send a text. In fact, you’re not really supposed to be sending texts with information.

Rob: Texts, something more secure.

Bryan: Call them up.

Rob: Email and phone calls.

Bryan: Email and say, “Hey, when is a good time to talk about going over this private information?” In cyber security, we’re seeing it so much now in the news with what’s happened with the election and with Russia. Russia is a horrible country when it comes to cyber security.

Rob: [laughs] I don’t know if you could add any more emphasis to that.

Bryan: There was a Wall Street Journal article just recently that came out that talked about Russia. The government knows a lot of these crooks. They say, “You can go hit as many people as you want internationally, just leave us alone.”

Rob: “Just leave our own citizens alone. Don’t bother Russia, but you can hit everybody else.”

Bryan: Then a lot of times, they use them for their own effort. “Hey, we want you to hit this guy,” or, “We want you to do this.” People don’t realize this, but China, North Korea, and Russia, they actually have military units are designed to attack their enemies. They attack us all the time.

Now, we have cyber security not actually to be proactive, and go out there and infiltrate and attack, but to defend all the time.

Rob: To defend, right.

Bryan: This is a real threat. I think it’s going to be one of the most important things that we look at as the security of a nation, but also security of your finances.

Rob: It’s not going away.

Bryan: We have a foundation. Our custodian is Fidelity. They do a very good job ‑‑ as a lot of the firms out there, Schwab and TD Ameritrade, that are custodians ‑‑ of putting up a lot of defense walls for those. You want to make sure you’re with a good custodian.

Rob: Not just firewalls, per se, but just protocols and practices to keep everybody safe.

Bryan: Hadrian or Chinese wall against all these attacks. You got a lot of people that doing it, like I said, in Russia, and then also the former Eastern Bloc. There’s a lot of bad actors in the Ukraine. There’s a lot of bad actors in Slovakia and the Republic of Czech, and there’s a lot of them in Russia.

How do you defend yourself? It’s just basic prudence. A lot of times, people when they finish up with their checkbook, they just take it and throw it in…

Rob: Throw it away.

Bryan: Rip it up. A lot of times, what I tell people is when you have a credit card, let’s say you just practice cutting it in half. Don’t cut it in half, and then put both the pieces in the same trash. Take one, put it in a different trash can, or take one half, hold it for a couple weeks, and then throw it in.

Rob: I’ve got a visual. I’ve got a neighbor three doors down that actually has…[laughs] It’s funny, because he got hit one time, and he doesn’t even shred stuff anymore. He’s got one of those little couple of gallon metal trashcans I think of from school, back when we were…

He burns his stuff, even though there’s a burn ban. He does it in a little metal trashcan. Once a month, he just burns all of his stuff. That’s even better than shredding, but he doesn’t even trust the shredders.

Bryan: It might be a little extreme.

Rob: It is extreme, but protect yourself.

Bryan: When you look at some of the people’s lives, and how destructive they have been, and how they’re…I just brought up a, I found a person who committed fraud against my father’s estate. He falsified his signature and took possession of a property.

We had to take him to court. It took three years to prove it, but had we had a better system in place to protect my dad’s estate from some information that got out there, we wouldn’t have had that problem.

Rob: When we picture ID theft and things, it’s not just so much here in the States. It’s the international countries that are damaging us. They’re reaching outside their own borders, and are finding the US to be an easy target.

Bryan: One thing you’ve got to be very careful is when you do a third party wire. Be very careful. If you have an institution that actually just lets you just wire things left and right without having somebody at the institution sign off with your signature, that should be a red flag.

You can’t be too careful about how you’re moving money around, and how you’re managing your accounts.

Rob: Just ask. If people have questions about your level of security, they can call you.

Bryan: Absolutely. They can call me at 972‑383‑1210, and go over cyber security, and what they’re doing to protect themselves. Please also feel free to visit us at our website, riggwealthmanagement.com, and send us an email.

Rob: Listeners, we appreciate you being around this hour. We’ll be right back. Thank you. WRR listeners, thank you. We’ll be right back after these messages.

Segment 5

Rob Dalton:  Welcome back. Thank you for sticking around after the break. We want to say, this is “Wealth Strategy with Bryan Rigg,” our wealth professor. I am Rob Dalton, and over there…

Bryan Rigg:  Is Bryan Rigg.

Rob:  Bryan is here. He is here every weekend with me to talk about finance. We want to take just a moment to thank you for dialing in, tuning in, listening to us, whether it’s on air or podcast.

You have chosen to make us part of your day, and we consciously came in to be a part of your day, but you decided to let us be a part of that day, and we want to say thank you for listening, thank you for sharing. Tell your friends about us. We’re here at the same time every week, or share the podcast.

Thank you. We hope you learned something when the show is over that you could talk about at home and talk with friends, and maybe even tell your kids about. That’s what we try to do, try and keep it simple enough to do that.

This, on the contrary, this particular segment is going to be a little bit thicker about investing. We’re going to talk about the stock market, and a little bit more about what we call ETFs. An ETF is something that Bryan works with quite a bit, and it’s an exchange traded fund. Don’t get tired head on me. Stay with me here. [laughs]

An exchange traded fund, so Bryan, take a moment and explain what exactly is an ETF?

Bryan:  Ladies and gentlemen, when you hear a lot of terms in the financial world, quite often, they sound very sophisticated and complicated, but they’re for very simple concepts.

Rob:  They are.

Bryan:  An exchange traded fund is just a fancy way of saying a index fund. By way of illustration, here’s one way of looking at it. If you wanted to go out and have exposure to the S&P 500, those are the 500 largest companies, basically, in the world.

Instead of going out and buying individual stocks of all 500 companies, you can buy an exchange traded fund. You can buy an index fund, for 30 or 40 dollars that averages all of those 500 companies together.

You can get broad exposure in different markets. Let’s say it’s internationally. You get 2,000 international companies. Small caps, you can get several hundred small cap companies in an ETF. Let’s say you’re interested in just energy. You can get an ETF that focuses on hundreds of energy companies ‑‑ Royal Dutch, Shell, Exxon, and so on.

As a result of the indexing world, which is the ETF world, you can have broad exposure to many markets. In fact, there was one stat I got a few years ago that there are more ETFs out there than there are stocks. People are trying to blend different strategy…

Rob:  That’s hard to fathom.

Bryan:  It is, but if you keep it simple, using the Marine Corps acronym KISS, keep it simple stupid, and you do a diversified portfolio of several ETFs, and you have thousands and thousands of positions, you can have broad diversification, and then you can start finessing that every year, every month, every quarter, depending on how often you want to look at your portfolio.

There’s going to be some of those sectors that are going to be always up, and the ETFs, the exchange traded funds, the index funds, give you a broad exposure to those different sectors. You want to have broad diversification within those sectors, because…

Rob:  I was going to say that.

Bryan:  …S&P 500, quite often, in any given day, from some stats, over half the companies a lot of times are not doing well, so you don’t want to try to pick.

Rob:  Because of the diversity within those 500, some are down, some are up.

Bryan:  Yeah, so you never know which ones are going to be up. You never know what political ramifications are out there that are going to hurt companies. You don’t know new management. You don’t know new realities in the world.

Rob:  Right, mergers and acquisitions and all that stuff…

[crosstalk]

Bryan:  Right. The Yom Kippur War in 1973 with oil and gas. You just never know what’s going to go on.

Rob:  You never know.

Bryan:  But if you’re diversified, there’s always, regardless of what happens, there’s going to be several sectors that are going to be up and several sectors that are going to be down.

Rob:  An ETF is a way of buying diversification?

Bryan:  Yes.

Rob:  Without picking a stock.

Bryan:  Without picking a stock.

Rob:  I like that.

Bryan:  Now, being on Wall Street for over a decade, I’m a firm believer that we have a very good strategy. We use a third‑party provider that focuses on ETFs and active management. I believe a core component of everybody’s portfolio should be ETFs.

Now, you have to have, usually, a little bit of a critical mass to get diversification there, 50 to 100 thousand, usually, to get a portfolio up and running, but it has proven very efficient in not trying to beat the market, to be the market. But then when you are the market, practicing the old adage, buy low, sell high.

You never know what’s going to be up in a given year, and what’s going to be down, but at the end of the year, when you look at what’s up and what’s down, you sell off a little bit of what’s up, and then you buy what’s down.

Rob:  You buy what’s down…

[crosstalk]

Bryan:  This gives you a little bit better performance in the overall market, and I believe if I had just stayed with that for the last 12 years, all my accounts would be great. I’m now…

Rob:  [laughs] You suffer from hindsight as well.

Bryan:  Yeah, but at least, hopefully, as it says, I think Proverbs 20:6‑13, “As a dog returneth to his vomit, so does a fool returneth to his folly.” You learn from your mistakes.

Rob:  You do.

Bryan:  You learn what is good, and that’s one thing I think people will benefit, here at Rigg Wealth Management, is that I have over a decade experience. I’ve seen what works. I’ve been able to sift through a lot of the pundits out there that are telling you what works.

But yet, when you look at the track records of a lot of things ‑‑ private equity, individual stocks, different companies, different sectors ‑‑ what you eventually come away with is that if you just sort of…I’m quoting Burton Malkiel, “A Random Walk Down Wall Street.”

If you just honor the market, and then you rebalance on a regular basis, which I think, like I said, we have a very good system here at Rigg Wealth Management to do.

Rob:  You do.

Bryan:  You’re going to always win in the long run, if you let it grow. The only reason why it wouldn’t, I would think, in many respects, is if America went away. A lot of times, people have this doomsday fear, that, “What happens if it goes to zero?” I say, “Well, if your overall portfolio, if you’re well diversified over thousands of companies, goes to zero…”

Rob:  We have a bigger problem. [laughs]

Bryan:  We have a much bigger problem than your ETFs and so on. But a lot of people, when people come to me, and they say, “I have a portfolio of a lot of mutual funds. I am diversified.” I’m like, “Well, you know, mutual funds is one way of getting diversification.”

Rob:  It is. It is.

Bryan:  But mutual funds are, I find, historically, much more inefficient than ETS. In fact, Burton Malkiel found that 80 percent of all mutual funds don’t hit their benchmark, and yet, you’re paying more fees for them. If 80 percent of the time you’re not at your benchmark, and all ETFs, index funds, are the benchmark, why not just be the benchmark?

Rob:  Yeah, just buy into the benchmark. I do want to restate that we’re actually talking about exchange traded funds. It’s a fuzzy term, but it’s basically indexes that you can buy into for diversification. You are an independent consultant.

Bryan:  That’s right.

Rob:  You don’t work for a particular wire service.

[crosstalk]

Rob:  In general, in a full disclosure effort, are there fees associated with an ETF, in case people are curious?

Bryan:  Yes, there is a…It’s called an expense ratio, and usually it’s a few BPs, as they say, basis points. If you’re looking at $100,000 in an exchange traded fund, they may charge 0.1 or 0.2 BPs, so it might be a couple hundred dollars at the most. They’re much more efficient.

Rob:  Everything costs something. That’s just the way it is.

Bryan:  Yeah. By way of illustration, though, to do a comparison, a mutual fund, a lot of times, sometimes there’s a front load. They’ll charge five percent, so they’ll charge like $5,000 on $100,000 investment right at the get‑go, without ever doing anything. ETFs don’t have front loads, and they are much more efficient with fees.

As far as performance, you have a better understanding of what you most likely will be getting from them versus mutual funds, who are always trying to beat a certain benchmark. Here again, quoting Burton Malkiel, “They never do,” the majority of the time.

ETFs are very efficient, and if this is the first time you’ve heard about ETFs and index funds, please give us a call, at 972‑383‑1210.

Rob:  It might be a new term for them, but it’s definitely not for you at Rigg Wealth Management.

Bryan:  No, this is something that I was very blessed at Credit Suisse to have a group come in and educate us for several weeks on this, and make us read Burton Malkiel, A Random Walk Down Wall Street.

This is something that I believe should be part of everyone’s portfolio, and you’re seeing firms going more and more that way, sometimes kicking and screaming, because they want to keep those heavy fees with mutual funds.

Rob:  [laughs] [inaudible 8:59] .

Bryan:  But they work, and they’re much more efficient for people’s portfolios.

Rob:  They really are. Good. He gave you the phone number. We don’t want to give you the website, because if you go to the website, we are already setting up a seminar at the end of August. The dates are on the website. You can go to riggwealthmanagement.com, but do look into the seminar as well. I wanted to tap on that one more time before we send people home.

Once again, the phone number they can reach you for voicemail?

Bryan:  It’s 972‑383‑1210. And the Web page where you can go and see about the seminar information, or send us an email with questions that you may have is riggwealthmanagement.com. That’s Rigg with two Gs, R‑I‑G‑G wealthmanagement.com.

Rob:  Ladies and gentlemen, thank you for being with us this past hour. It’s been a blast. We hope you learned something. We always do. Drop us an email, drop us a call, and tell us what you think. Tell your friends. We will be here next weekend, same time, and we’ll see you then.