034R | What’s Your Risk Tolerance | The Friday Roundup

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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

Links from the show:

Books Mentioned in the Show:

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Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Disclosures.
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