00:10
Peter Dunn
Fire. Hello, everybody. It's me, Peter Don. Pete the Planner rolled my sleeves on my shirt today. I regret it. I'm just trying to show off the work in the gym. Welcome to the Pete the Planner show. The show within a show. This is the podcast and the live stream, and eventually this turns into a radio show. You know how it works. Joining me, as always, is second level Krav MAGA master, Damien Dunn. Dame, you have been operating in the world of Krav MAGA for some time now. You've achieved second level status. Krav MAGA, of course, is the Israeli technique of quickly and violently ending a fight. Tell us all about it, Dame.
00:57
Damian Dunn
I regret ever telling you about this, sir.
01:00
Peter Dunn
By the way, I didn't know anything about Krav MAGA, sir, until I looked up a video about it today because you told me about it, sir. And I'm calling you sir because it is so intense that I am now terrified of you, sir.
01:12
Damian Dunn
Not much tickling that goes on in Krav.
01:15
Peter Dunn
I am trained in the art of Portuguese tickle fighting. So if you and I were ever to enter battle street fighter style, be prepared to guard your midsection. Dane we're going to do a show this week. Turns out it could be one topic for all three segments, and the fourth segment is what it is.
01:35
Damian Dunn
Yeah. Anxiously looking forward to it. I think we'll have a lot of good discussion.
01:39
Peter Dunn
I'm going to tell you what the Guam is right now so you can form a position on it.
01:43
Damian Dunn
I don't know how I feel about this.
01:45
Peter Dunn
I don't know how I feel about it, but I'm going to go with it. Here's what I I am totally on the fence. Like I see both sides of is having a lottery for a million dollars for people to get vaccinated in the state of Ohio a waste of money or a good use of money. Right. So you've heard the story?
02:04
Damian Dunn
No, I hadn't heard that story.
02:06
Peter Dunn
So there will be five $1 million winners in Ohio. The governor, Mike DeWine, I think is his name, he is the governor, Republican governor from Ohio, and he's taking COVID funds and setting up a lottery, a sweepstakes system that if you get a shot, you are registered to win. That that's what we're going to talk about later. I get it. But I have some just strange let's just talk. We'll talk about it later. Okay. So get your head around that.
02:37
Damian Dunn
I see a lot of black market vaccine cards coming with pharmacists with a little deal that says, hey, I'm going to give you a card, but if you win, we're splitting it.
02:46
Peter Dunn
Jessica's watching on Facebook live right now. She says hello from beautiful Vancouver Island. Oh, my gosh.
02:52
Damian Dunn
Is that in Mexico?
02:53
Peter Dunn
I love the south, actually. Now I want to Google Vancouver Island. All right. That's what I'm going to do. We're going to take a look at what? Vancouver. I mean, I assume it's near Vancouver, right?
03:04
Damian Dunn
Your guess is as good as mine.
03:06
Peter Dunn
Vancouver island, off Canada's Pacific coast, is known for its mild climate and thriving arts community. On its southern tip is Victoria, British Columbia's capital and its boat lied inner harbor, neo baroque parliament buildings, grand fairmont, empress hotel and English style gardens. Harbor City NAN name, though home of chocolate and custard nanaimo Barts has an old city quarter with shops, galleries and restaurants. That's Vancouver Island.
03:37
Damian Dunn
Sounds like you're going to have a beautiful time, Jessica. Unless you live there, and then maybe it's just old. I don't know.
03:41
Peter Dunn
It just sucks. Hey, Danza. Good to see you again. Did everyone stay getting money this past week? Just checking. She says she can't afford to live in Victoria. Jessica says, you know, I'm going to have to learn more about that. I've always wanted to go to Vancouver, but I don't know why other than I've heard it's nice. So anyway, Dame, let's start the show. I've actually got my clock ready this time, so I don't you tell me when you're ready. Krav MAGA master level two. It'd make you an orange belt if your dojo. Do you operate out of a dojo?
04:14
Damian Dunn
No, actually, we're in a basement.
04:15
Peter Dunn
Okay. If your basement went by the belt system, you'd have an orange belt, which, as you and I discussed this morning what are you going to do with that when you don't even have shoes to match?
04:25
Damian Dunn
Yeah, really hard to match. I'm ready to go.
04:29
Peter Dunn
Oh, you mean to stop talking about Kraft McGahn?
04:32
Damian Dunn
Yeah.
04:34
Peter Dunn
I'm going to learn some sort of thing. Three, two, one. This week on the Pete the Planner show, we answer your money questions. Here's how the show works. You email us. Askpeet at pete theplanner.com that's ask Pete@pettheplanner.com. When I say we, I mean me and Krav McGahn. Orange belt. Damien Dunn joins us, as always. Hello, Dame.
04:57
Damian Dunn
I hate you.
04:59
Peter Dunn
Don't start that way. But it's a positive show. This is a positive show. I met a gentleman in the lobby of our building this morning who said he loved the radio show. He really did. He said he listens to it all the time. He's a dentist. And he said he loves the show.
05:13
Damian Dunn
Just hanging out in the lobby?
05:15
Peter Dunn
Kind of. Yeah, kind of was. I was like, all right, brah. All right, dame. On the show this week. We're playing a little game called how do you know when you're a worse investor than you thought you were? How's that game sound?
05:29
Damian Dunn
That sounds amazing.
05:30
Peter Dunn
Okay, so, Dame, here's what we're doing this week. There's a lot of talk about people being interested investment concepts more than ever right now. And what you and I have sort of realized is that people are certainly distracted by shiny investment ideas, as we discussed this week. For instance, NFTs and cryptocurrencies and GameStop and things like that are sort of the four Loco of the investment world. It's like, hey, I'm going to try an alcoholic beverage. I'm going to start by shotgunning a four loco. And now we've got every news story in the financial world focused on what a car company CEO thinks about fake dog cryptocurrency coins. That's the world we live in. So Dame, here's what we're going to do. We're going to talk about actual, real signs that maybe you're not as good at this as you think, which is good. We're not making fun of anybody.
06:31
Peter Dunn
But you either understand investing or you think you do, or you admit you don't. And therefore you get professional help. So I'm going to start with the first one here today. Dame, if you are not a day trader and not an investment advisor and you watch CNBC all day long, that's probably a sign that you have no idea what you're doing.
06:53
Damian Dunn
I agree. There's way too much that goes on there. There are agendas that happen inside of CNBC. You and I have discovered that their website contains a few inaccuracies every once in a while that may be misleading. It's not just CNBC, though. Pick something. Pick a fox website. Fox Business. If you're constantly hitting refresh on whatever the website de jour is that you'd like to frequent for financial information, that's not great. You're burying yourself with information that a, you may not be able to put it in the right context, b, may be giving you misleading information. There's a number of reasons that you don't want to just inundate yourself with this sort of information on a consistent basis.
07:53
Peter Dunn
Look no further than the front page of any of those services, CNBC.com or Bloomberg. On any given day, you'll have two opinion pieces. One, the market is poised to do something that's never done today in a good way. And then right below it's like, market's going to tanked. And it's like, what is a person? I realize it's different opinions, but it's not really presented that way. I used to be on Fox Business all the time. There was I don't even know how long ago that was. Ten years ago, maybe all the time. Weekly. Right. And I thought it was cool, and I enjoyed the vanity of it all. I thought I tried to provide value at the segments I was on, but then I figured out it's like, why in the world they haven't me on. Because while I understand stuff and I can be somewhat engaging and entertaining, I am more entertainment when it comes to those topics.
08:44
Peter Dunn
I am not a technical expert at the things that were discussing. Thus, those things are all entertainment. It's not actually helping investors make better investing decisions. I will draw a distinction, though, between what we just said about those organizations and by the way, you can tell I don't really care to be on any of those shows anymore. Have you just figured that out? Yeah, the Wall Street Journal. I read the Journal in the mornings and I feel like I learn a lot from it. And yes, there's opinion pieces, some that I agree with, some I disagree with, but that's not a blended line. You can discern which is opinion and which is sort of raw financial data, right?
09:24
Damian Dunn
Yeah, I think The Wall Street Journal does an admirable job of giving you the information and then also if you want to go chase down opinions, they're certainly going to make them there. It's a publication that want to draw eyes to it. But when it comes down to the actual news of the day, I think the Journal does a decent job of getting that out there without being too dramatic one direction or the other, which.
09:49
Peter Dunn
Bleeds right into the second way. You know that you're not as good of an investor as you might think is that you're not a day trader and you check the market multiple times per day. Now, I have to admit, and I'm giving myself a pass because we're in the financial world, I check the market multiple times per day, but at any given time I might be in a live event. Someone might ask me a question and I need to be informed. But a vast majority I'm going to go with 98% of Americans have no business checking the market on a daily basis.
10:20
Damian Dunn
No. In fact, when I was an advisor, I said, if you check it once a month, once a quarter, that's fine. Let's keep an eye on it for large trends, not necessarily short term trends, make sure things are going to be headed in the right direction. Because if you get caught up in the momentum and the emotion of the market gyrations, whether they're up or down, one way or the other, you may be inclined to make some decisions that don't benefit you in the long run. Happens all the time.
10:53
Peter Dunn
We talked a few weeks ago, probably months at this point, about the attention economy, about you can divvy up what you pay attention to and what you give your attention to. And I have to say, giving your attention to regular market swings ain't healthy because if you get it addicted to it during the good times and you get a dopamine hit off of that when the bad times come, man, it will drag you down. I actually learned that lesson recently, not with the financial markets, just my own use of social media, that during the good times, whenever those were, let's call them 2019, and before you interact with people, it's fine and you really enjoy it makes some sense. But then weird times come, but that addiction still exists, and then it turns into doom. Scrolling or hot takes about literally everything you can consider, and it became incredibly so unhealthy.
11:51
Peter Dunn
Thank God. I'm like six weeks free now from any social media, and I feel so much better. I've read four books in the last six weeks.
12:03
Damian Dunn
Have you actually read?
12:06
Peter Dunn
I've consumed four audiobooks in the last six weeks, and I downloaded four more just this week. Some ones that came out that I want to listen to. It just seems like a better use of my time and attention than seeing someone's hot take about Purdue football or something.
12:22
Damian Dunn
How do you highlight and make notes in an audiobook?
12:25
Peter Dunn
I don't have to make notes. Oh, no. If I like something, I will make note of it in Evernote, which is a computer notes program.
12:36
Damian Dunn
Sure.
12:41
Peter Dunn
I would keep qualifying things with saying, if you're not a day trader, it might be worth talking about that because some people think they're a day trader, but they're not. I have no problem with people pursue that and that's what you like to do. But day trading is an actual sort of art science that you really do have to keep your eye attuned to all of these things. But again, a smaller population here. So that's why I keep qualifying these points that way. Right, sure.
13:11
Damian Dunn
Yeah. I mean, day trading can, in theory, be done successfully, but it takes way more attention to do it successfully than most people have the time to do it correctly with.
13:23
Peter Dunn
I fancied myself a day trader in college, specifically my junior and senior year. And while I would arguably make a trade a day, I'm even convinced that didn't make me a day trader. A day trader is just a little more intense than that, especially in now's day and age. So, dame, let's do this. Coming up after the break, we're coming to the big stuff of ways you know that maybe you're not as good of an investor as you think you are and that you need to be. All that's coming up next on the Pizza Planner show with Damien Dunn. Orange belt and me. Pizza Planner next on the show. Weird ending to the segment, though. Tried to get my orange belt sets for those. Just joining us on the program. Dame is an orange belt and KRAB MAGA. Now.
14:07
Damian Dunn
I'm not.
14:08
Peter Dunn
You are.
14:09
Damian Dunn
I'm not. We don't have belts.
14:12
Peter Dunn
When you walk into a room with me, do you think about how you can dismantle me?
14:17
Damian Dunn
Everybody in the room.
14:18
Peter Dunn
Everyone like, seriously?
14:20
Damian Dunn
Everyone?
14:21
Peter Dunn
Everyone. Jimmy Christmas.
14:24
Damian Dunn
I'm terrified of that. How many stocks were you working with in your junior senior year? Were you two or three? Yeah, just a few focused ones that you knew kind of inside and out at that point.
14:33
Peter Dunn
Now, you know, my memory at times is good and as at times is just like, awful. But here's how I remember that time. So this was oh, by the way, good day, Mr. Pinkins joining us. This was 1998 through 2000. Okay. I think I would just trade 5th, 3rd bank stock up and down and up and down. I don't want to say I figured out a pattern that might be overselling what I was really doing. Yeah. Interesting, right?
15:07
Damian Dunn
To be fair, I think a lot of college kids familiar with the Internet had access to it, thought they might have known more than they actually did, were doing exactly what you were doing at that time period.
15:22
Peter Dunn
Yeah, like my roommates were right. I mean, were all sort of doing that together. It worked out. Honestly, I'm not going to get into the particulars because I'm not that guy, but it actually worked out, and I ended up making quite a bit of money on it, which is why I give some grace to people who are so excited about the money they're making in the market right now. And it's hard for me to not say, well, it was different. I was dealing with a bank stock and you're dealing with an asset, which you don't understand.
15:52
Damian Dunn
A lot of people were making money doing exactly that at the time. Like we've discussed, though, the key is knowing when that party is going to end and stopping it and then not continuing to throw money at an investment that's going to continue to go down unless you're in for the long term.
16:10
Peter Dunn
Sorry, we're starting to segment. 5 seconds.
16:14
Damian Dunn
Okay.
16:16
Peter Dunn
Back on the Pizza Planner show. All right, Dame, so this whole episode is dedicated to signs that you're not as good of an investor as you might think you are. Dame this week a postal worker. My postal worker in terms of the person that brings us to the post, stop me in the hall. As a guy. I know a lot of people stopped me in the hall of the building this week. If I'm being paranoid no, really, it almost is like I'm making up these anecdotal sounding stories, but it's happening. So we're talking. He's like, what do you think about crypto? And we sort of talked about crypto, and he's super great guy, super nice guy. And I've had this conversation probably five times in the last two weeks. I was at a wedding last weekend. Oh, for those that remember the old radio show and the old podcast producer, Nicole.
17:07
Peter Dunn
We used to call her Frank. She got married last weekend. I was the officiant of the ceremony. So she's doing well, everyone. And let's all send our love to Nicole and her special friend Zayn, who are now married. But anyway, people keep asking about cryptocurrency, especially around dogecoin because it's so inexpensive, but it's seen such huge gains that anyone can throw a couple of $100 in there, let it ride, and it turns into thousands of dollars. I talked to a guy that last weekend that tried to make a $300 purchase of Dogecoin, right? He got an error signal when he hit submit, tried it again and realized that he had just bought three transactions worth of dogecoin, which are, by the way, now worth $16,000. So it's one of those things where it's like there was no investment knowledge that went into that. It was speculation.
18:04
Peter Dunn
Which brings us to our next point. Dame people have to understand the difference between investing and speculation. And they have to understand that speculation is not a plan at all and it will not help you reach your financial goals.
18:22
Damian Dunn
No, they may. If you get everything just right and it lines up perfectly and you recognize that you've made a really good return on this speculative investment. Speculative investment, and get out and then use that money towards your financial goal. Yes, it could. However, in my experience, I don't think that's how most people view speculative investments. It's almost like a lottery ticket, maybe. Have you experienced that? Is that kind of how you view it as well?
18:57
Peter Dunn
Yeah. And you know what? I'm okay with people viewing it as a lottery ticket. The challenge is when someone says, well, I took all my savings or I went self directed IRA, or you do all these things, that's when it terrifies me, because that while it's a strategy, it's not a reasonable strategy, it's unsuitable. Dame there's this thing investing called investment objective, like, what are you trying to do with the funds you're investing? And some classics are capital appreciation, which just means for it to grow, there's growth income, which is you want it to grow, but you also want to be able to take some dividends or interest off of it. There's liquidity. Maybe your objective is you just get to the money quickly. There's tax advantage, where you just avoid taxes and a few other things. Now, the question is worth asking, is speculation an actual investment objective?
19:57
Peter Dunn
Because if it is, that doesn't mean that all of your investments should be in speculative instruments.
20:04
Damian Dunn
Exactly. I believe that speculative investments do have a place in some people's portfolio. If they have a risk tolerance that accommodates for that. If they start to overweight that class of investments inside of their portfolio, that's when they start to potentially run into some very large problems. You may be swinging for the fences and you find out you lost half or more of your money. Well, now you have to keep swinging for the fences to try and make that back, because time may not allow you to revert to a more traditional allocation to recoup those losses. So speculative investments I'm okay with, perfectly fine with, but they've got to have a specific place in your overall strategy.
20:55
Peter Dunn
Call me crazy, but I don't want to risk my family's financial future on the host of Saturday Night Live making a joke and then my assets tanking. I know people sort of laugh that off. It sort of drives me crazy. Which gets us to another point that we want to talk about today, is if you don't have an out strategy, an exit strategy for a particular investment if you're just letting it ride, you're probably not that good of an investor. And again, we're not trying to kick people in the area. We're trying to help you understand that there's this cognitive dissonance between what you think is your reality. I'm a great investor because my assets gone up 1600% and cold. Hard luck.
21:44
Damian Dunn
Yeah, I've told you this story before. A number of years ago, I put some money into Facebook and wrote it up, and it got to the target that I wanted it to get to, and I got out. If I had left it there, it would have gone on to triple beyond that. But I executed my plan. I had a plan on when I was going to get out, took the cash, redistributed it to some other investments, and moved on. That is what we're talking about. You've got to know when enough is enough or when to rebalance have a plan on rebalancing, whether it's quarterly, semiannually annually, whatever the case may be, and then changing those investments, that portfolio over time to make sure it's continuing to reach the objectives that you've got for your investments.
22:34
Peter Dunn
So in the next segment, we're going to talk about investment policy statements, okay? That's what we're doing.
22:40
Damian Dunn
All right.
22:41
Peter Dunn
However, before we get there, Brian pinkens, our buddy Pink in the Facebook Live, just said what I was thinking. It's the old Kenny Rogers. Got to know when to hold them, no one to fold them. What's the rest?
22:53
Damian Dunn
No one to walk away, no one to run.
22:55
Peter Dunn
There you go. But if you know Kraft McGah, you never have to run.
23:00
Damian Dunn
You should sometimes, but that's okay.
23:02
Peter Dunn
Dame another element to this that is worth considering here is that sometimes when you're looking at your financial situation, it is better to be boring and admit you have no idea what you're doing, such as just get in a target date fund than someone who thinks they know what they're doing and tries to beat professional investors. You and I sort of had this exchange the other day. I think people who just admit they don't know what they're doing and get a target date fund are the smartest people in the room.
23:39
Damian Dunn
Yeah. Sometimes we speak with people who feel almost ashamed that they're just in the target date fund because they're nervous about the markets or they don't trust themselves, wherever the case may be. But they're making consistent contributions through their paycheck with 401K deferral. I've got no problem with that. They're just continuing to push money towards that investment. The investment side of it's being handled by the company itself, adjusting and tweaking those funds inside the target date fund, and they're going to be okay. They're not trying to outsmart the room. They're just doing what they can, making those contributions and letting the market handle itself.
24:19
Peter Dunn
What percentage of people who own a Toyota Camry have target date funds?
24:25
Damian Dunn
Oh, man.
24:26
Peter Dunn
Gotta be 100%, right?
24:27
Damian Dunn
Yeah. They might have multiple target date funds, which is another comment for another day.
24:33
Peter Dunn
But yeah, I remember when I was an investment advisor, there was this idea that even constructing portfolios, I somehow thought I was trying to rebuild my own allocations to outsmart target date funds, because that's when target date funds really started getting there. Should we explain what target date funds are?
24:56
Damian Dunn
Probably. Do we have time for that?
24:58
Peter Dunn
Yeah, go ahead. You've got 40 seconds.
25:00
Damian Dunn
All right, so a target date fund is one fund, one ticker symbol that you choose, and it will get a handful a basket of funds for another explanation that will continually be tweaked. As you get closer to retirement to reduce the exposure to risk, hopefully, as you get closer to retirement to hopefully not have as much volatility inside that portfolio, it will be a well diversified portfolio. Always and forever.
25:30
Peter Dunn
There it is. Always and forever. Like a great ninety S, R and B song. All right, Dame, coming up after the break, investment policy statements right here on the Pete the Planner Show. I'm Pete the planner. All right, 40 seconds. That was pretty good.
25:44
Damian Dunn
That wasn't great.
25:45
Peter Dunn
That's fine. Sorry, buddy. Ralph joins us on YouTube live, says, love the freshly shaved head. I shaved mine this morning. When did you last shave your head, Dave? Same, really? Do you use a razor? I use a blade, yeah. I use trimmers on the lowest setting. No one cares.
26:04
Damian Dunn
You'll get there.
26:05
Peter Dunn
I've done it once, but my head was like so it was so weird afterwards. I felt like a hairless cat skincare regime.
26:14
Damian Dunn
Mr. Petersworth got to take care of it.
26:17
Peter Dunn
All right, Dame, investment policy statement. This is something that you've been putting your head into here the last several days as we build things for our participants and clients and whatnot are you fully prepared to talk about this?
26:31
Damian Dunn
As prepared as I'm going to be.
26:33
Peter Dunn
As prepared as I'm going to be. Okay. In three, two, one. Back on the Pete the Planner show. This entire episode is dedicated to you, just like every other episode. But today we're helping you understand. Are you really as good of an investor as you think? And by the way, Dame, I think where we left off the last segment is you don't actually have to be that good of investor. You just have to admit that maybe you're not that good of an investor and you're fine with something like a target date fund or a group of properly allocated index funds. Everyone thinks they have to outsmart the market. And it's funny to me that people of all intelligence and education levels fall for that they think that they are somehow obliged to outsmart what can easily be achieved with more sort of passive and set it and forget it investing.
27:24
Peter Dunn
Yeah.
27:25
Damian Dunn
Here's the thing, that maybe it's common knowledge in our world, Pete, but maybe a lot of people don't understand professional fund managers don't beat the market consistently, maybe a few years in a row, but they don't do it consistently. It's not uncommon to see them hopefully just meet the market, which is what you're trying to do with indexing, or take a slightly smaller return because of the fees that are included in ETFs, as small as they are. But people don't beat the market on a consistent basis. Nobody does. So if you think you're going to be able to do it on a regular basis, well, and you do on a regular basis, should probably run to Wall Street and make a bucket load of money.
28:09
Peter Dunn
A bucket load of money. Damien Dunn. It's time for Investment Policy Statement 202. You know how many times people create things are like this is this 101? I went with 202. Could be 201.
28:25
Damian Dunn
201 probably would have been.
28:28
Peter Dunn
Dame, if you are a fancy yourself as a reasonable investor, then not only should you have the ideas that exist within an investment policy statement, like you should have know these things on an individual basis, but those thoughts should be aggregated into an actual investment policy statement that lays it all out. It says, this is who I am, this is what I expect, this is what I'm willing to do. And in doing that, it helps people have resolve around their investing ideas, especially when times get hairy. And boy, we've learned that in the last several months. So Dame, an investment policy statement. What are some of the considerations, what are some of the elements of an investment policy statement?
29:15
Damian Dunn
Yeah, I think first and foremost, one of the most important things that goes into this is listing out your goals. What do you hope to accomplish through your investing? Most commonly it's going to be retirement, preparing for retirement, having some capital accumulation to make sure that you can step out of work on that last day and feel comfortable going into retirement knowing that your needs are going to be prepared for. So as you start listing those goals out, whether it's retirement or some midterm or short term goals, whether it's a down payment for a house, or just maybe an outright purchase of a house prior to retirement or whenever funding a wedding, those options are virtually endless. Lay them out, know what you're working for, and let those goals help dictate how you're going to start achieving them.
30:04
Peter Dunn
There is an investment policy statement that I'm using as an example here today that I found@biglawinvestor.com. They're all over the place, but it's interesting to see the template. Big lawinvestor.com, it starts with the philosophy, right? And so Dame, on this particular statement, it's just a quote, it's a bogle quote. John bogle quote. And it says buy and hold long term all market index strategies implemented at rock bottom cost and the surest of all routes to the accumulation of wealth. Bogle heads will recognize that as a pretty tried. And true buy and hold strategy. That doesn't have to be your strategy, it just doesn't. But it's like sometimes when people send you a resume and they've got a Michael Scott quote at the top of the resume, you're like, okay, cool, bro. I mean, weird flex, but thanks for the quote. It could make some sense just laying it out there.
31:00
Peter Dunn
So when you're scared and when things get hard, you can look at the philosophy and you can remind yourself, oh, yeah, during calm times. That's how I think.
31:07
Damian Dunn
Yeah, totally. And the one thing I want to make sure we point out is that investment policy statements are fantastic to make sure that you stay in between the lines on what you're doing. However, if you're working with a financial advisor, even better. That way everybody knows the rules that are being played by and what hopefully the goals are for your investing. If you say you're targeting a 5% average return, yet you're 100% in equities and you're way out there on the edge, maybe a speculative investment part of your portfolio is larger than maybe we feel it should be, then you're taking way too much risk to achieve the overall goal of that investment policy statement. You don't have to be as invested as aggressively as you are. So an investment policy statement can help lay out all these things to not only help determine why you're doing something, but the strategy that you're going to undertake and what the reasonable results are going to be.
32:04
Damian Dunn
So you'll notice if you do Google investment policy statement, most of them that pop up are probably going to be geared towards nonprofits or corporations or large entities. That doesn't mean they don't have application for the individual as well. So with a little bit of work, you could follow some or find, I should say some good examples, but don't be scared to find what you find and apply it to your own personal circumstances.
32:32
Peter Dunn
Find what you find. That is rule five of Krav. That's right, MAGA.
32:36
Damian Dunn
Stay getting cash.
32:37
Peter Dunn
Dame when I was an investment advisor, I remember we always had to fill out, like an investor profile, the list of things like people's, risk tolerance, investment objective, and any good investment advisor is going to help you do that. But I think what we're really saying here today is you need to do this before you go to your investment advisor or do it after you leave your investment advisor, because ultimately you and I are very pro advisor. But our concern and why we do this is we want to make you better clients so that you have a better experience, plain and simple. Having an investment advisor alone is not going to do it. You have to be a good client. You have to know how to get the most out of the experience and completing an investment objective, a tax strategy, understanding your marginal tax rates, all those sorts of things go into that.
33:26
Peter Dunn
Now, there's another element here is dame I think about the different accounts and pieces of money. How I like to say it that Mrs. Planner and I have they have different purposes, right? So it's to say this is for college, this is for post 59 and a half. This is for south of 59 and a half. And so those all have different investment objectives and they also have different tax strategies and considerations. So that's why an investment policy statement should be pretty comprehensive, including objectives as it relates to a health savings account that may or may not be invested in the market.
34:08
Damian Dunn
Yeah. What you'll find with a well constructed, thorough investment policy statement is it's, A, going to leave very little up to question, and B, it's going to increase the quality of communication between all parties involved. You're going to know, just as Pete said, what you are trying to do, how you're going to do it, and you're going to be able to go back and check, did I accomplish the goal? Did I not accomplish the goal? Do I need to start making some changes in my overall philosophy or my approach? What do I need to do? And let this document guide you through this process, you and your advisor through this process.
34:44
Peter Dunn
A lot of do it yourself investors. If they were to truly classify their assets and look at their asset allocation in the classic pie graph of what someone they may say, well, I'm a moderate, aggressive investor, or they might say, I'm an aggressive investor, and then they look at their actual investments and how it lines up with what their risk tolerance is. Dame that will be, for most people, one of the most shocking, eye opening experiences there are. Here's the dumb metaphor I like to use. Let's say you love chocolate cake. Simply adding 80% chocolate. I don't mean cacao. I mean 80% of the total mass of the ingredients being chocolate. What does not make a good chocolate cake? And that's how people invest. They're like, hey, crypto or S and P 500 fund. I like it. I want a lot of it. And it makes your recipe taste worse almost every single time.
35:42
Damian Dunn
Totally. You've got to have a nice diversification to make sure that you are responsibly achieving your goals. You can't overweight too much in one area without running the risk of ruining the whole thing.
35:54
Peter Dunn
All right, dame coming up after the break, the biggest waste of money of the week, or is it? Governor DeWine from Ohio has a $1 million vaccine lottery, five of them. So if you get a vaccine, you may win a million dollars in the state of Ohio. You and I will do our best to figure out if that makes sense or if that doesn't make sense. And I'm not sure we're actually going to come up with answer. But all that is next right here on the Pete the Planner show. I'm Pete the planner. What do you think?
36:22
Damian Dunn
I have questions.
36:24
Peter Dunn
All right, well, I'm getting the particulars here, so I can actually give you information. Damien, you know that there's two phone calls that I'm awaiting and my life, our business life, that we collectively share partners, and I'm waiting on two of those calls. And we both guessed that they would both come during the show today, and I would be so distracted that I couldn't perform well like normal. Neither of the phone calls have come, so that is good. So that's why I'm still focused.
36:52
Damian Dunn
So you didn't put the phone out of reach and out of sight like I suggested? No, of course not. You jeopardized the entire show and the enjoyment of dozens of listeners and viewers.
37:06
Peter Dunn
Larry asked a really good question on Facebook Live.
37:09
Damian Dunn
Hopefully he's still here.
37:09
Peter Dunn
Didn't leave because we didn't answer. Any thoughts about staying in target date funds versus an income fund after retirement, if not using the funds for income at this time? There are target date funds that are meant for that purpose, and so you could simply use those. I'm not going to say it's six, one, half dozen the other, but oftentimes out of the money. Target date fund. I guess it would be an in the money target date fund where you've already achieved that year. Like a 2020 target date fund already is going to have income provisions to it. Right, Dame?
37:42
Damian Dunn
Totally. I would make sure that you look at how that target date fund is comprised, what it has, and what the overall allocation is inside of it, see if maybe there is another potential option out there that would help fill that role. If you feel uncomfortable with what that is, there's a number of different ways that you could go about it. Now, there are some funds that would specifically help you achieve that. If you wanted some a little bit more active management, you could go with a betterment Robo advisor type deal. Not just betterment. There are other options out there as well, but with an income tilt to it and have a little bit more active management.
38:20
Peter Dunn
All right, Dame, here we go. You got your current events ready for the week?
38:23
Damian Dunn
I got them.
38:24
Peter Dunn
I'm ending my week this way. So we're doing this. Of course, I got to edit the show and put it up to the radio stations. Oh, I got to mention the affiliates when we come back. But then I've got a live streaming event to end of my week at 02:00 p.m. On a Friday that I agreed to. It's my fault.
38:41
Damian Dunn
Yes.
38:41
Peter Dunn
Glad to help the people. All right, so let's start the segment. Three, two, one. This week's biggest waste of money of the week right here on The Pete the Planner show is something you're going to hear in just a second, especially if you're listening on WA W-K-A-M in Kendallville, Indiana. WIOU and Cocomo. Or maybe our flagship WIBC. FM indianapolis. Dame. Okay, so usually this time we talk about something that is just a complete waste of money. Sometimes we say things that are like a really good use of money. And I got to admit, when I saw this story this week, I didn't know what I was really dealing with. And that is the lottery in Ohio that potentially will give you a million dollars if you sign up to get a COVID vaccine. In an effort to increase the number of Ohioans who currently have not taken a COVID-19 vaccine to get vaccinated that's weird.
39:42
Peter Dunn
Copy governor DeWine announced a series of statewide drawings to help incentivize vaccinations. Ohios under the age of 18 who are eligible to receive COVID-19 vaccine will be entered into a drawing for a four year full scholarship to any Ohio state college and university I didn't know this. Including full tuition, room and board. Ohios aged 18 and older will be entered into a weekly drawing with a prize of up to a million dollars. A total of five weekly drawings for each prize will take place with the first winners being announced on May 26. Winners must have received at least one dose of a COVID-19 vaccine by the date of the respective drawing. Okay. Wow. All right, so let's acknowledge a couple of things here. Number one, clearly there's innovation going on how do you incentivize someone to take action and get a vaccine, right? There's various efforts to do this.
40:45
Peter Dunn
This might be the most innovative I've seen. Dame, if you can't I'm trying to set my own feelings about the vaccine aside. Like, I'm really trying to do that to try to understand this and I hope you can do the same. What do you think about this? I mean, does it make sense?
41:01
Damian Dunn
I am typically in favor of nudges to try and start to encourage behavior that you feel needs to be encouraged. This is a huge nudge. A great number of people. I still don't know how I feel about it.
41:22
Peter Dunn
Do you think it'll will it work? And what do we measure as it worked if 5000 more people get vaccinated? I'm just picking a number. Does it work or is it got to be 50,000 for it to work? Or is 50, like, what works?
41:40
Damian Dunn
Sure. I'm sure they have a target number in mind, though they probably will never say what that target was, which I would understand. I don't know how you would measure success beyond what the normal rate is. I'm sure they could if probably a little bit of research, we could figure it out, too. What what vaccination rates have done in Ohio over the last, you know, four to six weeks. But no, they're trying to encourage continued vaccinations or an increase in vaccinations. And this is how they've felt. Is going to be the most effective way of doing it? I'm curious. I don't live very far from the Ohio border peak. Could I sneak across and get a Jab over there and be eligible?
42:26
Peter Dunn
Please? Go get your pokey over there. I'll tell you this, I don't feel especially critical of this particular issue, but I certainly am intrigued by it. I don't want this to be like if something comes back or like we told you, it's not that. I just think it's interesting. Todd on YouTube live comments I assume by naming this incentive, the state of Ohio has already ruled out the possibility of a lawsuit by anti vaccine individual. I mean that's a good point. It goes to sort of like true lottery games and let's say you buy some cereal and you could win like a kazoo or something. I think you could actually write to the no purchase necessary sort of things. There are rules around these things. You got to assume they've dealt with that.
43:13
Damian Dunn
Maybe the state's partially looking into this because they'll get some of that money back in taxes at this point. Whether now the money has to be used for vaccine stuff, they give out a million bucks, they're going to get some state revenue out of that as well.
43:26
Peter Dunn
Dame, what's in the news this week?
43:29
Damian Dunn
Well, Americans are paying down their credit card debt at levels not seen in years. That's good news for everyone. But credit card issuers, large card issuers that cater to borrowers ranging from the affluent to the subprime say that overall card balances and the firm's interest income are falling to make up for it. Issuers are spending more on marketing and loosening their underwriting standards, which we also have another story about as well. Discover Financial Services said it's on his earnings call earlier this month that the share of card balances that were paid off at the end of the first quarter was at the highest level since 2000. Capital One said nearly half of credit card balances it had at the beginning of March were paid off by the end of the month, which the company described as historically high. Pete, people are paying off credit cards.
44:18
Peter Dunn
Remember, one person's spending is another person's income. And when it comes to credit cards, the person who's getting income is a bank. Our personal successes are often juxtaposed against those of the economy at large. Right? We're consumer based economy. But Dame, if you take care of business and you save money and you pay off your debts, you pull yourself out of the consumer based economy and it hurts the consumer based economy, yet you are better off. And that's exactly what has happened in the last twelve or 13 months. This always happens. We talked about it a couple of weeks ago. When consumer confidence is low, people's financial lives get better. When consumer confidence is high, people go and do dumb things and go into credit card debt, and it's going to happen a lot in the next six months. So the credit card companies should just pump their brakes.
45:09
Peter Dunn
They're going to be fine.
45:10
Damian Dunn
Well, some of the largest US. Banks plan to start sharing data on customers deposit accounts as part of a government backed initiative to extend credit to people who have traditionally lacked opportunities to borrow. The program is aimed at individuals who don't have credit scores, but who are financially responsible. The banks would consider applicants account balances over time and their overdraft histories. Some 53 million adults in the US. Don't have traditional credit scores. According to Fair Isaac Corp. The Creator of FICO.
45:43
Peter Dunn
Here's the thing. There is a means to enter people into the borrowing atmosphere. Ecosphere, I don't know. And it's called a secured credit card. And that is a much better way to go than to simply just start extending credit to people who are likely unfamiliar with the very basics of what it is to borrow. It is so easy to borrow from not only credit card companies, store credit cards, student loan people. It's so easy to do it. There is a reason why this 53 million people conceivably don't have credit. And that sounds judgmental, it sounds awful, and I'm sure there's some horrible systemic issues within that. But I have to tell you, there is a dark side to that. And the dark side is that a lot of people are going to get in big trouble if this thing actually happens. Is it happening or is it proposed?
46:40
Damian Dunn
I believe it said the pilot program is expected to launch later this year.
46:46
Peter Dunn
Oh, good Lord. Give me a good story. Can you have any good stories? No, I don't.
46:53
Damian Dunn
Well, you know what? There's one that had a breaking news update that kind of turns into a good story. Darkside, the cybercriminal group whose hacking activities took the US's largest gasoline pipeline, the Colonial Pipeline, offline for four days, said it felt kind of bad about disrupting the flow of fuel to critical hubs on the East Coast. The rest of the story is kind of inconsequential now because they have just announced this afternoon that they are going to shut down operations and they will no longer be hacking anyone or providing their services going forward. That's how bad they felt, Pete.
47:27
Peter Dunn
What?
47:28
Damian Dunn
Yeah, hackers with a conscience. Apparently now, they already had some rails in place. They already said they weren't going to allow their services to be used to hack hospitals, schools, nonprofits, governments and mortuary services.
47:46
Peter Dunn
Of course not.
47:48
Damian Dunn
But they did happily accept $5 million to release the Colonial Pipeline information before they said they were going to shut down.
47:57
Peter Dunn
Look, I have no data or anything to suggest this, but do you feel like we're losing the cyber war as a country?
48:06
Damian Dunn
I wonder how much goes unreported.
48:09
Peter Dunn
Yeah, I feel like we're in bad shape there, and we have been for a very long time.
48:14
Damian Dunn
Yeah.
48:15
Peter Dunn
Dame, it's with that uninformed opinion that I'm going to end our program. Dame, thank you for your contributions to this show. I look forward to seeing you again, and I will defend myself, sending you good vibes, because good vibes are all that's in the budget. I'm Peter Dunn. That's dame? Dunn. Orange Belt. We'll see you next week. I didn't make very many mentions of your Krav McGahn news this week on the show.
48:40
Damian Dunn
Too many were made.
48:41
Peter Dunn
At any point, did you picture doing any of the moves to me, as I consistently talked about it on the.
48:46
Damian Dunn
Show this week when you said that we might see each other in person? Yes. I thought of a few things that I could happily do.
48:55
Peter Dunn
I've told you about the time in high school when a guy was trying to beat the ever living tar out of me, and I just made him laugh and he stopped. That was sort of my move.
49:06
Damian Dunn
Good luck.
49:08
Peter Dunn
Do you think there's a nerd do well on the street that's trying to accost me or force himself upon me or herself upon me, and I just make them giggle and they run away? Or do you think I need to be a level one Krav McGahn person?
49:21
Damian Dunn
I mean, you're in pretty good shape now. You could probably run faster than that person.
49:26
Peter Dunn
That's a good point. I am in pretty good shape. What if I get so good looking that it affects our business in a positive way?
49:35
Damian Dunn
We'll never know.
49:36
Peter Dunn
What? Why not? All right. Hey, I got to go. I got to do some stuff. All right, listen, everybody, thanks for being here this week. I hope you have a really good weekend. If you live in Ohio, get that pokey. Maybe get a million bucks. I don't know. I don't care. Do whatever you want. Hey, everybody, stay getting money.
