Looking at Retirement

Retirement: 50 percent of all people today who retire have 50 percent less than what they need ‑‑ not than what they want, but than what they need.

One way of looking at retirement that I like to do with my clients is look at the salary they think they’re going to need later on. Let’s use an example. Let’s say you need $60,000 a year ‑‑ $5,000 a month. To look at current interest rates, and looking at portfolio management in today’s reality, to replace a $60,000 salary, you need about $1.3‑1.4 million under management to keep up with inflation, to keep the purchasing power going, and to spew off enough cash flow that you can lift from without really going into the principle.

A lot of people listening in today are probably thinking, “Oh, my goodness. $1.2, $1.3, $1.4, $1.5 million, that seems so unobtainable.” If you’re in your 30s and 40s, and you start putting away 5, 10, 15 thousand dollars a year, and you start working on investing, slowly but surely, you can build out a portfolio that can meet a lot of your needs. We believe you need diversification You’ve got to have proper diversification. You’ve got to continually rebalance. You’ve got to take on more risk a lot of times, but there are techniques that if you just focus on the pennies, as they say, the dollars will take care of themselves. If you get a plan in place, you can start pursuing achieving those goals.

Here at Rigg Wealth Management, we encourage you to come in for a “no cost”, complimentary free consultation and go over it. If you come to us and say, “You know what? I do need to have $1.5 million. How do I get there?” We can start looking at strategies and plans out there to hopefully achieve those type of goals to give you a compass heading, and then manage it over 20 or 30 years to make it seem more realistic. It’s not going to be done in one year. You’ve got to plan and do it over several decades, and David, as you mentioned in the last program, people need to be patient. They need to let it work. It’s like planting seeds and letting those crops slowly come up, and that takes years. We believe that proper financial management and diversification are crucial elements to harvesting a bountiful crop for retirement. With proper financial management and diversification, it can be obtained.

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SHOW TRANSCRIPT

SEGMENT 1 – Transcript

Host:  “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.

[background music]

Host:  Welcome to “Wealth Strategy” with Bryan Rigg for every Sunday at one o’clock on KLIF. Bryan is a celebrated Yale graduate, adding a PhD from Cambridge, a former officer in the Marine Corps, a man of profound integrity and honor, and your wealth professor.

Please, welcome your host for the next hour, Mr. Bryan Rigg

Bryan Rigg:  Good afternoon, ladies and gentlemen. This is Bryan Rigg with Rigg Wealth Management, wealth strategies. I’m here with my two partners, Gary Bilyeu and David Rigg. We were all United States Marines. We’ve been working together for several years. I’ve been on Wall Street for over a decade.

Thanks so much for coming back to the show and listening. We are on every Sunday from one to two, here at KLIF. Last week, we talked an awful lot about retirement. I want to come back to that. Retirement is something that a lot of people discuss in daily conversation.

Many people know they need to look forward to that reality, but most people don’t plan for it. They don’t put a lot of thought into it. It’s kind of like the old adage that a lot of things that are most important in life, people give the littlest thought to.

Sigmund Freud said it well. He said, “If people realized that death has something to do with them, they would make better decisions every day.” Retirement is something that I think needs to be looked at very carefully and very critically, because that’s going to support you the last, hopefully, 10‑20 years of your life.

You may need a lot of medical attention most often during that time. You’re going to, hopefully, have the ability to support yourself, but you’re not going to have the ability to work at the level that you were when you were younger.

You want to make sure that you can replace that salary. That’s something that, here at Rigg Wealth Management, we really like doing, sitting down with our clients, going over the strategies that they need to plan for retirement.

Like we mentioned last week, quite often, people don’t put a lot of thought into what that retirement looks like. Are they going to spend a lot of time with the grandkids? Are they going to start a second career? Focus on a hobby? Are they going to move to another area that might be more expensive?

Once you answer those questions of how retirement’s going to look for you, then a strategy will become clearer, how you need to set up your portfolio ‑‑ your assets, your bonds, your stocks, and other investments that you’ll be using later on to, hopefully, support that lifestyle you’ve become accustomed to. Gary, do you have a thought?

Gary Bilyeu:  Yeah, Bryan. I’m surprised at how many people don’t realize just how great retirement can be. I’ve heard that there’s only one big event after retirement, and I think that’s such a pessimistic view. You should be able to do whatever you want. We try to ask people and stimulate the conversation.

“What are your goals?” I can tell by their response that they have not paid very much attention to that, or much thought. We want them to view retirement as more than just survival, waiting for that last big event.

We talked about it. Some people want to travel. They want to spend time with their grandkids, and they want to see the world. They may just want to go out and fish. There is nothing wrong with any of those. We want them to come up with those goals, so we can work with them and help them to, potentially achieve those goals.

Bryan:  On that note, one thing that we do also provide is we are a good sounding board to go over lessons that are out there. Quite frankly, a lot of people I have talked to who retire, if their main goal was to just golf or play tennis, they get bored with that very quickly.

I would encourage people to look for activities that’s going to keep them intellectually stimulated, engaged, because as I’ve mentioned before, retirement is a new phenomenon in the fabric of mankind. Most people throughout history did not have the luxury to retire. They worked and they worked, until the day they died.

To have the opportunity to shift gears later on by amassing enough wealth to help support your lifestyle is an incredible luxury. Like you said, it’s something to really embrace and be happy about.

Because not only in the framework of mankind, looking at it historically, but compared to most people in the world, that Americans have this luxury to plan for and then to enjoy retirement is something that most of their ancestors and most people today, they had no opportunity for, and it’s beyond the imaginations of most.

Gary:  I would agree with that, Bryan. I would also tell you this. Many of the people, when I ask them, “What does retirement mean to you?” they simply give me the answer, “That’s the day I stop working.” “OK, but there’s more to retirement than that. If all you did is stop working, then that big event we just alluded to will be here faster than you…”

[crosstalk]

Bryan:  Yeah. A lot of people we have talked to, they put off retirement. They say, “I’ll do that later on, when I get a better job.” Retirement planning should be done yesterday. From the research that I’ve been given, 50 percent of all people who retire today have 50 percent less than what they need, not than what they want.

That means a lot of people are finding it very difficult once they get into retirement to support themselves. That other 50 percent who have planned and reached their goals has done a proper plan, done proper diversification, have the accounts out there to support themselves. They are enjoying retirement.

If you’re one of those people, and I think that’s most people that look to retirement, know you need to get a plan in place, realize that by putting in the plan, you’re going to be, hopefully, beating 50 percent of the population by having a clear‑cut compass heading of how you’re going to support yourself later on, when you’re not working at the level you are today. Yes, David?

David Rigg:  I think most of the people that we know in retirement, the people that are most happy are the ones that are busy. They’re the ones there singing in the church choir. They’ve got a charity that they’re working very hard with.

They’re blowing, and they’re going, and they’re doing the things that they have not been able to do while they were slave to a clock. They were working during their working lives.

I think it’s important that we look at retirement as an opportunity to do the things that you have a passion for. The people that do that seem to thrive on it. The other people that have no idea what they’re doing, and they’re sitting at home and watching TV, they’re not happy.

Bryan:  To help some people think about retirement, a lot of people say, “Well, what do I need? How much should I be putting away?” The answer to that is, for most people, put as much away that you possibly can.

One way of looking at retirement that I like to do with my clients is look at the salary they think they’re going to need later on. Let’s use an example. Let’s say you need $60,000 a year ‑‑ $5,000 a month.

To look at current interest rates, and looking at portfolio management in today’s reality, to replace a $60,000 salary, you need about $1.3‑1.4 million under management to keep up with inflation, to keep the purchasing power going, and to spew off enough cash flow that you can lift from without really going into the principle.

A lot of people listening in today are probably thinking, “Oh, my goodness. $1.2, $1.3, $1.4, $1.5 million, that seems so unobtainable.” If you’re in your 30s and 40s, and you start putting away 5, 10, 15 thousand dollars a year, and you start working on investing, slowly but surely, you can build out a portfolio that can meet a lot of your needs.

We believe you need diversification You’ve got to have proper diversification. You’ve got to continually rebalance. You’ve got to take on more risk a lot of times, but there are techniques that if you just focus on the pennies, as they say, the dollars will take care of themselves. If you get a plan in place, you can start pursuing achieving those goals.

Here at Rigg Wealth Management, we encourage you to come in for a “no cost”, complimentary free consultation and go over it. If you come to us and say, “You know what? I do need to have $1.5 million. How do I get there?”

We can start looking at strategies and plans out there to hopefully achieve those type of goals to give you a compass heading, and then manage it over 20 or 30 years to make it seem more realistic.

It’s not going to be done in one year. You’ve got to plan and do it over several decades, and David, as you mentioned in the last program, people need to be patient. They need to let it work. It’s like planting seeds and letting those crops slowly come up, and that takes years. We believe that proper financial management and diversification are crucial elements to harvesting a bountiful crop for retirement. With proper financial management and diversification, it can be obtained.

David:  Just one quick thing to add. We get this all the time about retirement, and you threw out a sizable number at the end. That would be your nest egg or your cash cow that you’re trying to achieve.

Just a very brief analogy. I don’t get wrapped around that big number at the end of the rainbow. It’s more of I take a marble, a golf ball, and a bowling ball. If you’re young, what each one of those balls represent is the amount of money you’re putting away each month.

If you’re young, you can put the marble away. You’ll feel it in your pocket, but you’ll get used to it. You may not even notice it, and that’s the amount of money you’re putting away. If it’s a golf ball, you may notice it, but it’s not uncomfortable. If you’re late, and you have to put the bowling ball away, then it could be very painful.

Bryan:  Ladies and gentlemen, thank you so much for tuning in today. We’ll be right back with you after this commercial break. Please, visit our website at riggwealthmanagement.com. That’s Rigg with two Gs. R‑I‑G‑G wealthmanagement.com.

Also, please, feel free to call us at 972‑383‑1210. Again, that’s 972‑383‑1210, and come in for a no cost, complimentary free consultation. We’ll be right back with you in a few moments.

SEGMENT 2 – Transcript

Host:  “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.”

Bryan Rigg:  Welcome back, ladies and gentlemen. You’re with Bryan Rigg at Rigg Wealth Management, wealth strategies. I’m here with both my partners, Gary Bilyeu and David Rigg. We left off talking about retirement and what that looks like with your portfolio values when you decide to go into it.

Some people have said, “$1.5 million, $2 million, $3 million. I don’t think I’m going to be able to get there.” One thing we can look at, if a person’s retiring today and comes to us and says, “I only have $600,000. I don’t think I’m going to be able to replace that income with $60,000.”

We look at all different sources of cash flow. Let’s say they’re getting $2,000 per month from social security, which for them is still a reality. We don’t know what’s going to happen with social security with people in their 30s and 40s today, but now, people who are retiring, they are getting their social security.

If somebody’s getting a social security check for $2,000 a month, one way of looking at that is that that’s like a portfolio for $500,000. If they only have six, seven, eight hundred thousand dollars in their portfolio, but they have the social security, they are actually at, basically, like a portfolio of $1‑1.5 million, because you’re looking at assets that create cash flow.

If social security is giving you that $25,000, then instead of looking for another 25, 30, or 35 thousand that you might need from a larger portfolio, you now can obtain that if you have six or seven hundred thousand.

This is one way that we can help our clients is looking at all the different sources of income that they might be getting, and giving them a good compass heading, helping them work within a budget, and to know what they need on a monthly basis and how they should structure it.

If we have a $600,000 portfolio that we know needs to generate around $30,000 per year, then there is a different way of setting that up versus, let’s say, a portfolio that only needs to generate $10,000, or versus a portfolio that needs to generate $60,000, which would be very difficult.

It all goes to what type of volatility you need to have in the portfolio in order to meet the goals of the client. By looking at all different sectors of a person’s portfolio ‑‑ social security, retirement, if they have assets that they’ve inherited and so on, and how that actually looks in the overall portfolio in their umbrella of financial management is critical in giving people a sense of calm and a sense of reality of what they can support in retirement.

Gary Bilyeu:  I think that’s hammers home the point that why you need to go see a financial adviser. Everyone’s goals, needs, portfolios, are different, and it needs to be customized to meet your needs and goals. That’s why we stress it enough. You should seek the consultation of a financial adviser.

We stress that. We stress it to everyone we come across, that we know you have your trade, where you work, and what you’re doing. You may be a professional ‑‑ a lawyer or a doctor. You’re focused on that trade or that skill set. We focus on financial advising. That is our job, to help you.

Bryan:  Some of the research that has been given to us ‑‑ and of course, this is research that we’re glad to see, because it keeps us employed, and that is, a lot of people say they’re going to do it on their own. A lot of the research shows that when people do it on their own, they underperform the market dramatically.

We try, with one aspect of Rigg Wealth Management is focusing on indexing. We try to be the market, quite often, and then look for opportunities when different sectors get out of whack, out of balance.

When I say sectors, a lot of people will ask, “What does that mean?” Different sectors meaning you can go into the fixed income, like bonds, treasuries, CDs, and muni bonds. You can go into commodities. That’s buying into steel, nickel, things that build things, concrete. You can go into energy, which we’ve talked about before ‑‑ oil and gas.

You can go into large cap companies, companies that are earning over $35 billion and up per year. You can go into small cap companies, between $500 million and $5 billion. There’s all these different sectors. You can go into pharmaceutical.

By getting the broad diversification and looking at opportunities out there, that allows you to take into account what’s going to happen later on in the market, and then respond to it. That’s one thing that we’ve reiterated time and time again at Rigg Wealth Management, that active management in this process is very critical to economic health.

Burton Malkiel, in his book “Random Walk Down Wall Street,” shows that by indexing and going across several different market sectors, allows you to take advantage of what will happen later on, because we know some holding will go up, and some holding will be down.

When those holdings that go up do very well, sometimes, taking into consideration the client’s economic reality, it’s prudent to sell off some of those profits and then look at sectors in the portfolio that are down and buy on those dips. That’s practicing the old adage, “Buy low, sell high.” Yes, David?

David Rigg:  I think it’s also important that if you don’t have your money deployed, if you don’t have your money invested, all of this is a moot point. You can also throw a little bit of the government issue into it.

Before Trump was elected, how many people were saying that, “If Trump gets elected, the stock market’s going to tank? It’s going to completely collapse. Oh my god, it’s going to be Armageddon.” He got elected, and after the election, the stock market actually had a rally.

If you weren’t invested, none of that would have mattered. This is really what we need to hammer home, too, is you need to get started. Start somewhere.

Gary:  Yeah, and on this note, David, very good point. What I like to encourage people so much with that knowledge is that a lot of times, you get from people ‑‑ and I don’t know what it is, historically, that a lot of times, people go to the Armageddon vision of life, that everything’s going to go down to hell in a hand basket, and everything that we understand is going to go away.

Granted, historically, I’m sure a lot of people in Rome were thinking, “Rome is going to be around forever,” and of course, it went away. A lot of people in Athens thought the ancient time of Pericles was going to go on forever, and it didn’t. Genghis Khan and the Mongolian Empire, same story.

Yes, things change. Yes, things do dramatically change, but I think the greatness about America is that we have the checks and balances, and regardless of the political group that we have in power, our economy has historically always been strong.

Investing in America has usually never been a bad idea, and so getting involved with the market, diversifying, is very important, because ultimately, on the flip side, if it gets as bad as some people worry about ‑‑ Armageddon ‑‑ then people are not going to be focusing on their portfolios and their investments. They’re going to be looking at other things.

I do not think that’s going to happen. I think we’re in a very strong position as a nation right now. Whether Hillary is in or Trump is in, the one thing that our economy has shown time and time again, is that if you are diversified, and you are involved, like you were saying, Dave, you will benefit on the long run.

David:  Or you have the flexibility to take advantage of whatever is happening. But if you’re not involved, it’s a moot point.

Bryan:  Yes, and you bring up an excellent point. One thing we do here at Rigg Wealth Management, we practice this active investment with index funds.

I’ve been talking about looking at opportunities when things go up, and selling when they have profits, and then buying when things go down.

Another way of finessing the market with new economic realities is if you have a portfolio, let’s say, that’s traditionally balanced in a moderate way, 60 percent equities, 40 percent fixed income, so 60 percent aggressive, 40 percent conservative, if the market all of the sudden tanks, you have an opportunity. You can sell off that 40 percent all and put it all into equities and be aggressive.

Conversely, let’s say the market overheats, and that 60 percent that’s equities all the sudden becomes 90 percent of your portfolio, you can sell off the profits and then build back out that fixed income. Or go all the fixed income, if you’ve had incredible profits, and then wait for another market downturn.

Like Warren Buffet said, “If you always book in the black, you will always win.” These type of issues, we love to discuss, we love to explore with our clients, we love to educate our clients on these subject matters.

We’re going to be breaking away for a commercial break here in a few moments. Please feel free to visit us at our website, riggwealthmanagement, that’s Rigg with two Gs, R‑I‑G‑G, wealth management.

You can learn more about myself and my two partners, Gary Bilyeu and David Rigg. Also, please feel free to call us up for a no cost, complimentary free consultation at 972‑383‑1210. Again, that’s 972‑383‑1210. We’d love to sit down with you, go over your financial house, and see where we can be advantageous to you.

The time to get a plan going for retirement, a time to get a plan going for your investments, is now. Many people do not do it, and so if you haven’t done it, we’d love to be your quarterback for your financial house.

Please, stay tuned. We’ll be back in a few seconds with more information about the market and investment ideas.

SEGMENT 3 – Transcript

Bryan:  Welcome back, ladies and gentlemen. You’re with Rigg Wealth Management. I’m here with my partners, David Rigg and Gary Bilyeu. My name is Bryan Rigg.

In this segment, we’ll be talking about a lot of issues we’ve been discussing the last several weeks, and using an author that I’ve been reading, William Bernstein ‑‑ he wrote “The Investor’s Manifesto” ‑‑ using some of his concepts to support some of the issues that we’ve been discussing.

Before we do so, David had some interesting thoughts about retirement and ways of looking at investing. I’ll turn it over to him.

David Rigg:  Thank you, Bryan. Thanks for having me back for this segment. We have talked in past shows and segments about some of the things you need to have or qualities you need to have while you are an investor. We’ve talked about patience. We’ve talked about a lot of other things that you need to have to not panic when things are going on.

One of the attributes that I think is required is a real sense of reality, what’s going on. Our business, we have two major components. We either have time, or we have money. We need both. If you don’t have one, you need a lot of the other.

We need to be realistic about what’s going to be required to get you where you want to be as an investor. We have had some very uncomfortable conversations with clients, a reality check, so to speak.

You didn’t get where you needed to be. You weren’t able to invest what you needed to invest over the timeline that you had, so we may not get to that target. When we start talking about reality checks, I remember one of the ones I had.

It’s one of the most impactful, but it’s kind of funny. I was in the Marine Corps. I was in boot camp. I was 19 years old. First time I had really been away from home for an extended period of time. We’re all lined up. This is in the evening. We’re all in our underwear, T‑shirts, shower shoes.

We’re all done, about ready to go to bed, or hit the rack, as the Marine Corps says. We had mail call. The drill instructor came in with a bag of mail. He would yell your name, and you would say, “Here, sir.” He would fling that letter as hard as he could at you. He goes through the whole bag of mail, and this kid I remember ‑‑ he was right across from me ‑‑ didn’t get a letter.

You could tell he was boo‑boo‑lipped, he was a little upset he didn’t get a letter from home. I remember the drill instructor was walking up and down the squad bay. He looks over at him and he goes, “What’s the matter, Private? You said you didn’t get any mail?”

Of course the kid goes, “Sir, yes sir.” Little pregnant pause there, and then the drill instructor goes, “Nobody loves you. If they loved you, you wouldn’t be here.”

[laughter]

David:  I remember sitting there across the hall from him going, “Wow. I wonder if he’s right.” [laughs] It was a little reality check there of what we were doing and where we were at. It was not going to be like home. You weren’t going to get the attention that you were used to having when you were at home.

Sometimes, we’ll have conversations that may be that stark with some of our customers. We’ll deliver it hopefully in a much nicer way. [laughs] The fact that we need to be realistic with your situation is something that I think we’re very good at and to manage our expectations and manage the customer’s expectations.

Bryan:  To support what you’re saying, I was talking with Gary earlier this morning. Sometimes we have clients that admit to us later on that they’re very embarrassed where they’re at. There sometimes is a support for that, because they have not been active in putting away for the future.

That’s OK. A lot of people make mistakes, we all do, but the worst mistake is to continue on not planning for the future, and sitting down. Gary, you might want to describe that situation you had with the teacher recently.

The takeaway from there is the proper thing to do is to start today. You’re on your own. Many people, you need to remember, you are responsible for really laying the foundation for your retirement and getting a plan going. Gary, if you would share that story.

Gary:  Sure, Bryan. Let me take a second and go back to Dave. You had mail call?

[laughter]

Gary:  I remember getting on the yellow footprints, and I don’t remember mail.

David:   That was it. [laughs]

Bryan:  Nobody wrote you in boot camp? You were the kid across David?

Gary:  I knew I recognized you.

[laughter]

Gary:  Getting back on topic. Bryan, as you’ve told our listening audience many times before, that I got my start in insurance. For the last 15 years, I’ve headed an insurance business. I got started working with teachers early on, and still work with teachers today.

We helped our first teacher with their retirement needs in 2002, and helped many teachers along the way since that time. One of the things that we were discussing was when teachers go back to school, they’re there before all the kids get there, and they try to get so much stuff packed into a very short period of time.

One of it is, obviously, their benefits. A teacher in particular was telling me that she missed it. For whatever reason, she wasn’t there when whoever was speaking about investing options. She missed it the first year, waited until the next year and happened to miss it again. The third year rolls around, and she was too embarrassed.

She’d heard all the other teachers in the lounge and other places talking about they’d gotten started early on. This was her third year and she hadn’t got started, and was embarrassed about that, and simply did not do anything.

That’s not the best decision obviously, but it’s never too late. Getting started is the most important part of this. We talked about coming up with a plan. We often try to come up with the perfect plan. News flash, just so you guys, there is no perfect plan.

Plans change all the time. I got started ‑‑ and I’ve mentioned it in a few shows in the past ‑‑ with a plan that was comfortable for me. That plan is not the same plan that I’m implementing today. It’s changed over time.

I was young, single, a marine officer. I had more money than I could spend. I was often on deployments. I got married. Now I have two kids. My needs have changed. My goals have changed. I have a family to think of. It’s not just me anymore. My investing plan has changed accordingly.

If you’re concerned about getting started, and you want the perfect plan, there is no perfect plan. Getting started is what you need to focus on, and then we can help with that plan. That would change over time.

Bryan:  I agree, totally. I’ve said this many times in the last several weeks. I’m going to reiterate it again, that from the information that I’ve been given in this industry, 50 percent of all people who are retiring today retire with 50 percent less than what they need, not than what they want.

If you know you need to get a plan going and you haven’t put one into place, we’d love to sit down with you and go over what you need to do to start realizing realistic goals. Don’t be shy. Don’t feel ashamed if you haven’t put a plan in place. That is something that we encounter all the time.

Just taking that first step and being proactive is the focus that you need to have to take retirement fully into reality and understand what you need to be doing. Now, getting to this book that I’ve been reading, it helps support a lot of the concepts that we practice here at Rigg Wealth Management. It’s called The Investor Manifesto, William Bernstein.

One thing that David mentioned a few shows ago, he’s talking about a lot of people look at their home as a retirement plan. That is something that Bernstein supports is not a good idea. He says that people need to be looking at their homes, not as an investment, but as a consumption.

That is something that if you’re doing, we strongly encourage you to reevaluate your investment goals for your retirement. Also, he pointed out there that a lot of people focus on they’re going to do their investing on their own.

He says after looking at thousands of case studies and talking to investors over the years, he says only a very small percent of people can do investing on their own. He talks about a lot of different factors for that.

One is the emotional factor. A lot of time, if you’re emotionally involved, and you don’t have a team to work back and forth with each other and try to be as objective as you possibly can, a lot of times, you’re not going to make the proper decisions.

Bryan:  There’s many reasons for this that he brings out. One is the emotional component. A lot of time, people have a hard time managing their own money because they have an emotional attachment to it. We at Rigg Wealth Management can help people with that, of managing expectations, managing emotions. Luckily for us, the information that Bernstein does bring out shows that working with a financial advisor, whether it be with us or someone else is usually very advantageous to one in putting away for a good retirement and developing a good strategy, which is very important to look at. I don’t know if that’s something that you’ve heard, gentlemen, but a lot of times when I’ve worked with people who have tried it on their own, a lot of times when they’ve worked with me, they start to like that dialog that they can have with me on the phone. They like going over ideas. They learn new concepts that they would have never really explored had they not come to us and asked for advice.

Gary:  I’ll jump in here, Dave. Before I do business with someone, there’s really three components. Do you know them? Do you like them? Do you trust them? Trust is the biggest component, I think, but I like to meet people. I would encourage the listeners, come meet us and see if it’s a fit. Go meet your advisor. You should treat it as an interview. When you’re sitting in front of a financial advisor, you need to interview that advisor, because guess what, I interview my clients. I am asking them questions, it’s over coffee or something. Having coffee, a doughnut, something along those lines and visiting with them. Now, Dave, I don’t really like doughnuts, but…I saw him looking at me.

David:  [laughs]

Gary:  We sit down and we talk, but I’m interviewing them. I’m asking them questions because I want to see if we can help them or not. Are they realistic goals? Do they even have any goals? You need to have that face‑to‑face meeting.

Bryan:  On that note, one thing I want to reiterate, a team approach to investing seems, from the data that Bernstein shows, is the best way to have successful results with your portfolio. We are going to have to break away for a few minutes here. Please, stay tuned. Please, feel free to visit our web page at riggwealthmanagement.com. That’s Rigg with two g’s, wealthmanagement.com. Also, feel free to give us a call for a no‑cost, complimentary session to go over your portfolio at 972‑383‑1210. Again, that’s 972‑383‑1210. Thank you so much, and we’ll be back with you shortly.

SEGMENT 4 – Transcript

Bryan:  Welcome back, ladies and gentlemen. You’re with Rigg Wealth Management. I’m here with my two partners, David Rigg and Gary Bilyeu. My name is Bryan Rigg. Thank you for tuning in. One thing we talked about in the previous segment is the importance of just getting a plan. A lot of people think they’re going to sell their house later, and that’ll be their retirement. A lot of people put off a plan, because they’re embarrassed they haven’t put enough assets away. What we encourage everyone to do is get a plan together, and then once you get a plan up and running, a lot of times, it is very important to stay the course. As we say in the Marine Corps sometimes, “Cool heads prevail when the bullets start flying.”

Staying the course is having a plan, understanding financial history as best you can, and realize that according to the data that we have and according to this author that I’ve been mentioning a lot today, William Bernstein, is that if you leave your money in a good, diversified plan and get exposure to the market, you can return between eight and nine percent per year.

How does that look in a portfolio when you’re looking over several decades? He brings out an analogy that if you get that return that he sees from historical data of eight to nine percent return per year, and if you put it away for 30 years, whatever amount you can put away today, it will grow at a 10 times rate within 30 years. By way of illustration, let’s say you’ve been working for several years. You have $100,000 that you have to invest, and we sit down, and we look at how much money you’re earning right now. Let’s say, it’s $40,000, $50,000 a year. To replace that in today’s interest rates, you need about $1.5 million to replace that salary.

A lot of people will be thinking to themselves, if they only have $100,000, “Man, I’m so far away from $1 million or $1.5 million.” This is what we try to do at Rigg Wealth Management, is look at the historical data, put a plan together, have realistic expectations, and according to this research, if you put $100,000 away, in 30 years, that’d be $1 million. You’re well on your way, if you don’t put anything else away for retirement, of getting about 60, 70 percent the way there.

Of course, if somebody starts out with $100,000, we want them to continue on contributing every year, always saving, always looking to the future of having more, not less, than what you need. That is very important for people to look at once they get a plan in place, to understand what historical data can lead us to conclude that will help us obtain realistic goals and keep to the course. A lot of times people, they’ll stay in their portfolio when things are doing very well, but when things start getting volatile, and when they start going down in that, in their portfolios, they get very nervous, and this is not me speaking, but this is Bernstein.

He says, “When you look at the returns you can get in the stock market, if you’re diversified,” and so on. He says, “People ‘with half a brain’ will not get worried about volatility, because they will understand that is part of the reality of getting the returns you need by taking on the risk that is necessary to get the returns to reach those retirement goals.” That’s one thing I want to reiterate to people, that once you get a plan in place, and you understand what your portfolio’s capable of, you need to weather the storms and understand that history in many respects is on your side.

Gary:  Bryan, can I jump in real quick?

Bryan:  Yeah, please, Gary.

Gary:  You said those that come to us with $100,000. I want to talk to those listeners that are trying to go from $0 to $100,000. You said, “Get a plan in place,” so that might be their plan is, “How do I get from $0 to $100,000, and get that working?” We deal with those clients as well. In fact, those are some of our best clients. They’re eager to learn, they’re focused on their retirement, and many of them are very, very young. Those are some of our best clients.

David Rigg:  I think one of the best things that we provide for people is a very simple structure. “Here’s your plan. This is where you’re trying to get to. This is how we can get you to that goal.” When you set up structure, a lot of times, people don’t invest, because they just haven’t gotten around to it.

Once we get a plan in place, and we can do things that are almost transparent. The old adage of “pay yourself first,” we can set up a bank draft. We can set up a direct deposit or something of that nature, to where they are automatically starting to get into the game. That is one of the best benefits of coming to us that we can offer.

Bryan:  Yes, I agree with you totally, David. One thing that I think clients need to also have in mind is the reality of inflation. Usually, historically, people put inflation at around three percent. The way that you gauge this at any given day, you look at the Consumer Price Index, and that tells you, basically, what inflation is. According to Bernstein, he says, “Inflation historically has been around 4.3 percent.” What is the takeaway from that? That means that if your portfolio is not on average trying to get at least three or four percent, you’re losing money every year.

A lot of people say, “I’m just going to put money in my bank account, and I don’t care if there’s no interest rate on it.” One way you want to be thinking about that with inflation is that if you do that, every year, your money is losing around three or four percent in what’s called purchasing value.

The value of your money is not as strong as it is today as it was yesterday, so you’ve got to keep inflation in mind when you’re investing. That’s one thing people don’t realize when they’re building out portfolios, and it’s very important to take that into consideration as well. What do you think, Gary?

Gary:  Yeah, and one side note. That made me think of something, because we get several clients that come in, and they want the safety of having it in a bank, and there’s nothing wrong with that. When we start those discussions with inflation, and they tell us that they have sizable amounts of money in the bank that’s drawing interest, not only are we talking about inflation, but we’re also talking about the taxes they’re paying on that. Now, that actually sets them back a little bit further. I understand. I have money in bank. I use banks, and that’s a part of the overall portfolio. I put my arms around the entire investment, and that’s we’re calling the portfolio. We have to sit down and look at the whole picture ‑‑ the whole picture ‑‑ and that’s what we do. We put the time and effort in to sit down with our clients, to understand the bigger picture, and show them how we can help if we can. We try to help everyone that comes in the door.

Bryan:  In looking at tax strategies, a lot of times, people don’t realize. They’ll say, “Hey, if I’m getting three or four percent in the bank,” ‑‑ let’s say the Fed raises rates, and we go back to rates that were back in 2006, 2007, and 2008. On that interest that you would get on the bank, you’re going to pay ordinary income. If you’re at 30 percent, that’s 30 percent tax hit that you’re going to be hit on that income.

Another way of looking at strategies here is looking at dividends, and then looking at long‑term growth in stock holdings. If you go to long‑term growth on a lot of your stock holdings, and if you get good dividends on stocks, you could bring that tax burden down to around 20 percent. A lot of people don’t realize that. If you’re getting four percent, five percent dividend versus four or five percent ordinary income, even there is an advantage to get a portfolio of equities versus keeping it in the bank. We know we’re far away right now from having interest rates at four or five percent. Really, to get a portfolio that’s going to protect you against inflation, you really have to get exposure to dividends, ETFs, and equities, because putting it in CDs, cash, and savings accounts is not doing it for people. That’s something, I think, is very important for everyone to look at.

Gary:  We’ve thrown a lot of numbers out there. Some of our listeners may be driving, and their head spinning a little bit. That’s why we encourage you to come in and sit down where we can talk about these things in a one‑on‑one session.

Bryan:  Absolutely, Gary. I encourage everyone, please, don’t feel bad if you don’t have a plan. We love working with people and developing a plan. I love a quote that I got when I was studying over in Germany. I believe it was Schiller who said ‑‑ a famous German author. He said, “To know and not to do is not to know. Knowledge without action is futile and stillborn.” If you know you need to do something, then get busy, give us a call, give another financial advisor a call, get a plan in place, and start taking care of yourself. If you’re not for yourself, who is? Please feel free to call us at 972‑383‑1210. Again, that’s 972‑383‑1210. Also, visit our web page at riggwealthmanagement.com. That’s rigg with two g’s, riggwealthmanagement.com.

We appreciate you listening. We are here every Sunday from 1:00 to 2:00 on KLIF. We hope you continue to stay tuned every week. Hopefully, we’ll meet you here soon.