In today’s podcast we discuss our thoughts on Part 2 of the Stock Series conversation with JL Collins, risk tolerance, doomsday scenarios, and re-balancing.
Podcast Episode Summary
- The Friday Roundup and the episode Part 2 of our discussion with JL Collins from The Simple Path to Wealth and JLCollinsNH
- What do you do when there’s a large crash in the stock market? Big takeaway from Jim’s episode
- You can’t sell at the bottom, so you need to steel yourself mentally beforehand
- If you’re starting investing, one of the best thing that can happen to you is a market crash
- You can’t time the market
- There are doomsday scenarios, but since they are so rare it is silly to plan for the absolute worst case and ignore the other 99.9% likelihood
- Follow the math when making the best decision with the information at hand
- Question from Kevin about when to “take all your chips off the table”
- That event would have to be extraordinary and destructive for our country and economy
- Spend less than you earn and invest in broad based index funds
- Feedback from Nancy on asset allocation and comfort with volatility and her belief that you shouldn’t take a lot of risk if you don’t need to
- Jonathan’s example of re-balancing and a hypothetical $1,000,000 portfolio and a 50% market crash
- Equities will return significantly higher than bonds over the long term. Bonds do “smooth the ride” but lower long-term returns
- You want to re-balance in accounts like IRAs, 401ks that won’t trigger a taxable event
- Brad’s example of his parents investing strategy
- Over the long term which option is truly riskier? Investing in stocks and facing volatility or lowering your expected return by investing in cash or bonds
- The 4% rule is based on getting a return while pulling out money each year, so you can’t just stick it in cash and expect the money to last forever
- The power of the ‘perpetual money making machine’ to last forever
- ChooseFI was mentioned on Forbes as one of three financial podcasts for people of all ages to listen to
- We need panelists to select the finalists for the business building contest with Alan Donegan
- Lance on our Facebook group pulled the trigger on FI today – congrats!
- What did Brad and Jonathan put into place this week as one life optimization?
- Jonathan’s salad hacks
- Jonathan is now saying “stimulus and response” out loud when finding something habitual in his life
- ChooseFI is not just limited to finances. It is a life optimization project
- Voicemail from Scott (Brad’s brother)
- Frugal wins of the weeks
- Itunes reviews of the week
