More Knowledge, More Wealth - Ep. 164: How to Manage Different Aspects of Your Personal Finance

Ep. 164: How to Manage Different Aspect of Your Personal Finance

[00:00:00] Gabe: Good afternoon. This is Gabriel Shahin, certified Financial Planner and your host of More Knowledge, more Wealth here on every weekend, talking about all important topics of personal finance. Our goal is to give you the knowledge you need to increase your wealth, not to the listener. You can always reach out to myself or any one of our colleagues here at Falcon Wealth Planning.

[00:00:16] Our phone number is eight five five nine six three. 25 26. That's 8 55 96 Falcon like the Bird, or visit our website@falconwealthplanning.com. That's falcon wp.com for short. We have a knowledge center that you can reach out, watch a bunch of videos to really help increase your knowledge. Now I am the principal of thought and Wealth Planning.

[00:00:40] I am a also certified financial planner. We are fee only. Registered investment advisory firm that specializes in comprehensive planning folks. We also manage money as well, but our comprehensive planning folks goes over anything that involves a dollar sign. That's where you are today, how retirement looks like.

[00:00:56] Talk about social security, pensions, investments, state planning, taxes, insurance, folks, you name it. Anything that involves a dollar sign we can help with. And folks, we are offering a free financial assessment where we can help relate this show to your specific situ. . Our phone number is (855) 963-2526.

[00:01:16] That's 8 5 5 96 Falcon like the bird. Folks, we can go over just about anything that you need. And today we are gonna talk about a handful of items. We're gonna talk about the markets. We had a really good last week with one day in particular. Last Thursday. We're gonna talk about cryptocurrency. We're gonna talk about the whole FTX debacle.

[00:01:35] We're gonna talk about, uh, regulation needed on that. And along with, other, uh, different items with interest rates and how it affects tech companies. Because here's the thing, folks, there are so many different aspects to personal finance and a lot of people just take a look at what's on the TV and they think that's normal.

[00:01:53] Just whatever normal is to them. I'll give you an example. I was interviewed by a news outlet at. A year ago, and they said, what is an advice you have to the younger and newer generation, or what worries you? What scares you is another one. I said, what worries me and what scares me is also similar advice to the young generation is that is people have been spoiled since.

[00:02:13] Covid of 2020 of just positive returns in the market. You could have invested in almost any tech company and you would've made up a hundred plus percent by investing during Covid when the markets were dropping to where they were up until the end of 2021. So my issue is I had people cross the table from me.

[00:02:32] We had clients, prospects that said their anticipation is to. A 20% rate of return. That's what they expected out of their investments. That's all these, uh, younger, newer investors have anticipated. Even something as stupid as Hertz rent a car that went bankrupt and more of the, they became like a meme stock.

[00:02:55] People were investing money in this. So much so Hertz said. I can't believe these idiots are buying us. Let's issue a billion dollars more in stock. And that got ate up by these un novice, uh, these novice unsophisticated investors. So the issue, of course, what that was, ev obviously it was going bankrupt.

[00:03:14] Everybody's gonna lose their money. But guess what happened? The private equity company came in there and ended up buying them out at $8 a share where so much so. The investors, these idiots that bought a bankrupt company actually made 16 x on their money. Absolutely insane folks. But this is what I'm saying.

[00:03:33] People were just get there no way you could lose money. They were given so much high return anticipation, expectation, and they think it's normal. This was my biggest fear. And then of course 2022 hits and they get. In the face. Almost every investment class, every asset class, lost money. We're talking about every, almost every sector and almost every asset class was down.

[00:03:59] Now this was talk about a Come to Jesus session. So now people are realizing, wow, this isn't as easy as possible. Now if you invested last in 2020, uh, in 2020, you actually are still up in your current portfolios as of today. But some of these people that invested in tech co stocks, uh, they are. As high, and it could be something with Zoom, it could be something with Peloton, it could be something with Trulia, it could be something with, so, so many of these tech companies that were losing money that are now not favorable, their investments, they have lost 70, 80, 90% plus of their whole draft.

[00:04:36] Kings was another example of that as well. And so what does this mean for you? Well, here you have to understand how markets work. Okay. Now, here at Falcon Wealth Planning, we did shifts towards value. . Especially last year. Now, why was that important? Because in a high interesting environment, it's as clear as water.

[00:04:52] Guys, this is not an opinion. This is a matter of fact. I'll give you a couple examples. When interest rates go up, what happens to the bond prices? Exactly. They go down, it's, it's obvious that is a hundred percent economic fact, but, and the same thing happens folks, when interest rates go up. Tech companies also go down in value as.

[00:05:16] Why is that? Because tech companies mostly are not profit. and they count on money to survive. That's lending money, borrowing money from private equities for individual people or the banks. By the way, folks, if you're just joining us, you're listening to Gabriel Shahin, certified financial planner and your host of More Knowledge, more Wealth here on every weekend.

[00:05:35] Talk about all important topics of personal finance, and today we are just discussing. Uh, markets that we're in right now, and it's interesting how people did not see this coming, and I hate to say that, but in a rising interest rate environment, tech company is one of the first sectors to get punched in the face.

[00:05:52] And these are the things that you have to take a look at. Now, for somebody who doesn't do this daily, they maybe don't understand those concepts, but at the end of the day, if the money is so cheap to borrow, so cheap to operate, it's so easily. . Well, it doesn't make sense for when interest rates would go up for that same story to be given to these tech companies.

[00:06:13] And I'll give you another example. They have debt that they have through banks. Now, these banks are not gonna wanna refinance that debt. They're not gonna refinance it at number one, their lending guidelines are a lot tighter. And number two, the company can't afford a higher interest rate. So you're saying isn't some money better than no money?

[00:06:31] Cuz if they foreclose on it, they, they or not foreclosed, they, uh, companies put 'em into bankruptcy. The banks put 'em into bankruptcy. Well then they don't have access and they don't get their money anyway. That's not true. These companies do have assets and at least through bankruptcy proceedings, the banks can get their hands on some of these assets.

[00:06:50] These are classic tells and classic signs of why it makes sense to discuss your situation with a professional because these items are often overlooked and under. Understood if you will not understood. Uh, because the fact of the matter is simple when you look at what's going on today and have a globally diversified portfolio is absolutely crucial in the success of your portfolio.

[00:07:16] And this is why people that have reached out, I had my own cousin reach out, uh, working for a large tech company that's saying they're sick and tired of seeing their portfolio. And the joke was, Hey, I told him to buy into it. But the problem is I gave that advice four years ago and he made a bunch of money in that process.

[00:07:33] But now you have to relook at divesting away. You have to look at understanding what makes sense at this current juncture. And so the point of that is, is knowing that your situation is unique to. You don't wanna take advice from somebody, a coworker, a friend, a family member that doesn't understand your full situation, where they're giving advice just based on what works for them.

[00:07:55] They may be able to afford to lose $10,000 or a hundred thousand dollars for even a million dollars. The risk tolerance may be way different than yours. Their goals may be way different than yours. And so if this money is geared and focused towards retirement, then you have a longer time horizon. So you have to be careful about putting your.

[00:08:14] All in one basket, number one. And number two, trying to swing for those home runs cuz you don't wanna strike out and striking out could be crucial and you could put your money to work. Heck, this US stock market on average does 10% a year since 1926. That seems like a pretty good bet for me. And the problem is you think it's betting.

[00:08:36] In reality, you're investing cuz you are investing in companies that have been proven. You're investing in companies are through all different sectors and asset classes. You are investing in many different ways to achieve your goal. Not just in the US markets, but international markets. And they also have developed and emerging markets and large, mid small.

[00:08:55] Cap companies there too. Making sure you can invest properly is so crucial for financial security and it's so crucial for mental stability because no matter what happens internationally or domestically, you're covered. And as long as you're investing in an index, cuz companies can go outta business. But an index cannot, because you are investing in all the companies and for all the large corporations to go outta business folks, you won't even have electricity, let alone money in the bank.

[00:09:24] You get what I'm saying? So this is why it's absolutely important. To make sure you talk to a financial professional and just talk to somebody who knows what they're doing to point you in the right direction. Folks, our phone number, we are offering a free financial assessment. We have offices all across the country and we'd love to help.

[00:09:41] Our phone number is (855) 963-2526. That's 8 5 5. 96 Falcon like the Bird. We can help put together a personal assessment to help relate this show to your situation, to help answer the questions you have and make sure you are not making any of the common pitfalls that we see people making on a daily basis.

[00:10:02] Folks, you're gonna retire once in your life. We retired alone 30 to 50 times last month. Why? Because we do this in volume and scale. I'm not the only planner here. We got multiple certified financial planners at Falcon Wealth Planning all scattered across where we can cover the whole country. Our headquarters are here in Southern California, which is great because this show a lot of us through podcasts and so on, we have a large presence.

[00:10:26] Most of our clients are here in Southern California. I live in Southern California, but the point of the matter. , no matter where you are, where you live or your situation, talking to somebody who does this for a living can only help you. It could be, I've had some people say, I want to pay off my house completely cuz I got money in cash.

[00:10:44] I sold my investments in sitting in cash. I said, what's your interest rate on your home? Well, 2.75%. My God, you can get a four and a half percent United States Treasury. Why would you go pay off a debt at 2.75? Which, oh by the way, you get a tax write. Depending on your tax credit, you could be at one and a half percent after tax.

[00:11:07] You get what I'm saying? You're gonna go pay off a one and a half percent after tax potentially, versus putting it into United States Treasury risk free. I mean, this is my point. This is the issue that I'm seeing with people today. They're very reactor. They react so fast on news that are coming out. It's time to stay disciplined.

[00:11:27] Cha chase after the shiny new thing. You gotta make sure you stay disciplined. We would love to help with that, folks, give us a call. Our phone number is (855) 963-2526. That's 8 55 96 Falcon like the Bird, or visit our website@falconwealthplanning.com. That's falcon wp.com for short. Folks, we're gonna go on a quick break and stay with us after a few words.

[00:11:53] Welcome back folks. This is Gabriel Shahin, certified financial planner and you're host of More Knowledge, more Wealth here on every weekend, talking about all important topics of personal finance. Today we're just talking about markets in general, and we had a great day on Thursday of last week showing how the market was.

[00:12:14] By almost 5% depending on the index. Some indexes like Nasdaq was up over 5% and Dow Jones sp also with a great day. Now, if you're wondering why this is the case, well, it all started with inflation numbers and when they looked at the projected inflation numbers and where we thought it was going, it was less than anticipated.

[00:12:31] We've seen it folks. We've seen it by gas prices. We've seen it by buying crickets and Amazon to the dollar store, not being a dollar 25. When you go to the dollar store or the dollar. . And so my point with all this naturally is that things have gone up in price. You don't need me to tell you that. Go look at a cost of a filet min, yay, uh, filet Minn is over at Costco.

[00:12:54] It's almost doubled in price since Covid. So now things that are adjusting and we're trying to see alight. Price stability. We saw price restructuring happening with all the supply chain issues and so on. Now you're actually seeing stability. Now, this is extremely important for somebody like yourself.

[00:13:10] Now when things are not going up as much as they were before, that means you're starting to see a slowdown. So we're at the end of the cycle markets going through expansion periods, peak periods where things that are all time high, and the trough is at the bottom. So we are on its way down, so we're coming towards the bottom number.

[00:13:27] Could be a great time to invest. Number two, it could be a great. to look for purchases, because right now you're seeing something as simple as home prices With interest rates going up. If they're slowing down on interest rates going up, you're gonna see the affordability index. By the way, home prices are gonna become much more affordable if they haven't already.

[00:13:46] You've already seen some of these homes that have dropped in value and you just go straight on Zillow or Redfin. You could see price drop, price drop and price drop. So the market went up because it liked what it saw. That means. Essentially based on just this indicator that the end is near of this volatile time.

[00:14:04] Now, with that being said, we still haven't officially had a recession. That's also a lagging indicator, so it historically used to be more times than not that two quarters of negative GDP equals a recession. Of course, they now have decided to change that or not change it, but understanding there are more elements to it, such as unemployment is still very, very, But when you take a look at where things are currently at, you can understand that right now things are getting better.

[00:14:36] Just simply, and that's how the market works. Just simply what happened on Thursday shows you it's a trickle effect of what to expect with those numbers that recently came out. And then sure enough, Negative news came out the very next day, ftx, which is a cryptocurrency exchange site, the second largest one that's out there, fell into financial duress and it looks.

[00:14:58] Frankly that they were taking that money and investing it. Other people's money. Banks do this by the way too, by the, uh, just so you know, they take your money that you have deposited in the bank and they lend it to other people. What they were doing is they were lending it to other subsidiaries of themselves, investing it into very, uh, risky investments.

[00:15:19] And of course it's turned on them. When people wanted their money, they didn't have enough money to give. So keep in mind this did not happen to the FTX us. So as of now, at least they're giving people back their money that need their money. This happened to their other international FTX exchanges. Now this is part of the benefit of some of the regulation that US imposes.

[00:15:43] Now, by the way, Coinbase is another famous one. Gemini is another famous one. Binance is. Famous one, uh, crypto.com is another famous one. So there's a bunch of places, but it's very similar. Everything I listed is very similar to Bank of America, Wells Fargo, JP Morgan, US Bank. These are all places that hold your money, and so hence why there's an F D I C insured.

[00:16:07] If something happens to those banks, if they have poor lending practices. We saw that during 2000. When companies like Lehman Brothers and Barrett Sterns went outta business when they were buying a bunch of junk. So my point with all. Is right now, you are seeing a situation where in the US at least, where we are safe.

[00:16:27] Now you're, if you have money at ftx, I would recommend taking that out because they've proven to be extremely poorly ran and make very bad decisions. Uh, my comment to you of course, is that this is what crypto needed. This is the risk. So not only is the risk in cryptocurrency like Bitcoin and light corn Ethereum, and so.

[00:16:49] Or Dodge coin. A lot of people know what that is. Not only is there risk in investing, but there's also risk in the custodians, those who hold the assets as well. Now you're seeing that because truly of the lack of regulation. I read that they had less than 10 people working at those companies holding billions of dollars of assets.

[00:17:07] Kind of crazy to think, but that's what happened. So you have to understand then, So regulation now you start to think about it is needed, and I believe that's where there is a lack of understanding because nobody truly knows, number one, who even made Bitcoin. So there is a lack of feeling of security if you get the government involved.

[00:17:30] That's the saving grace for cryptocurrency. I'm not telling you to go buy it, frankly. I think it's extremely early in the western cowboy days of cryptocurrency. By the way, folks, if you're just joining us, you're listening to Gabriel Shahin, certified Financial Planner, and you're host of more knowledge, more wealth here on every weekend, talking about all important topics of personal finance.

[00:17:49] And today we are talking about this crypto debacle that happened absolutely crazy would happen with, uh, what's going on. They tried. Backed up and bought out and protected. But you know, they, they, they didn't pass a smell test. This was extremely, , extremely. Uh, poor management of ftx, and you've now seen what happened, the repercussions of that, which has caused cryptocurrency really going a down tear.

[00:18:15] My point with cryptocurrency folks, it's still extremely early in it, and there is some validity to the technology, but from an investment point of view, how does it actually make money? It's banking on the, frankly, the whole. And World Society of Currency Management goes to hell in a hand basket. I mean, that's I think what everybody in cryptocurrency, I think that's like the core belief.

[00:18:40] If everything goes to a negative or people agree that they don't value the dollar anymore, any world currency and they agree to use because they're sick of the government at Bitcoin going forward, that's a bit. I mean, and sadly, there is a lot of people that believe this. You do not wanna put all your eggs in one basket.

[00:19:00] Whatever you decide to invest in crypto, you have to understand it has a very high probability. I'm not saying it will, but it has a very high probability of going to zero. Once you understand that, once you feel that, then you can start thinking to yourself of what makes sense for you. Could it make money?

[00:19:18] Sure. We saw it go up to almost 70,000 per Bitcoin. Yeah. We saw a theory of north of $4,000. But yeah, we have seen a massive drop of over 50% or plus 50% plus, but this has happened multiple times with cryptocurrency. So, yet again, I get a lot of calls on this. Does it make sense? It could make sense, but consider this a very risky investment.

[00:19:40] For you, and it's still very early as we saw, not only could the actual investment itself be extremely risky, but in addition to that, the custodian that who actually holds your assets, as we've seen with ftx, can be equally as risky. So, Thank goodness for the US and the regulation, the US Binance and us ftx, uh, from what we understand right now is still liquid and available for you to pull your money out.

[00:20:09] So just as classic case of the wild, wild west and not putting all your eggs in a basket you don't fully understand. Cuz I see that quite often that people are just trying to chase the new shiny. People think that, uh, what is it? Fear of missing out. They don't want, they wanna be fomo. They wanna hurry up and get in and buy.

[00:20:28] Everybody has fell into this trap. Just be careful and stay disciplined. Rome wasn't built in one day and there's no billionaires overnight except for that lot of winter in California. Not far from us, by the way. So this is the time where you have to make the decision. This is the time you have to understand your situation of saying, when do I.

[00:20:48] Control of my financial situation because you could have money scattered all over the place. It, uh, uh, Robin Hood here, E-trade here, uh, Bitcoin, uh, through Robin Hood or Coinbase or some other exchange. You could be having just multiple different bank accounts cuz you were chasing maybe a good CD at the time.

[00:21:09] Maybe you have your money in I Bonds, which is through the US Treasury Direct. My point is you want to stay discipl. Of your situation. And make sure that you understand where everything is. You should have everything that you have on a net worth statement, on a balance sheet so you can understand where you are today and what your situation looks like in 12 months.

[00:21:30] It should always be positive, depending on your stage of life. If you're adding money, if you're under 40, 50 years old, it should always be positive cuz you're continuing to add money. But also it's more important cuz we ran into a, a situation recently where somebody passed away and they were single, they were not married.

[00:21:48] And so their situation, and they have heirs, they have brothers and sisters and nieces and nephews where they couldn't track down all the assets. There was lingering stock certificates, which is kind of crazy, today's day and age, but it's sad when you work so hard for money and your money just goes and disappears.

[00:22:07] Folks, if you want help with this, if you want help just aligning your situation, understanding your situation, relating the show to your, uh, specific situation, give us a call folks. Our phone number is (855) 963-2526. That's 8 5 5 96. Falcon like the bird. Would love to put a personal assessment for you to help relate this show to your specific situation because right now is the best time for help.

[00:22:32] Whether you have stocks or they have bonds or they have a 401k, whether they have a brokerage account, whether you have cryptocurrency. Cuz right now cryptocurrency doesn't have the watch sale rule, so markets dropping could make a lot of sense for you. You could sell and rebuy the very same second, the same exact thing, and get a full on write off for what you.

[00:22:49] And so I just don't see a lot of people taking advantage of that, unfortunately. So by doing that, by having help, by seeking guidance, obviously taking into effect any training costs it may have, this could save. Hundreds, thousands, tens of thousands, if not hundreds of thousand dollars in taxes, depending on your situation.

[00:23:07] Anyway, you slice it, it's a win win for you and your situation, so take advantage. Sadly, I see people that don't put everything you have on paper. I'm not saying put passwords and account numbers and everything like that, but you know what? Say something that only you or your heirs will know. Okay? Share that with.

[00:23:25] Maybe not the dollar amounts, but where the assets are. This could also make sense. Folks, this was a fast, fast show. I thank you for tuning in with us, joining with us, uh, every single week as we talk about all important topics of personal finance. Well, thank you for listening. Want you enjoy your week.

[00:23:40] Have a great weekend and God bless.