How to Retire with Confidence: Insights from Morningstar’s Christine Benz

Episode 43: Audio automatically transcribed by Sonix

Episode 43: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to Take Pride in Retirement, the podcast dedicated to helping members of the LGBTQ+ community protect and grow their hard earned money. Get set for a show full of education and insights with your host and advisor, Matt McClure. We recognize every family is unique. The goal of the show is to help you achieve financial freedom so you and your loved ones can have the retirement you've always dreamed of, a retirement you can take pride in, no matter who you are, where you're from, or who you love. So now let's start the show. Here's Matt McClure.

Speaker1:
Hello, and welcome to another edition of Take Pride in Retirement. Matt McClure here with you, your advisor, your hosts, your good buddy, your pal and your confidant. I really do appreciate your time, as always. I always say it, but I really, really do mean it. And that's why it bears repeating. To quote Bianca Del Rio. But I really do appreciate your time, as always, and I think that we have so much great in store for this particular edition of the show. I have such a great guest scheduled to join me in just a bit and she will. Her name is Christine Benz. She is with Morningstar, which just does so much wonderful financial analysis, and she's also written some about some research that they've done in the LGBTQ plus community. So I want to talk to her about that. I also want to talk to her about her book, which is simply called How to Retire. And there's a lot of great stuff in there. She talks to a lot of wonderful experts in the process of compiling that book, putting that book together. So that is going to be something that is wonderful as well. Got a lot to get to here today on the show. Wanted to remind you as well that you can always go to the website. Take Pride in retirement.com. That's take Pride in retirement.com. And there you'll find all kinds of things. You will find a welcome video from me. You'll learn a little bit more about me and why I do what I do and why I always say that, you know, no matter who you are, where you come from, who you love, how you identify, or how much money you have, you deserve a retirement you can take pride in, right? So you can see all the back episodes of the show, all of the different episodes there that we've done, the podcast audio versions, all of that.

Speaker1:
You can subscribe to the podcast wherever you get your podcasts, and you can also reach out to schedule an appointment. I'll talk more about that coming up in just a bit. If you prefer to pick up the phone and actually use it as a phone to give me a call, I'd appreciate that as well. You can always feel free to do that. 46 921185524692. 11 is that number. And of course you can get us all over the place on the socials as well. I'm talking about, you know, Facebook, Instagram, YouTube also also on threads, but on YouTube you can see a lot of the video highlights of the shows, some partial interviews, some full interviews that I've done with guests in the past and in the present. Because this interview that I'm going to be sharing with you here momentarily from Christine Benz, that is going to be posted on YouTube in its entirety as well, and you'll just get to see that and hopefully enjoy all of her insights and see our conversation and our interaction as well.

Speaker1:
So a lot of great stuff there. And that is that that's my housekeeping stuff. All right. As we start off here. And I also got to tell you, you know, I would really love to meet with you and discuss how I can help improve your individual situation. You know, we talk a lot on the show about different financial concepts, different strategies, kind of in general. Right. This is really for educational purposes though. And I can't give you. Fiduciary advice. And what that means is in your best interest. Right. That's what I'm bound to do. That's what I do is give you advice in your best interest when I meet with you and go over your financial situation with the fine tooth comb, get to know you and your goals, your aspirations and all of that and your particular, you know, family dynamic, your situation, and then come up with a plan that I believe is best for you and it's going to be the best for you going forward into your retirement years. That's what I do on a daily basis, and I would love to do that. You can of course, contact me. Make an appointment directly on the website. Again, it's take Pride in retirement.com or call that number one more time. It's 855246 9211. Of course now there's a lot of market volatility that's been kind of rearing its ugly head. That's going to be the main subject of today's show. And what my big conversation is going to really mainly focus on, with Christine Benz coming up a little bit in just a few minutes, really.

Speaker1:
And that's just a great conversation. She has a lot of insights to share and some specific insights as well for LGBTQ plus folks and kind of things that we need to focus on and be aware of during these volatile and uncertain times that we're experiencing. And also, I'm going to tell you a little bit later on after my interview with Christine Benz, just kind of a little extra tidbit on today's show about how you can beat the bank CD rates. You know, inflation has caused interest rates in response to be raised by the Federal Reserve over the last couple of years. Well, now those interest rates are starting to come down. So if you have, you know, gotten maybe a bank CD or if you've looked into getting a bank CD, the chances are those interest rates are not as high as they were just a few months back. And then chances are, as well, they're not as high as some other types of products out there that you can look at that offer a lot of the same benefits as a bank CD, but potentially higher growth. And I'll talk to you about that coming up a little bit later on. How's that for a teaser, huh? First of all, though, let's get into it. Some inspiration for our conversations this week, and we'll do that with our quote of the week.

Speaker3:
And now for some financial wisdom, it's time for the quote of the week.

Speaker1:
This week's quote comes from an author named Will Robinson, who is authored and co-authored several books. And no, Not Danger Will Robinson, Danger Not that Will Robinson, an actual Will Robinson, who was an author and this quote says, financial fitness is not a pipe dream or a state of mind. It's a reality. If you're willing to pursue it and embrace it. Financial fitness, you've got to pursue it. You've got to embrace it. It's like, you know, if you have a goal of wanting to be a bodybuilder that says something that has to do with fitness, right? Physical fitness. But you have to pursue that. You have to embrace it. You can't just be like, oh, well, maybe it'll happen. And then, you know, try and get up on stage and compete in a bodybuilding competition. One day is not going to go so well. You've got to prepare right. And so you've got to prepare financially as well for retirement. No matter who you are, where you come from, who you love, how you identify, how much money you have, you can have that retirement that you can take pride in.

Speaker1:
That's what the show is all about. And that's what I hope to show you throughout the show. And then I hope to show you in person as well. You know, we can meet via zoom. We can meet in my office in Midtown Atlanta. If you happen to be in the metro Atlanta area, I would love to meet with you in person. And that's really just what it's all about, is I just want to be of service and of help to you and help you have a better financial situation going forward than you would otherwise. All right. That really is kind of it in a nutshell here. And someone else who is really focused on helping folks improve their financial situation is Christine Benz. She is with Morningstar. She is the director of personal finance there. She's also the author of How to Retire 20 lessons for a happy, Successful and Wealthy Retirement. And I am so excited to welcome Christine in. Now, thank you so much. I'm really excited for this conversation and appreciate your time.

Speaker4:
Man, it's so nice to see you. Thank you for having me on.

Speaker1:
I really do appreciate it very, very much. And and, you know, just for our listeners, slash viewers here, if they, you know, might not have seen you or heard you before, um, kind of introduce yourself, give a quick background for our listeners and viewers, if you will.

Speaker4:
Sure. So I've been at Morningstar, which is an investment research firm, for 30 plus years now, which makes me kind of a dinosaur. Most people do not stick around with their employers that long, but I've had a number of different, interesting roles at Morningstar over the years. I had been a mutual fund analyst earlier in my career and eventually headed up our team of US fund analysts. But along the way, I got more interested in matters of related to financial planning, portfolio construction, things that we weren't really talking about with our great individual fund reports. And so I went through the Certified Financial Planner program in the run up to my current job, where I focus on personal finance and retirement planning, and I love that. It's a really broad area. So I'm always learning, which is important to me, and I love that I get to share what I'm learning with the people who the who we're writing for and producing videos for, for Morningstar.com.

Speaker1:
That's wonderful. So a wealth of experience, of course, that you and interest that you bring to to the table and to this discussion especially and I wanted to talk to you specifically because of not only the work that that you do every day, but right now I feel like is a great time to have you on because we've seen a lot of volatility. We've seen a lot of uncertainty in the markets, and I know that working with my own clients, you know, I've had calls and emails being like, okay, should I be freaking out right now? What should we do? Is there anything we need to change? What are we. You know, just all the the typical questions that might come up during a time like this with everything, with the new administration coming in and a lot of uncertainty about things like tariffs and all of that, and how all of that and all the different layoffs in the federal government, how that is going to impact things in the economy. Um, talk about, if you will, with all that market volatility kind of rearing, its its ugly head here, how retirees and and pre-retirees can keep kind of a level head and just sort of avoid those knee jerk reactions that might be the, you know, just just plain human nature, you know, that we want to kind of things get unsettled and we want to kind of freak out and make moves and feel like we have to do something right. So how can people stay level headed at a time like this?

Speaker4:
Great Vanguard founder Jack Bogle, I think, said, don't just do something. Stand there. And I think that's often good advice in volatile conditions like like the present, um, where people might have that urge to get in and tinker. I do think it's a valuable juncture to revisit a portfolio's asset allocation, how you are apportioning your assets across safer, uh, more reliable and stable assets relative to those that have more volatility associated with them, but also better long term growth prospects. And it really does come back to balance, um, where you're looking for a mixture of safer investments in those that have more growth potential. And kind of your ratio of safer to growthier really does depend on your life stage and your proximity to needing your money. So for people who are, say, in their 20s 30s 40s, I would say to the extent that you could build a portfolio that is more heavily tilted toward growthy assets and just kind of tune it out, besides having your kind of emergency fund to help meet any unanticipated expenses, that's a really good strategy for people who are, I would say sub age 50. But once you get over age 50, I think you do need to be much more attentive to having balance in that portfolio where you have de-risked the portfolio a little bit. And that's been a tough sell because we have had fairly strong returns from the equity markets, especially US stocks. It's been been tough to pry people's hands off of those appreciated equity assets. But at this juncture, given that stocks have been so good for so long, Inevitably we will have some reversion in investors, especially those who are getting close to needing their money for retirement. Will be glad that they went through that de-risking process.

Speaker1:
Yeah, absolutely. And I totally agree. It's it's very super important that you, you know, just step back, take a look at what you have and make sure that you are properly allocated, especially at a time, as you say, like this where we have that, you know, sort of juncture of market volatility right now. And the fact that, yeah, the market trajectory has been up and up and up and up, you know, really ever since I guess the biggest, most recent downturn was back in 2020 at the beginning of Covid, where the market just, you know, the bottom fell out but very quickly recovered and has sort of continued that upward trajectory since. So yeah, it's um, it's a weird time psychologically, I feel like for people because it's, it's, you know, well, the markets are doing well. Why would I want to, you know, sell anything, I think. Right. It's great. But, yeah, it's, um, it's something that that you have to sort of fight against. So maybe what are some maybe practical steps that people can take, um, to de-risk some right now, especially given the fact that, you know, you'll this is sort of this attitude of you can pry the my, my securities out of my cold, dead hands.

Speaker4:
Right. Right. So for that sub 50 sub age 50 cohort, I would focus my intention, my attentions on globally diversifying that equity portfolio. So I would still hang out with a fairly stock heavy portfolio. I don't know how you advise clients, Matt, but that's where I would come down. If you're under age 50, I would still stick with a stock heavy portfolio, but I would just make sure that I have a healthy complement of non US stocks. So for people who haven't been paying close attention to this, non US stocks have really quite dramatically underperformed us for several years running. And so at this point now we have much more attractive valuations overseas. Dividend yields are higher overseas. And you also get a different sector mix overseas than you do with a US stock heavy portfolio. So the US market is, as many people know, has been dominated by those big cap tech names. You still definitely want to make sure you are holding space for them in your portfolio, but they've probably taken over your portfolio unless you've taken steps to de-risk. So by globally diversifying, you are getting exposure to sectors that are pretty underrepresented in the US today, things like banking and basic materials. Energy is is a smaller share of the US market than it once was. So that's what I would focus on for the the younger investors just making sure that I'm globally diversified. And we have this style box at Morningstar that kind of depicts the allocations of the the global market. And so you want to look for some kind of a dispersion of your holdings across that style box. You don't want to have all of your equity exposure clustered in that US equity box of the style of US equity square of the style box.

Speaker4:
That would be the focus I would be I would be using for people who are sub age 50. And then if you're 50 and above, de-risking should also include that check on how global your equity portfolio is. But you also want to look at building out your portfolio's exposure to safer assets. So if you're, say, 50 or just above 50, you don't want to go crazy holding cash. You want to hold a little bit of cash, but you do want to be thinking about putting some bonds in place in your portfolio. And there I would look for a well-diversified bond fund to do the job, or maybe a couple of different bond funds, rather than trying to get too specific in terms of my buying individual bonds, I would just buy a good quality bond fund or ETF or maybe a few different bond funds. So that would be the the job for people who are getting close to retirement. And then for people who are in retirement, it's very much my bias that they have something like 7 to 10 years worth of spending needs. So the amount that they'll pull from their portfolio. Hold that in a combination of cash, short term bonds and intermediate term bonds, and generally keep the complexion of that bond portfolio pretty high quality. But the idea there with that 7 to 10 year runway is that you're building yourself a component of securities that if we have a really long bear market for stocks, those are the assets that you would pull your living expenses from. And that's kind of the basic idea behind a bucket strategy, which is something that I talk a lot about in my work.

Speaker1:
Yeah. Absolutely. Right. And yeah, no, and I agree with, with so much of what you just said because it's like especially the whole, you know, the three rules of investing diversify, diversify, diversify. You know, it's so important and not just to be diversified in US equities, not just to be diversified in different, you know, companies not just to be diversified in things like that, but make sure you're diversified different asset classes, you're diversified in different markets and different types of investments as well. I often encourage my clients and again, all of this depends on your individual situation. But I often encourage clients if they are hesitant, maybe to invest in bonds because they may seen that bonds have been underperforming the last couple of years. I will instead encourage them to go to like an annuity or something like that, where they can get still that safety that they need inside their portfolio, but then they could also get some market growth as well. If it's a fixed indexed annuity, the potential for that market growth. So there are different, you know, things to look at for the individual. And I think so much of it too. And it's funny because I was I was telling you just before we started recording our conversation that I just had a client meeting prior to, to us getting together here. And it's funny because he was asking me to be his psychologist because he was he was like, do you do I have to pay extra for that? And I was like, no, it's fine. You know, I do what I can, but, you know, there's a certain, you know, sort of behavioral, psychological, um, determination to all of these different moves that people could probably make. And I want to do more studying into that. There's a certification out there, I believe, a behavioral finance certification that I'm so interested in because I find this so fascinating. Like what psychological or behavioral finance tips do you have for people who sort of feel compelled to do something when the markets are choppy instead of just, you know, turning or tuning out the noise?

Speaker4:
Yeah. And I think I've heard from advisor friends that that's really not a good answer for clients, you know, that we're just going to do nothing, that sometimes you do have to do something. And so, you know, I would I would say maybe there are a couple of constructive activities that you could look at instead. So I'm a big believer in people streamlining their investment portfolios. If you've been working for a while, you probably have multiple IRAs with various firms. Things are more complicated than they need to be. Can you put your attention on that, like figuring out, okay, how about shedding some of these accounts? Consolidating with a single firm or a couple of firms. So that's a good sort of way to burn nervous energy I would say conduct a cost audit on the holdings in your portfolio where you're looking at, okay, am I overpaying for this fairly generic type of investment? That's another activity that you could engage in to maybe do something that's productive, but isn't going to be reactive, because I think that's what you want to be super careful about, that you're not just reacting to whatever's been going on in the headlines. We see people get themselves into some really difficult spots by being reactive. In fact, we run this annual study called Mind the Gap, where the gap is the gulf between a mutual fund's published total returns and the amount that shareholders actually earn. And what we see is that there's oftentimes a disconnect because of some of these bad timing decisions that people see. The fund or the ETF that has performed really well may glom onto it after that, and then they capitulate when the investment doesn't perform well. It's just kind of like wash, rinse, repeat with this cycle. And it's something that we can actually see and measure. And so investors do have to to be aware that this is a risk. It's something that we see that that investors do that systematically undermines their wealth.

Speaker1:
Yeah. You freak out for lack of a better term. And then, you know, you essentially if you freak out, you sell, you lock in your losses at that point. And so and then you miss the bounce back that that inevitably happens at some point thereafter. So, you know, it's not a good formula, right, for for success. And so just be, you know, I guess my mind always goes back when I'm thinking about this. My mind goes back to that. It's the old British World War II poster. Keep calm and carry on. Right. A lot of so much of it is that because you don't want to have that freak out moment and and hopefully, you know, if you're working with a trusted advisor, if you're working with someone who is a professional in this, in this field, you've got somebody to sort of talk you off the ledge from, from doing that. I think that's extremely important as well.

Speaker4:
And absolutely, you.

Speaker1:
Know, I mean, a lot of obviously this the show is called Take Pride in Retirement. It's focused on LGBTQ plus folks. And, you know, I think that there is there's also a lot of uncertainty amongst the LGBTQ plus community right now, especially the scene, you know, given changes in in Washington, you know, federal recognition of transgender folks being kind of taken away, at least in, um, you know, the federal different federal government departments and things like that. So there's uncertainty about, okay, what may be next as far as that goes or what, you know, what could be on the horizon for my particular community? Um, so from a financial planning perspective, from a financial planning standpoint, what should LGBTQ plus folks kind of be focused on, especially with things like, you know, estate planning, retirement benefits, marital issues, things like that, just from the financial side. Um, just because there is so much uncertainty. I feel like we all need a psychologist right now. Google+ community. What can we do?

Speaker4:
It's a great spot to get some advice. Um, certainly in the estate planning space, I know people will see that there are services, online services that can help. And I think I think they've gotten better, but I still think there's no substitute for some sort of human estate planning guidance to walk through what are invariably very individual decisions that you might be making. And, you know, they may be able to help, um, you know, help you find some comfort that, oh, you know, in our state, this probably isn't going to change overnight or whatever the case might be. So I do think that for people who are anxious or who simply haven't revisited their estate plans for a period of time, it really makes sense to get some guidance. And the same goes for financial planning guidance. Matt, you and I were talking before we got going, and I know this is a particular niche for your practice, and I do think that it makes a ton of sense for LGBTQ folks who, um, you know, do want that advice that is very customized to their own situation, that they look for someone who has that as a niche. So I love that idea of getting that that personalized guidance, because I know it is a time of of deep uncertainty for a lot of people.

Speaker1:
It really is. And, you know, as we always say, as I, as I always say on the show, and this is the reason that the show exists, really, is that no matter who you are or where you come from, who you love, how you identify, or how much money you have, you deserve to have a retirement you can take pride in. And that is why the show is called what it's called and why I do what I do. And so that is, I thank you for for saying that and for pointing that out, because I do think it's paramount right now, especially for folks to have that personalized guidance. And no matter if you are part of the LGBT community or not, you need personalized guidance. A lot of the time, because it's a complicated world that we live in, finances can get complicated. And so I feel like at least just having another set of eyes on your finances can really, really help you see through that fog and help you make better decisions going forward. And I know, obviously, this is one of the reasons that you do what you do as well with with folks and also with people in wider numbers, because you have written, as I say, quite a bit, and this book now is very I love the title is so simple that it tells you exactly what it is. It's how to Retire. Um, I love that. What inspired you to write the book, and how have your experiences in life that you've talked about before at Morningstar and and elsewhere, because you've been at Morningstar for 30 plus years? Um, but how has your experience at Morningstar, um, kind of affected and shaped the priorities that you like to share and the advice that you like to share with folks?

Speaker4:
Sure. So, um, I have gotten super interested in the process of retirement decumulation constructing a portfolio to support someone's cash flows through retirement. And there are a couple reasons why. One is just, um, from a research standpoint, there's way more to talk about in the realm of retirement. Decumulation so you can talk about the role of, you know, income producing products. You mentioned annuities earlier. You can talk about social security strategies, how to have a plan for long term care. It's just a really diverse set of topics that that there are to research. And then I was also attracted to the to the topic because there's so much that's suboptimal about how we do retirement decumulation in this country where if you are, um, working and you're contributing to an employer provided retirement plan, it's just sort of going along, you'll probably be defaulted into something if you make no choice. Well, when it comes to retirement, decumulation people hit their retirement years and then they're handed this pot of money and kind of told to figure it out, which is not great, right? We know that, um, people experience cognitive decline at a higher rate as they age. There's a lot that is not great about handing people their pot of money at retirement. So there's just a ton to talk about. And the idea with the book was to make each chapter a lesson in, in how to do some aspect of your retirement. And so each chapter is an interview with a thought leader in a specific area. And the nice thing about that format is that it didn't require me to be an expert in every single one of those areas. In fact, I'm kind of as a as a person. I'm kind of a jeopardy player where like, I know 1 or 2 things about a lot of things, but I don't know a lot about some of these topics, like healthcare and retirement and housing choices and retirement. So the idea with the format was that we could go deep on a broad swath of topics, both financial and non-financial.

Speaker1:
I love that I'm kind of the same way as you with. And it's it's so funny. My husband and I, every every night we watch jeopardy! And I'm right there with you. I am, you know, I'm all over the. I will know a little bit about all of the different categories really. Well, the opera not so much which opera appears a lot is opera and mythology tend to appear a lot on jeopardy! I'm not quite as good on those, but the others I'm pretty good at. But yeah, it's like I know a little bit about a lot of different things, but some of these areas, you know, you kind of need help on. And so you got that, that expert, um, you know, input on all of these different topics, um, going back just a little bit to maybe even the LGBTQ plus community. Um, is there anything in the book, maybe any chapters that sort of stick out to you that might be specifically helpful to the LGBTQ plus community that you wanted to highlight?

Speaker4:
So one through line in the book is this idea of, um, lifetime am giving. And this is something that you and I talked about in advance of, of getting rolling here. But, um, I've become a huge believer in lifetime giving to loved ones and to charity versus leaving it all at the end. Um, and it does require a little bit more calibration in terms of the retirement spending plan to give yourself permission to make those lifetime gifts, but I think it may be relevant. I do not have children. And, um, and I know some people in the LGBTQ community do have children, some do not. But to the extent that folks don't have that very strong bequest motive, where it really does matter that they either enjoy the assets that they've managed to save or that they give them away, at least in part during their lifetime. It can be a really rich part of the planning to discussion to think about, okay, what are some of these gifts that that I could potentially make potentially, potentially in my lifetime to see that money working for me during my own lifetime versus leaving them to to others after I pass away. So that that might be a topic that is is of some relevance to your audience, I would think. Matt.

Speaker1:
Yeah, I believe definitely so, because, you know, so many as we've discussed, you know, everybody's situation is different and everybody's family looks different, right? And so and I think too, that with that sort of lifetime giving in mind, you actually get to see sort of the fruits of your labor during your lifetime instead of, you know, and it's good that there's a lot to be said for. Okay, well, I know that after I'm gone, so and such organization or group or cause that I'm really passionate about will benefit from this gift that will be given to them. But actually seeing that happen, I believe, is a is a very good thing. And that sort of ties back into the whole psychological part of investing, too. It's it's like, you know, what do you want and what will be more psychologically beneficial to you and give you more satisfaction during your own lifetime. And I love that. Um, now, there are just a few more minutes here left, and I wanted to talk about some specific, maybe resources or tools that people can take advantage of. Obviously there's the book, which again is called How to Retire, which I would highly recommend because there's a lot of great stuff in there, a lot of great, you know, nuggets that people can take away to really help give them a comprehensive look at their own retirement through the lens of all of these different experts that you were able to speak with for it.

Speaker1:
And but you know what other resources Morningstar, I'm sure has a ton. You do a lot of research. There was, um, I know one report that we had mentioned before that I wanted to actually mention here as well, that's that The state of retirement income, I believe that comes out on a yearly basis. So that, you know, is a good resource to at least give people an idea of sort of the the drawdown of income, the decumulation in retirement as well. But are there any other resources that you would recommend for people who are looking to sort of stay calm during these times and, and really just at least if even in more calm times, stay on top of changes in the markets and shifts in even things like monetary policy or legislation that could affect their finances as well.

Speaker4:
Yeah, we have a lot of resources on Morningstar.com. There are people who are we have a markets team that I think provides pretty sober coverage of the market environment. Our strategy overall at Morningstar. Our approach is valuation and quality conscious. So that's kind of a bias built into almost everything that we do. Um, so I would urge people to, to check out some of the work that our economists are doing. Another little tool that I would urge people to check out is this market valuation graph that we have available. And it's something they could just type in Google, Morningstar Market Valuation Graph, and basically it shows the price to fair value of all of the companies in our global coverage universe, uh, relative to, uh, it, it shows our estimated fair value relative to what we think, um, the company should be worth. And so it's just a little bit of a temperature check on the market. I looked before we got on here, Matt. And I think the typical stock in that coverage universe was trading about 4% overvalued. So not a lot. But I think it's kind of a nice tool to just kind of get your arms around where the market is currently. This is the stock market and there will be points in time like when stocks sell off sharply. You'll see that graph react pretty quickly too. So if stocks do incur some losses well you see actually stocks are getting cheap during that period. So that's a nice incentive to to stay the course to not get too cute in terms of trying to time things around. So that's another tool that I would urge people to check out. I think it can be kind of a nice anchoring device in volatile times.

Speaker1:
Yeah. Absolutely right. You know, are you getting the value that that you're paying for, you know, and are you overpaying for something that's underperforming or, you know, that kind of thing? I think that's a that's a great, great tool to keep in mind. Well, Christine, anything else that you wanted to mention that we haven't gotten to talk about just yet that comes to mind before we wrap things up?

Speaker4:
Well, one quick thing, Matt. I work on this, um, annual white paper that is about diversification and what assets work in a portfolio and which do not. And so the short answer there, and it's a long white paper where we have a lot of graphs and a lot of detail. But the short answer is that keeping it simple in terms of your portfolios, asset class exposures goes a long way. So if you have US stocks in your portfolio, the next best asset to add for diversification is usually kind of US government bonds. Very boring, very vanilla. But I think to the extent that people have that mantra in mind, that keeping it simple when it comes to to portfolio building is, is a really good strategy.

Speaker1:
Yeah, keep it simple, I love that. Well, Christine Benz, director of personal finance at Morningstar, also author of the book How to Retire 20 lessons for a happy, Successful and Wealthy Retirement. Christine, it has been an absolute pleasure. I really thank you for your time and hope to talk to you again soon.

Speaker4:
Matt, thank you so much. It's been my honor.

Speaker1:
Such a great conversation there with Christina. Really do look forward to hopefully having her back. As I said again very soon here and some great insights there on just, you know, all of that research that they do at Morningstar. I think a lot of that is really eye opening stuff. And so feel free to just go online and Google that and check it out, because it's really just eye opening when you kind of get your brain wrapped around a lot of the things that they look into and that they study all the time. All right. So here is a segment that I don't know that we've done on the show before, but we have a nice fancy sounder for it and everything. So you know, why not.

Speaker5:
Need a higher rate of return from your safe money. Listen up. It's time to beat the bank CD rates.

Speaker1:
Yes, beating the bank CDs. That's what we're going to do right now. And I sort of, you know, teed this up at the top of the show, and I'm just going to go through it over the next few minutes here before we close out things today. But, you know, a bank CD is a certain type of, you know, investment. Really. It's a place to put your money where you're going to get some guaranteed growth over a certain amount of time, usually a few years, you know, a year to a few years, and then, you know, your money's locked up completely during that time, but you get that guaranteed growth. It goes to a bank and it gets that certain, you know, amount of guaranteed interest growth credited over that period of time. That's essentially what a bank CD is. But there's another sort of alternative investment to bank CDs. It's called a Miga. And I'm going to go through this. It's a multiyear guaranteed annuity, which I think a lot of times, you know, you look at the annuity rates and you can really beat the bank CDs. You can beat those bank CD rates by going with Amiga a lot of the time. Of course, it's not universally true. But if you look for the right Miga and you're working with a trusted advisor like myself who can go through and find and works with different companies who have different rates and all of that and different products that they offer. This is something that's potentially good for you and, you know, the interest rate opportunities that are out there because of the interest rate environment that's still high.

Speaker1:
You know, they've come down a bit, but they're the rates are still high. They really do present opportunities for investors who are maybe more conservative, more conservatively minded, want those more of those guarantees and not to take as much risk in the market. So, you know, rates for bank CDs have gone up, of course, as interest rates have risen. But I really want to encourage you to consider this alternative if you're interested in protecting and growing your safe money. Cd rates are pretty good right now in comparison to where they were a couple of years ago. But multi-year guaranteed annuities, migas, those rates are actually more favorable in most cases, and this can be particularly beneficial for those looking for higher returns without taking on too much risk. So don't settle for those low bank CD rates that you might see. You know, I've seen them. If you go online to different sources, you can see the different bank CD rates that they're offering, and especially the brick and mortar banks. The big banks tend to offer CDs that are very low in returns. Like, you know, you see these, see them sometimes it's like the return is a 0.0009 or something like that. You know, it's. And just as an example, I'm not saying that that's a concrete thing that that is out there at the moment. But just as an example, I have seen them like that before. And so you want something that is going to give you more of a return than that, because that's essentially nothing, because you're not keeping up with inflation anywhere close to even when inflation is like at normal levels, say, 2 to 3%, which is what the Federal Reserve looks at as their sort of target, right, for for healthy economic growth, they say 2 to 3% of inflation is right where it needs to be.

Speaker1:
So don't settle for those low bank CD rates because you're not keeping up with the rate of inflation. A couple of advantages to migas as well. These multi-year guaranteed annuities, they actually do allow for tax deferred growth. The earnings and gains from investing in Amiga are not subject to taxes until the funds are withdrawn, and that allows for potential greater growth as well. And you receive those guaranteed returns. You know, Mike has provided a guaranteed return on your investment no matter what the market does. And this can provide peace of mind for investors who are seeking maybe more predictable returns on their investments. So you're not investing in the market. You're getting a potentially higher rate of return than you would in a bank CD. In a lot of cases, you're still getting those guarantees. You're not subject to market losses. It's a it's a great situation for a lot of people and a great option for a lot of people. And then please understand, you know, most bank CDs have a financial reserve requirement, meaning the money that the bank has to keep on hand to cover their, you know, if their customers, their bank customers want to come and say, hey, give me my money, they only have to have they don't have to have every dime that people have deposited in that bank on hand.

Speaker1:
No, they have to have maybe a 3 to 10% Federal Reserve or rather financial reserve requirement. That is. So they only have to keep that much money of the 100% that the people have deposited into that bank, right? Well, my guess is, on the other hand, these multi-year guaranteed annuities, they have a 100% reserve requirement. So that, to me at least equals peace of mind. Right? You know that the company you have this Miga with is going to have 100% of your dollars on hand. They have to at least 100%. Some have more. And then, you know, compare that with the banks that only have 3 to 10% of the money on hand. So, you know, maybe if you come to call and say, you know, give me my money, I am kind of freaking out about whatever situation. First of all, your bank CD money is locked up until the end of a period. Secondly, if you come at the end of that period and say, I want my money. Did you know chances are they're going to have it? But if there's a run on the banks for any reason at that time, they may say, tough luck, you don't have your money and then you have to go through. Of course, it may be FDIC insured and all of that, but then you have to go through that process to get your money returned to you via the FDIC.

Speaker1:
Only up to $250,000 though. So if you have more than that in the CD, then you could be out of luck for whatever the amount is above that. So it could be a potentially sticky situation you find yourself in. But with Omega, I believe I know that this is the case for me. I would feel safer knowing that 100% of my principal is backed up in reserves by law, versus just that 3 to 10% with a bank CD. I mean, what good is a is a safe investment if your money isn't just absolutely as safe as it can be? So what I want you to do is take charge of your financial future. You don't know if you don't know that these. Options are out there and you don't take advantage of them. You can't take advantage of them, period. If you don't know that they're out there to begin with. Secondly, yeah, they may or may not be right for you. I'm going to tell you whether or not it's right for you. When I take a look at your individual situation, I operate in a fiduciary capacity. I have a fiduciary duty, and that is to act in your best interests, not my own. So that really is just the the basic thing, the base level thing of what I do. I act in your best interest when I meet with you, when I come up with a plan for you and all of that. Amiga, a multiyear guaranteed annuity could be a good alternative to a bank CD if that's something that you are interested in.

Speaker1:
Now, if you want that guaranteed rate of growth each year, it might not be good for your situation. But I'll tell you what is good for your situation. Maybe something like a fixed indexed annuity might be better for your situation. Maybe, you know, you might be a little younger, and maybe you don't need to invest in an annuity just yet. If you are a little bit younger, maybe you can be more aggressive in the stock market. I'll tell you that as well. Maybe you could do both. Maybe you could have an annuity. And, you know, it all depends on how the puzzle pieces fit together to come up with a picture that is best for your financial future. That is really what it is all about. And if you want to talk with me one on one via zoom or in person, go to Take Pride in retirement.com. You can schedule a consultation there directly on the web page. Just click on the button that says that it's right up at the top right hand corner of that window on the home page. Take Pride in retirement.com. You can also give me a call 85524692118552469211. Well folks that is going to do it this time around for take pride in retirement. Really do appreciate you joining me as always. I have to say it because it is very true and always bears repeating. So until next time, take pride in yourselves and take care of each other. We'll see you next time.

Speaker2:
Thanks for listening to Take Pride in Retirement. Members of the LGBTQ plus community deserve to work with the fiduciary financial advisor who puts their needs first. To schedule a free, no obligation consultation with Matt McClure and the team at Active Wealth Management, call (855) 246-9211 or go online to take pride in retirement. Dot com investment advisory services offered through Brookstone Capital Management LLC. Bcm, a registered investment Advisor, BCM and Active Wealth Management Incorporated are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.

Speaker1:
Fixed annuities, including multiyear guaranteed rate annuities, are not designed for short term investments and may be subject to restrictions, fees, and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims paying ability of the issuer.

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