Ep 70: Predictions About Cryptocurrency, The Housing Market, and Interest Rates
The X's & O's
A lot of people are panicking every time they check their portfolio these days.
There is no need for this, in fact, you should just be riding the wave.
In this episode, Matthew Theal, Brent Pasqua, and Joshua Winterswyk share their insight about the cryptocurrency meltdown, the housing market, and interest rates. They also discuss how their predictions about them can influence you in the coming months and years.
Matthew, Joshua, and Brent discuss:
The cryptocurrency meltdown––comparing crypto from 2020 to now
What the future of cryptocurrency investments could look like
Their predictions about the housing market and interest rates
Some insight about why you shouldn’t be panicking during this downturned market
And more
Resources:
Connect With RPA Wealth Management:
The Hosts:
Brent Pasqua, Matthew Theal and Joshua Winterswyk
Transcript
Welcome to the Retirement Plan Playbook with Brent Pasqua, Matthew Theal, and Joshua Winterswyk from RPA Wealth Management. In this podcast, we cover current events, retirement planning strategies. And provide you with the tools to help you build a successful retirement playbook in any political or financial landscape.
Join Brent, Matthew and Joshua as they navigate the issues that can make the later stages of your retirement plan, challenging and help you create the best Retirement Plan Playbook. Now let's get to the show.
Welcome to Retirement Plan Playbook. I'm your host, Brent Pasqua, I'm founder of RPA Wealth Management. I'm here with Matthew Theal certified financial planner and Joshua Winterswyk certified financial planner. Today's show. We're gonna discuss how to navigate this bear market that we are in. We know anytime the market is in a time like this, it really brings a ton of uncertainty.
And so we want to address that. I think where there's a lot of uncertainty too. Matt is, uh, in cryptocurrencies. You're a big crypto guys. So I think we need to get to that and address that. Um, but before we do that, you know, that's hot out here in California. What are you guys doing to stay cool? Um, I'm trying to find a, uh, pool.
You know, I'm inviting myself over to people's homes who have pools. I think I've invited myself over to both your places and, you know, let you both know that I have interest in your pool this summer. I also bought my daughter an inflatable pool and she loves it. And then I get to put my ankles in and it feels nice.
so yeah, pools. Why don't you invite me, invite me over. I mean, I can, but I mean, you wanna put your ankles in my inflatable pool? Sure. Yeah, let's just do, we could do, like over the weekend, just hit every, I'll go to your house, I'll go to Brent's house and we could all keep cool over the, the hot holiday weekend.
That's a good idea. Yeah. I say we just have to add some popsicles. I bought some popsicles for like our niece and nephew. Put 'em in the freezer. Really good. Had had a Popsicle in a long time. It's gonna, you're a big Popsicle right now. No, no I wasn't before. But I had 'em it's good. Good for summer.
Good summer snack. We got those in the freezer too. Yeah. Good. I think the hard part right now with summer is like we're in a cold office all day long and sometimes our office is freezing and then you go outside and it's like a million degrees, and then you're stuck between like an Arctic and. The Sahara desert.
And you're just in limbo for two and a half months. Yo you, the other day when I left the office, my car said 108. I know your car reads a little hotter than you know, it is outside, but 108 man. That's hot. It's probably cuz your windows aren't tinted. That's probably true. That's uh, that could be if you tinted your windows, it, keep some of that heat out UV raised product.
And it keeps your daughter from getting extremely hot when you're driving. Yeah. You know, it's a good idea, but you know, recession, I'll wait till they drop the price of window tenting. All right. So let's get into the hot take headlines. Crypto meltdown is actually taking place. Cryptocurrencies were actually obviously very hot for 2020 and 2021, and they have been imploding this year as Bitcoin is down 72% from its all time highs and Ethereum.
The second biggest cryptocurrency is down 78% from its all time highs. Our cryptocurrencies, the beanie babies are beanie baby. 2.0. It's looking like that. Right. The crypto markets have really been melting down, like you said. And it really all started when this one cryptocurrency called Luna or Tara Luna, which was offering a 20% yield.
If you, um, basically swapped your dollars for their coin. had a bank run and the project now went to zero. What does a bank run mean? When everybody asked for their money at the same time, and it turned out a lot of the money wasn't there and the, coin collapsed to zero and 60 billion was wiped away.
And anytime you have something like that happen, there's always gonna be more doms to fall. Right. We remember 2008, what that was like. Versus a couple mortgage lenders and it was bear Stearns and it was Lehman brothers. And that's what's going on in crypto right now. So another company called Celsius, um, not to be confused with the energy drink maker.
They were taken in deposits from everyday people like you, me and our clients, and offering them, you know, four or 5% yield on their money, which seems great because obviously the banks are paying nothing. they were then taking customer money and gambling it in certain markets like the Luna market and once Luna disappeared sales days disappeared.
So that's a $1 billion project that has also been wiped out and a lot of people have lost their money, unfortunately. And then there was this other hedge fund, three arrows capital. And these guys were basically doing the same thing and they were just going all around to all the different crypto exchanges, borrowing money and getting along all these crypto coins they've been completely wiped out.
So there's 3 billion lost. And now block five, which is a very popular lender that gives deposits. I'd say they're. They wouldn't you say Josh, they have a really big brand name, kind of like up there with like a coin base or maybe an FTX. Yeah. And I think they were one of the first to market, the Bitcoin credit card.
That's what really kind of brought a lot of light to their company. Yeah. A real legitimate company. There's rumors going on right now that they are selling themselves to FTX, um, which is Sam Bakeman Fried's company. Who's a crypto billionaire for $25 million. and the last PRI private round for block five was raised at 4 billion.
So basically selling it for pennies on the dollar. Yeah. Every equity investor, according to the leaked reports is getting wiped out. So that means if you invested private, you know, your own capital into block five, by writing a check in the startup market, that everyone says, oh, you make tons of money.
You're not getting your money back on block five. You're getting wiped out. so who's losing all this money. You know, all the people trading crypto, uh, everybody who, bought cryptocurrencies is, you know, getting wiped out. It's sad because a lot of people put all of their money into this, which I know that we were touting crypto on the show are saying, Hey, it looks interesting.
But we never said put all your money in. We said always, you know, one to 2% of your net worth. So, you know, if you have a million bucks, it's a couple thousand dollars. But there are people who took, their 401ks, their IRAs, their life savings put into these projects because, you know, they kind of follow the cult that it was.
And now they've, they're getting completely wiped out. They're losing their homes. It's very, very sad. So where does this put the cryptocurrency market at? What's what's the future look like? I'm not sure. I think it's, it's gonna get ugly. It's gonna get much worse. When they're, this is probably just the start for cryptocurrency.
Most likely it's gonna go back down to where it was in 2017, 2018. So for a price, I mean, Bitcoin, right now, as of recording is at 19,000 back in that time period, Bitcoin was below five. Bitcoin got as high as I believe, 70,000. so it's just a massive unwind of wealth. Anytime you see these types of losses, though it seems like the security exchange commission, the SCC is gonna get involved and more heavily, I would assume regulations are ready to come down.
Is that where this is heading? Yeah, those are kind of the rumors regulations and lots of lawsuit. Because you know, this happened in, I believe it was 2015 or 2016. There was a big crypto meltdown. The percentage losses were about the same as we're at today. But the difference now this time is there's a lot of real money in crypto.
Uh, we're not talking about a couple billion, you know, we're talking about. You know, hundreds of billions, two hundreds of billion, like there's a lot of money that's been lost and disappeared. And a lot of people who got rich, who cashed out who started these projects are kind of, in some ways looking like criminals.
And it's just, um, now that we're seeing these losses, you're also seeing how interconnected a lot of these projects were making, you know, like the domino effect, like you explain happened. and I don't think a lot of people even realized how interconnected these projects were. Yeah, absolutely. Um, it's completely interconnected and, you know, once one domino falls, then the next one keeps falling and, you know, there's, there's real concern here.
And you know, obviously if you're over invested in, in the, in the sector, you know, it might make sense to take some risk off the table, even down here, cuz you never know what's gonna happen. And unlike. 2008, where the treasury came in and saved, pretty much everybody. After Lehman went down, they're not gonna come in and save you in crypto.
It's the wild, wild west it's unregulated. At the end of the day, it's a lot of money to a lot of people, but it's a very small blip on the economic radar. Is there a chance that. A majority of this entire industry gets completely wiped out and decimated and it's done, or is it gone so far already along this path that there will be survivors, but it's gonna get washed very clean.
There will be survivors. I imagine the only two coins that make it out with certainty are gonna be Bitcoin and ethere. and then, you know, we talked about those NFTs a lot last year, and I, I think those are incredibly interesting, a real value case. And while they've gone down a lot in price, just like these crypto coins have I, I do think NFTs are here to stay and it's a really interesting use case for the technology.
It's still very young. The, the space is still not mature whatsoever, so yeah. There'll still be opportunity for those who survive. I agree. Yeah. I agree. All right. Well, another big headline is the average interest rate on a 30 year fixed mortgage is now 5.7% late. Last year, it was below 3%. The median mortgage payment is now $800 higher than it was last June.
Uh, rates going up, prices on houses is still high. What's happening. Interest rates went up and mortgage rates are following very quickly and it's becoming a lot more expensive for the consumer to purchase homes. And now we are seeing that demand finally slow down. It took a little while though. I mean, interest rates have been going up,
you know, since the beginning of the year. Um, but now we're really. that demand in the housing market slowed down for the first time I wanted to give a, a real life example of just how big of a payment difference. Um, it is because of the interest rates increasing the fastest they've had in decades and the mortgage interest rates since they have almost doubled in the last year, if you were to buy a $500,000 mortgage or home, and after putting 20% down, at a 3% interest rate.
Your monthly payment would be $1,682. Now, since the increase, let's just use another example of the current increase. So the same house, 500,000, we put 20% down and now the new interest rate is 5.81%. Your new payment is $2,350. quite a significant increase. And for most consumers we actually buy the payment, right?
What is the payment and how can I afford it? So you can see how this is going to affect the consumer because of the interest rate change. Now, consumers are being priced out of certain home purchases, which you're also seeing slow down the real estate market. So if you're considering getting a mortgage in the future in the near future next year or two based on where rates are going right now.
I mean, what are you thinking? Well, if you, if you do have a home picked out, I mean, rates can potentially even increase even further. So locking in a rate probably as soon as you can, cuz they can, you know, no one can predict the future of where rates are gonna be five or, or 10 years from now. But I think it's going back to the drawing board and seeing what you can actually really afford, cuz it might not be a situation where.
You're still able to purchase the home you want because of the increase of interest rates. If you're a fringe buyer, um, your only hope right now is that prices come in a little bit. Cuz prices got a little bit ahead of themselves in 2020 and 21. Like we all know that we all looked at home prices, it's kind of bonkers land and you know, your only hope is homes coming in by five, 10%, which would be really.
That would be really, really good for the housing market. If prices fell by five to 10% and in some metros, some areas that were hot I'm looking at U, Texas and Florida. Maybe if prices come in by 20 or 25%, I, I think that'll help kind of stabilize the market get people to list their homes again, and then also allow people to afford 'em with these higher rates.
Historically, when we've seen rapid increases in interest rates. Do we see. Rapid declines in prices. Prices do come down naturally, right? The higher prices is going to slow down demand. Um, not only with the interest rate change, but with the higher price. And what you're seeing a lot right now is the, the highest or the areas with the most accumulation like Matt and I were talking about Boise, Idaho was booming, and now you're actually seeing them being one of the first markets where prices are actually decreasing already.
To start this year. You know, eventually like Matt said, and just to piggyback on that, those, um, you know, hopefully we do get a little bit of a pullback in prices for anyone that is a fringe buyer. Real quick, one point on this because this is a general rate story almost right? Like housing market's held up pretty well this year, blah, blah, blah.
But interest rates are higher across the board. It's not just the mortgage market. It's auto lending auto loans are, probably above 6% for most people right now. Credit card rates are higher. If there's an interest rate attached to it and you're borrowing money, you're gonna pay a lot more than you did in 20 or 21.
And your affordability is going to drop plus inflation all around the board. Gas is more expensive. If you have a second mortgage, that's an adjustable rate that's going up to, you're probably gonna see a change in the payment. So definitely agree with you there. That life's just more expensive at these higher interest rate climate.
The one story I'm waiting to hear is that people are canceling Tesla. and then Tesla will get, because right now they have no inventory, right. Tesla makes a car, they, and they it's already sold. It goes off the line and it gets delivered to somebody I'm waiting for Tesla to start building national inventory because people are canceling cars and they have to produce cars to keep their factories running and all auto makers.
Right? Yeah. All auto makers. For sure. I think one lesson that's important here too though, is just by the example that we're talking about. If you're a younger person. You know, just anybody that's in the future, looking to buy a house, how important your interest rate is because you have about in this example, almost a $700 difference in buying the same house.
The only difference is the rate, and if you don't have a good credit score and you're not in a, what they call a paper or good credit land, uh, this is another example of how you can put yourself in a bad financial. For a very long time by just by not having good credit, you're essentially paying more for the same thing by just not paying attention to your credit score.
Yeah. And focus on what you can control. Right. We can't control what the interest rate is going up, but don't put yourself in a position and make it even worse by having bad credit or not the appropriate down payment and stuff like that. Right. And if you are a fringe buyer and your credit score, isn't in the, a paper land, then you probably want to.
Get it there before you purchase this house, because you probably aren't gonna want to give up another one or 2% on your interest rate just because you don't have good, good credit in, in this type of environment. Yeah. And, and really just the, the bank winning, right? Yeah. I mean, in this example, you're paying almost, you know, over double the interest over the life of the mortgage.
Yeah. I mean, that's a good number. And I, you know, in the example that I gave earlier, the first at 3%, you're paying over $200,000 worth of interest. And at almost 6%, you're paying over $400,000 worth of interest. I mean, that's a huge difference over 30 years. Absolutely just basic tools that can really help people over long periods of time.
Totally. Uh, let's get into the retirement planning corner. We are now six months into the year and stocks are in a bear market. This year has not been great for stocks. The SMP 500st half plunged of 21% is the worst since 1970. And the NASDAQ 100 finished the first half down 30%, most since 2002.
This last quarter, the second quarter of 2022 was the worst quarter since 2008. Today I think we should talk about what some of our favorite strategies are during these down markets and why you shouldn't panic and do something that will really negatively impact you and your finances down the road.
I know we all have really some different strategies and some important strategies that people can implement. Matt, should listeners be concerned that the stock market is going down right now? Brent, that's a great question, but before I answer it, I have a, kind of a mini public service announcement.
So everybody listening to this podcast is gonna be opening up their quarterly statement. Hopefully, hopefully you check a quarterly state. either this week or in the coming weeks, and you're gonna see you've lost money over the first six months of the year. And I'm here to tell you everybody opening their quarterly statements has lost money over the first six months of the year.
I've lost money. Brent, you've lost money. Joshua you've lost money. Um, your neighbor has lost money.The stock market's down. That's why your account's down. It's very, very simple. The only asset that has positive returns this year is cash. Cash is the only asset that hasn't gone down in price. Right. And then if you're in cash or you're in an annuity or you're in some type of other investment vehicle that doesn't have the same type of market risk, you're losing money.
You, we have high inflation right now. Exactly. In real terms, you're losing money. But I just wanted to get that outta the way everybody's losing money. It's not unique to you. It's not unique to me. It's not fun. I don't like it. I hate losing money, but it's also part of the investing game. I don't like it either.
So let's kind of look back on, on what happened. Starting in 2020, in 2020, the government created a ton of fake wealth. They printed a ton of money. They handed out checks to everybody and that money then got invested in all these various assets and everything went up. A lot of people are now starting to call it the everything bubble.
Well, now that's being destroyed. It's being destroyed by inflation. It's being destroyed by higher interest rates. It's purposely being destroyed by the federal reserve. So once it's all destroyed. Everything would be cleared and we could get back to normal back to 2018, back to 2019. I was like then, but we have to destroy all the money that was created, cuz it was just a Fugazi and you can make the argument.
It started even before 2020, I mean the, the printing of money. And really since after the last economic crisis in 2008, the money supply has just really been increasing you. You absolutely can. But it got like funny in 2020. You were basically getting a new check delivered to you by the Trump administration every other month.
I felt like, but to answer your point, should people be concerned? I, I don't think so. I mean, this is part, this is economics 1 0 1. This is a business cycle. This is a stock market cycle. This is how it works, economy overheats. And then it starts to contract prices, go down. Then they eventually go back. You know, I wouldn't be panicking.
I wouldn't be selling anything right now. I'd, ride the wave and have a plan. Is there a time where a person should panic though?
No, you, you should never panic. I, I mean, I understand why people want to panic. But if you do feel like panicking, you need to reach out to a professional, someone who could help you and give you honest advice. Cuz that's, this is the time as advisors, where we make our money, where we provide our worth to our clients by telling them not to panic by telling them to stay in the market and to think long term and not short term.
And you want to be proactive. I mean, any decision you make now is going to be a reactive. The, the emotional side of it, the watching the market and, and the nervousness is going to really drive you to make a decision or make a change. But we know that that isn't the, the strategy that's gonna get you out on the other end in a positive manner.
Yeah, absolutely. I think one thing that people always need to remember and it's basic investing and that's, even though the market is down right now and price per share is down. You still own your shares. And yes, you can make the argument that if you're investing into individual stocks, price per share may not come up, cuz some companies may not rebound from this, but if you're investing with the whole market and you're investing properly, the market has never not recovered.
And although price is down, you still have dividends being reinvested. So you're gaining more shares over time. Hopefully you're adding a little bit and buying a little bit more in down to pick up some extra shares. And as the share price comes back up, You essentially have, will hopefully have more money.
And so I think people need to be reminded of that just because you're the house of that you live in value drops. That doesn't mean you're just gonna put the house on the market and sell it. You still have your house. You're still living in there comfortably. And eventually the house price and value will come back up.
Think you make a great point and, and just defining, you know, your shares are your ownership and you. You're owning multiple different companies, if you're diversified and not all of them are even doing that poorly, there is still companies that haven't dropped as much as the market. So I think that you just make a real good point that you're not losing your ownership, just cuz the market's down.
And I think you guys make really good points that nobody likes losing money or having less money than they once had. But when you do get concerned, I think the one thing that you always need to remind yourself is do you need this money right now? Are you needing this to live off of, and most people aren't and if you aren't, then you really shouldn't be in any position to panic.
Remember you have cash flow, you could pay your bills, you could pay your expenses, price per share will come back up. Yeah. Well said Josh, what are some strategies, um, that you were telling your clients to do right now? Because I think really the strategies that you can implement right now are probably the most helpful things that get us through these periods of time.
I think we've touched on a really good point that, you know, a lot of good points already, which is not to panic, um, not to be reactive, but we have to stick to the plan. You know, if we went into, COVID in 2020 with the specific plan. And we watched the market go down, um, in the beginning of 2020, and watched it recover and you were, comfortable there.
And now we got good returns in 2021 and now entering 20, 22, we were okay with capturing that upside. We have to be okay with dealing some, with some of the volatility that's happening right now. We have to stick to the plant now is not the time to deviate from that and be reactive. Um, and that's gonna be, in my opinion, one of the best strategies that we can do right now, along with that also is, if you are still working or you're still just investing, investing regularly is going to be a.
Key to, to building more wealth in the future, you're getting 20 to 30% lower prices on anything you deposit or anything you contribute into your 401k or IRA than you were six months ago. So again, we're, you know, we're taking advantage of the sell that's going on in the stock market, as long as we're continuing to contribute into those investment accounts.
And then also even on the bond side. So, you know, going forward interest rates are higher. So bond yield. You know, are, are, have increased. So you're getting again, a better bond yield if you're purchasing bonds right now than you were two years ago, two years ago was at 1%. Now we're already seeing 'em at three or 4%.
So another way to take advantage or kind of seek the opportunity that the market's giving us, even through these volatile times, Matt, what are some of the strategies? Cuz I think those are great ones. What are some of the strategies that you're using for your clients? Yeah. The number one thing is, you know, one of our bread and butter strategies is, making sure your portfolio is well diversified, right?
We don't want to have, too much money in one sector. We don't wanna have too much money in stocks. Uh, we don't wanna have too much money in bonds. We wanna be, pretty equally weighted and, run, take a really balanced approach at this. And right now, What the data is suggesting is that you should still be running a, balanced portfolio that is fully diversified of stocks and bonds.
You know, we talked about it on last show. The data says you should be buying right now. And it could be off for a few months or, maybe even in another six months, but you have to trust the data and stick to the plan like Josh was saying and keep buying and then you'll get more shares, share price will eventually come back up.
You'll have more money than ever. And you'll be that much closer to accomplishing your goals. Another strategy that I think is really, really important is your risk management and. You need to think the opposite of the way you feel when you're in a bear market. So, you know, bull market, everybody wants to take risk, but that should be the time when you're TA when you're taking less risk.
For example, in 2021, I thought the market was getting a little bit of ahead of itself. I started taking a lot less risk in my portfolio. I made very, very few new investments. Now I'm getting very, very excited and I wanna make more investments with my money. Because prices are lower. It's time to get aggressive when prices are lower, when prices are high and you hear everyone around you popping champagne and your neighbor's buying a new boat because he cashed out on some startup, you should be concerned.
We're buying a bunch of crypto currency. Exactly. When prices are down, you should be getting excited. You should have like, Be backing up the truck, ready to fill up your wheel arrow and, get ready to make a bunch of money over the next five, 10 years. What I'm hearing you say too, is like a really good key to investing of like bull market.
We should be assessing risk and it's kind of like the opposite of like instinctively what we do, but really good key to that, uh, that you said stated there. Yeah. Do the opposite. And, and then finally you know, I, I, I always tell my clients, cause you're never gonna time the market. Right? It's it's like driving on the freeway.
You're never gonna really know which lane is, is the fastest. When you're in traffic you switch lanes. You're gonna end up in the slow lane. Eventually pick a lane, stick to the lane, drive in the lane. You're gonna get to where you're going. Same thing with investing. Keep your money in the market.
Pick a strategy and don't change it for 10 or 15 years. You're gonna get to where you go and you're gonna accomplish your goals. Don't pull your money out. What do you think's gonna happen if you pull your money out. And then two weeks later, there's an announcement that the war's over that Ukraine and Russia have come to a peace agreement and it's all over.
The market's gonna rally seven, 8%, maybe even 10% one day and your cash is gonna be on the sidelines. You're gonna miss it. Oil prices come down. Inflation's coming down. Lot of good news. Exactly. Yeah. That happens fast. You'll never make that money back up. No, you'll never make it back. And then you're sitting there and by the time you notice, maybe the market's 15, 20% higher, you're finally calling your advisor, your broker or log 'em onto your etra account.
And then you buy well, great. You just missed 20%. don't miss it. Yeah. stay in. I think one of the things that's really helpful with these strategies and, and I wanna tell a little story. where I've kind of seen this happen in real life. So the last couple weeks I've been working with the little league district during the all star tournament and in little league as you go through these different all star tournaments, little league has these rules and the, the rules are specific to little league.
They're not the same as, as major league baseball rules. So there's rules of how players need to come into the game. And so what happens is, is the people and the coaches that know more about the rules are better able to implement a lot of these strategies, strategies that put them in a much better position to succeed and win.
And I think a lot of this goes back to this type of planning. Whenever you do financial planning, you have to know, or be working with somebody that knows how all the rules work. Because when you know how the rules work, you're better to be able to creatively create strategies and implement strategies that are going to be able to benefit you.
Long term. For example, tax harvesting right now is extremely important because you could look at positions that. Can maybe take as a loss or you can move some positions around. Maybe you can buy a position that's as a mutual fund, you can move it to an ETF right now, take the loss. You're buying the same thing back.
There's a lot of strategies that you can definitely implement if you know them or working with somebody who knows them. Yeah. Great, great point, Brent. Josh, what are the ING or practice of spreading your investments around so that your exposure of any. Of asset as limited is, and doesn't have to be complicated.
Yeah. I mean, that's really just the definition of diversification, right? You, you don't want to have a focus. We talked about cryptocurrency and having a focus there. Um, we just don't want that. We want your investments to be spread around. And I think that a lot of times when we talk about diversifications and BR, I know, you know, a few stories of this is like, it.
Be more complicated. It doesn't have to be though diversification doesn't mean more accounts or more mutual funds or more investments. Now with today's market, we can easily diversify portfolios. Uh, I just wanted to define that a little bit, but that's, uh, just a great, um, definition of what real diversification is.
What should people be avoiding doing right now? I mean, we've been, we're 30 minutes into a show and we've basically been saying don't panic. So that's number one. I do not sell when the market's down you know, you're basically locking in a loss for yourself. But you know, on a second one, I, I think right now is probably the time where people are getting pitched a lot of shady investments, a lot of investments that look really great on paper.
But when you really kind of pull back the, the bandaid on 'em, they don't look so good. There's an ugly wound beneath the surface. Brent, why don't you tell us a little bit about annuities? Yeah, so I think during my career is now almost 20 years into this thing. I've been through a lot of these periods of time where these recessions happen or these market volatilities happen.
And I think what begins to happen during these times is a lot of the sales people come out and try to give you a lot of the old school pitches to get you out of the market and push you into products that they're selling. And I wanna make sure people try to avoid that from taking place, because in a time like this, what happens is let's say your portfolio's down 15 or 20% or 10% they'll come out and say, well, Hey, we are offering this annuity and this annuity is going to give you this very nice bonus and you're gonna get a 10% bonus or 15% bonus or 20% bonus.
And the reason why that may look attractive to you is because you're down 20%. And Hey, that's gonna put you back to where you were close to, where you were. , but it's not what it looks like on a surface, because what that is gonna do is that annuity is going to lock your money up for a very long period of time in a product where your bonus is not truly vested.
So not really giving you that money, it's vested over a long period of time. And as much as you may not want to believe it or think. the, in the insurance company actually controls what you're going to make in that annuity contract, because the, in the insurance company controls what your rates are now.
They they'll tell you that what goes up, can't come down and the market will go up, but you'll never lose. I get it. That's sort of the concept of how the annuity may work. But at the end of the day, they control what those caps are on those annuities and they will limit your rise and they will limit how much you can go up.
And when they do that, your rate of return for long period of times are going to be extremely limited. It's like a lot of teaser, right? Bonus teaser, the cap rates and participation rates that start high and they are able to fluctuate them. Drive that rate of return lower as you're within that product. I just don't like products that have a bunch of teaser rates yeah.
I think it's safe to say that, if you're getting an investment advice from someone who bought you a stake it's probably good to stay away. Yeah. And these, the people that do this are really the used car salesman of this industry. They're there to sell you a product that's pretty sleazy that they're going to make more money on than you.
And ultimately at the end of the day, it's not gonna benefit you. I would say be very careful because a lot of these start to take place during this time are all annuities bad? No. Are there good annuities? Sure. There's good annuities, but there's good annuities that aren't, that don't pay an advisor, a commission or an agent, a commission.
And because they don't pay out that expense, their rates and returns have the potential to be a lot better. So I think that's what you need to be aware of is, Hey, could there be good annuities? Sure. There can be, but you have to be very, very careful on which ones you're going into and stay away from this sleazy sales pitch, because I'm telling you they will not be good for you long term.
Yeah, I agree. And you know, if the idea of annuity sounds, sounds cool to you, you know, meet with a real advisor call a fuel financial planner or someone who knows how to construct a portfolio you could probably create an annuity like return. In your portfolio by using stocks and bonds, um, which is pretty cool.
That's a good point. We, we could take the specs of an annuity and within 10 minutes, we can tell you actually how it's going to work, not what you're being told from somebody else of what, a paint, a very good picture of how they think it's gonna work a fancy illustration. Yes. Can we, can we briefly talk about gold?
Yeah. Let's let's hear what, well, I'm just gonna put it Josh. Josh. What's the return on gold over the last 10. 0.8, 2% 82 basis points over the tenure period. That's awful. That's a little bit better than your savings account, but that's awful. Please don't ever tell me Gold's going higher again. You know what though?
It's like, it is the same products that keep coming up whenever there's a bunch of fear within society. It's gold. It's the annuities like when there's nervousness and fear here comes the annuities and here comes the gold salesman. And what did I say? The best performing asset was of the year. Again, guys, I forgot cash cash.
That means us dollars. And you know what everyone's been telling me for 15 years, the us dollars. Worthless. Yeah. Laugh out loud. Yeah. I mean, during this time you have the, uh, gold commercials ramping up the annuities steak dinner, seminar, invitations are ramping up in the. So just be where, where right now that, because the market's down, a lot of these things do do start to ramp their head again.
Uh, if people are really scared though what should they do? Yeah, it's pretty simple. You know, I, I would get on Google and try and find someone to talk to financial professional CFP. If the only financial advisor hope don't go to someone, you know, who's at a bank don't go to a brokerage firm.
Don't go to a state dinner and try and get advice from them, get on your machine, get on your laptop, go to Google type in fee, only financial planner in my zip code. You know, contact the first two or three people who come up, start working with the one you like the best. Yeah, I think it's that, you know, when you're sick, who do you call your doctor?
Yep. Well, some people use web D to try and self diagnose himself. Brent, not gonna point your fingers. Yeah. That's not for me. I I'll go the doctor every time. Go, go find or go call your, your financial doctor. All right. Let's get into the RPA recommends, uh, Joshua, what do you have for us? I'm gonna actually recommend a movie.
My wife and I this last week watched, hustle on Netflix with Adam Sandler. Great movie. Yeah, it was really good. Um, just, I had a really good story and especially if you like basketball, um, but it's, uh, it was fun to see Adam Sandler and kind of a more serious movie and, uh, we really enjoyed it. So if you haven't watched hustle in Netflix, go check it out.
Matt, what do you have for. I'm gonna go with the little pool. We got my daughter it's, uh, from target. It has a bounce house and a pool attached to it. Really, really cool. It blows up in two minutes. It it's really only for, toddlers probably. For and under, that was gonna be my next question.
uh, like I'm too big to bounce on it, but she loves it. I could put my ankles in the water, so at least my feet are cold. Really, really good. There's nothing better than finding things that make your kids happy. I mean, at the end of the day, like that's just such a blessing as a parent. Uh, my RP recommend is closed based.
I, It's always important to try to look good. If you're looking for a polo or an outfit, I, I just started wearing this new brand. It's called Ron. I think it's pronounced it's R H O N E. It's becoming much more popular. Um, they have really nice polos, great material, great style. I think it's a great, like middle aged man retired.
It's just a perk. Perfect. Kind of like brand for people that are trying to look nice and wear something that looks nice and it's fairly like price decent. Do they have golf gear? They do. Oh, okay.Yeah. For all the big golf guys. There's there's golf gear there too. I actually haven't, uh, haven't tried around.
I'll have to check them out. So as we close the show as advisors, we love helping people. That's why we do it. If you'd like to schedule an appointment with any of us, please go to RPAWealth.com and schedule a complimentary consultation. You can also download our ebook from our website, and if you'd like our show notes, please go to retirement.
Plan, playbook dot. but as always, uh, and that's why we do it. Thanks for listen. Thank you. Thank you. Don't panic Excel.
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