Segment 1 (Show Open):
Good afternoon everyone and welcome to Coasting in Retirement! I am your host, Josh Null, and I’m joined by my co-host, Michelle Lee Melton. Michelle, how are you doing? It’s great to be back in studio with you, we are recording this episode in Coastal College’s podcast studio, located in beautiful downtown Fairhope and just up the road from our Gulf Coast Financial Advisor’s office.
Listeners: Michelle and I are here today to discuss financial topics relevant to those in or near retirement living their best life along our part of the coast. If you’re just tuning in to our show, welcome, we’ve got a great show for you today and here’s what you’re signing up for: Our first segment will be a discussion about our main topic – hint, it involved diamonds - then at about 15 minutes past the hour we’ll dive into recent headlines with our “Michelle with the News of the Week” segment, THEN at about 30 minutes in we’ll get to poke a little fun at my big mouth with our “Where Josh Nailed It; Where Josh was a Little Off” segment. Finally, if we still have any time left, we will wrap up the show with either our “Living the Gulf Coast Life” segment where Michelle and I get to talk about all of the cool stuff we get to do down here in Lower Alabama, or on special occasions, a local guest interview. We pack a lot in, so buckle up and be ready to be both entertained and enlightened!
For those new to the show, a quick background on me. Again, my name is Josh Null, and I am a fee-based fiduciary financial advisor, I hold my FINRA Series 65 securities license and I am the owner of Gulf Coast Financial Advisors, an independent investment management and financial planning firm based out of Fairhope, Alabama. You can find more information on me and Gulf Coast Financial Advisors by visiting our website gulfcoastfa.com or feel free to give us a call at 251-327-2124. We will repeat our contact info several times throughout the show!
Let’s get to our main topic. Our episode today is titled “diamonds are a girl’s best friend, but not an investors – 5 investments to avoid in retirement”. Michelle, let me ask you a 2 part question: are you a fan of diamonds, and if so, would you ever buy one in hopes of it appreciating in value enough that you could sell it for a good profit? Right. Diamonds are kind of like new cars, they depreciate the second you take them off the lot. So this show isn’t about just picking on diamonds, because like most of you all out there, Michelle and I both appreciate diamonds. But they are not a good investment, and neither are the 5 things we are going to list. In no particular order, there are the 5 investments you need to avoid in retirement:
- Penny stocks / speculative stocks / meme stocks, or anything involving Fear of Missing Out (FOMO)
- Becoming an entrepreneur when you’ve never been one, or starting a new business in an industry you don’t have experience in (blue berry farm and week farm examples). ESPECIALLY if it’s a capital intensive or debt laden venture, and involves unknown partners.
- Too much of your portfolio or cash flow going into whole life insurance
- Buying the wrong kind of annuity
So let’s briefly discuss each of these points in more detail:
We recently did a comprehensive financial plan proposal for a business owner looking to transition to retirement in his early 60’s. This plan included both a lot of specialized software offerings but also the expertise and experience of our team at GCFA, so I wanted to share it with you all. If you’re interested in having a conversation about working thru a similar plan, be sure to give us at call at 251-327-2124 or you can email me at firstname.lastname@example.org. Here’s the basics:
- A Comprehensive Financial Plan utilizing EMoney Financial Planning software for assembly, presentation, and ongoing adjustments, including a potential client central “hub” for the Pierce’s to keep evergreen digital copies of their most important documents.
- Basic Tax Planning services utilizing Will Steih’s CPA background and Holistiplan software, including a review of existing tax returns to identify any potential tax savings and available phase-ins and phase-outs to make forward-looking tax recommendations. Note: this does not include tax preparation services.
- A Risk Tolerance analysis utilizing Riskalyze software and Josh Null’s investment experience to conduct a “MRI” of the Pierce’s current investment holdings and determine how those positions match up with the client’s actual investment goals and time horizon.
- A Customized Income Plan utilizing RetireUp planning software that uses portfolio data and actuarial modeling to provide a solutions-based, visual road map for the Pierce’s income planning.
The strategies we use are designed in part to help you with income production as well as inflation and longevity risks. Not only are we trying to match your risk tolerance with your investment holdings, we want to help make sure you don’t end up outliving your retirement savings. Again, f you’re interested in having that conversation, give us a call at 251-333-5151, or find us at gulfcoastfa.com. That’s gulfcoastfa.com.
Alright folks, coming up next - There’s always a lot going on in the world! Particularly the world of finance- this past week was certainly an example of big news in finance! Every week Michelle and I scour the interwebs for helpful financial articles related to our topic of the day, especially articles that pertain to those in or near retirement. Join us after the break to hear Michelle and I discuss this week’s relevant headlines in our “Michelle with the News of the Week” segment. Stay tuned!
Segment 2 - Michelle with the News of the Week:
Josh: “Welcome back to Coasting in Retirement, your host Josh Null here! As we discussed before the break, every week Michelle and I scour the interwebs for helpful financial articles related to our topic of the day, especially articles that pertain to those in or near retirement. Michelle and I are going to help you all understand and decipher the deeper meaning of those headlines, or at the very least, provide context. So with out further adieu, here’s “Michelle with the news of the week”!:
1. Michelle: Alright Josh, let’s start with a recent article from Forbes titled “Should You Invest in Penny Stocks”. So first, I guess when I hear the phrase “penny stocks” I assumed that these stocks were worth a penny each, but that’s not true! It turns out that penny stocks refer to publicly traded stocks that trade for less than $5 per share. Second, the article talks about how the movie “The Wolf of Wall Street” made his fortune by fraudulently pushing penny stocks, which even at 5 bucks per share, how could there have been enough money at stake for people to lose so much money? I guess tell us more about why retirees should avoid penny stocks.
2. Michelle: Our next article comes from a source we often go to, Kiplinger. No, not Kip Winger, that’s coming up next. Anyway, the article is titled “Warning: Your Business Is Not a Retirement Fund!”. First, this article title seems a little aggressive, I’m surprised they didn’t add 2-3 exclamation points. Second, the article claims that 80% of businesses in the US will never sell. In your experience Josh is this accurate? Or can business owners treat their business as a retirement fund?
Josh: Talk about how most businesses are small sole proprietors or S corps and really heavy on the founder. How biz owners should start transitioning assets from the biz balance sheet to personal, and how they need to focus on cash flow as much as asset value. Also weave this into the point of starting a new business in retirement, how the end valuation may not be what you think it will be, focus more on low capital ventures such as consulting. Be sure to talk about tax planning on how you can help a biz owner make the transition.
3. Michelle: We’ll Josh, I’ve got some news that I think it’s going to make your little hair metal head explode: According to site Grande Rock, 80’s hair metal band Winger is releasing a new studio album titled “Seven” THIS WEEK! Oh my buddha just how excited are you?
Josh: Be quick with this one, it’s silly, inform the listeners about how Winger is a running joke because of Kiplinger, and Michelle and I being 80’s kids, and pick on Kip Winger some b/c he’s tried so hard to walk back some of his ridiculous songs and behavior from the 80’s, esp She’s Only 17 song.
4. Michelle: Let’s pivot to one of your 5 investments to avoid in retirement, whole life insurance. Our old friends at Motley Fool have another article I would consider having a somewhat aggressive title, “Here’s Why You Should Avoid Whole Life Insurance Like the Plague”. Whoa. But as I dug into this article, it actually isn’t that one-sided against whole life insurance, and I think it did a decent job describing the difference between term and whole life, as well as how fees can eat into your whole life cash value. Take us a little deeper Josh into why both you and the Motley Fools have some trepidation about using this type of product in retirement.
Josh: Discuss whole life vs index life, talk about fees and expenses, mutual vs non-mutual, and the problem with some sales practices getting in trouble because they shovel such a high percentage of people’s cash flow into the policies.
5. Michelle: Alright Josh, I decided to dig into some new source sites for our last headline and I think I found one that matches up with one your tips to avoid in retirement, buying the wrong annuity. Newsweek has a recent article titled “Top Five Mistakes To Avoid When Buying an Annuity”. I’ll be honest, I didn’t know that Newsweek was still a thing, those listeners younger than you and I Josh probably didn’t experience going to a dentist’s or doctor’s office and seeing multiple copies of “Time” and “Newsweek” magazines. Nonetheless, in this article Newsweek makes a couple of points that I’ve heard you stress before, such as using an independent advisor and how fixed index annuities have stolen most of the thunder of variable annuities. I feel like we do a good job on this show of explaining all of the different types of annuities, so how does this article tie into your opinion on annuities?
Josh: Michelle, great job as always with the headlines, these are all important pieces of information that impacts those in or near retirement! Listeners – if you have questions around the topics in our headlines of the week, or questions related to your investment strategy or financial plan, why don’t you give us a call at 251-327-2124 to have a conversation or set up an appointment, or you can reach out to use via our contact page on our website gulfcoastfa.com.
Alright folks, coming up after the break, we get to have a little fun and I’ll probably get picked on a little bit by my co-host, Michelle in our next segment. We call it “Where Josh nailed it, where Josh was a little off”. As someone that has always had strong opinions, and often public opinions, I think it’s important to hold myself accountable for the things I’ve said that didn’t quite stick the landing. But to be fair we also discuss where my often-skeptical viewpoints proved to be pretty accurate. Remember I am originally from the Show Me State of Missouri, so means, don’t tell me, show me! Stay tuned!
Segment 3 - Where Josh nailed it, where Josh was a little off:
Welcome back! Your host Josh Null here, along side co-host Michelle. If you know me in real life then you know that I tend to have strong opinions, and as someone that has had a radio show and a couple of podcasts over the years, I’ve often espoused those opinions publicly. Sometimes I’ve been proven right with time, and sometimes, we’ll, let’s just say I didn’t stick the landing. So each week Michelle and I get to poke a little fun at the thoughts or opinions I’ve put out there that weren’t 100% on point. BUT, to be fair, sometimes I am RIGHT, so I also get to point at to some of my thoughts and opinions that were pretty accurate. We call this segment “Where Josh nailed it, and where Josh was a little off”. Alright Michelle, what’s first?
1. Michelle: Alright Josh, back in March we discussed the failure of Silicon Valley Bank, known as SVB. At the time you felt that the banking crisis was going to end swiftly and that it was unlikely we would have another bank collapse. Well, guess what? We just had the new 2nd largest bank failure ever this week with the collapse of First Republic. I’m pretty sure I said that I thought more banks were in trouble, so kudo’s to me because I nailed it, but how about you? Nail it or little off?
Josh: Off. Talk about how the bank failures are different thou – First Republic apparently was a pioneer in jumbo home loans to wealthy clients.
2. Michelle: Josh you said that you felt that the Fed had painted itself into a corner with it’s interest rate increases, that if it DIDN’T raise rates at least a little it would signal to the market that it was deeply concerned about the economy, but by most measures inflation is cooling off and more Fed action is questionable. The Fed just announced another ¼ point increase today which will take the Fed Funds Rate to around 5% in the first time since 2007, so did you nail it with your opinion about interest rates, or were you a little off?
Josh: Nailed it. Talk about how the Fed signaled they are worried about more bank failures, which they should be, they waited too long to raise rates then raised them too quickly. This latest increase should be it, and if it’s not…then we’ve got a real problem.
3. Michelle: Josh you’ve stated that you felt the best case for investors in the first and second quarters of 2023 was a “scratch and claw” battle to see some gains in the portfolio, and the worst case was that retirees would be looking at a 2008 type of scenario where their investment portfolio dipped significantly just as they told their employer to “take this job and shove it.”. So far 2023 has shown some gains in some parts of the industry, and there has not been a deep sell-off, so did you nail it or where you a little off with this opinion? Sequience of return risk
Josh: Both. Talk about how the gains have been super concentrated in certain areas, not just saying tech is accurate, but certain tech companies like Apple, Intel and Microsoft. Talk about how those companies either jumped ahead with artificial intelligence or are the direct beneficiary of the IRA Act (Inflation Reduction Act).
4. Michelle: Alright Josh, you stated that the car industry is trying to push buyers towards leasing, in part so that they can start charging subscription services for certain features. Now that rates are rising and new car sales are slowing, do you still hold this opinion, and if so, have you nailed it or are you a little off?
Josh: So Michelle, a lot of the subscription for services talk centers around EV cars, I believe because Tesla made it normal for cars to receive improvements over the air plus the EVs tend to have the newest tech. And what has happened in the EV industry. Josh talk about how the IRA puts a $7500 credit towards the purchase of an EV with restrictions about where the vehicle parts were made, where the vehicle was assembled, the battery source, but guess what has way less restrictions for the $7500? That’s right – leased vehicles. Plus you can apply the credit immediately towards your lease payment, so look for all kinds of lease deals coming our way…along with subscription services. Nailed i.t
5. Michelle: Last one Josh. In our show opening we talked about 5 investments that retirees should steer clear of, with one of those investments being cryptocurrency. I think we try to be fair on this show regarding crypto and Bitcoin and whatnot, but I still think it’s witchcraft and you keep asking for someone to show you a product or service that has been improved by crypto. Well just in the news today we’re several bad things related to crypto, including the seizure of 9 exchanges, a 30% mining tax proposal by President Biden and the United Kingdom banned cold calls selling crypto, so do your crypto skepticism has been on point or have you been a little harsh?
Josh: Talk about how even though Bitcoin has risen in value this year, it’s still the wild wild west with crypto, and that folks in retirement should still clear until the industry calms down and actually produces valid products and services. Also mention that you think the AI thing has become the new shiny toy and probably stolen crypto’s thunder anyway.
Well listeners, once again I didn’t totally nail it with all of my opinions, but I had valid reasons for being a little off. And I’m learning to be more open minded! Impressive maturity, one would say, right Michelle? Now, to our listeners that have more questions bonds, investments, inflation, interest rates, annuities, etc., we invite you to reach out to us. Call us anytime at 251-327-2124 to make an appointment or request more information.
Folks, that’s it for us this week here at Coasting in Retirement! I want to give a huge thank you to my lovely co-host, Michelle Lee Melton, a thank you to our awesome radio station 106.5, many thanks to the provider of our show music, local band Sloth Racer, and as always my sincere appreciation for all of your out there that have been listening and joining us on this journey. We would love to be a part of your journey as well. Until we talk again next Sunday, have a wonderful and productive week. This has been Coasting in Retirement with Josh Null!
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