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Best In Wealth Podcast

By: Scott Wellens
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  • Summary

  • This is the best in Wealth podcast – A show for successful family stewards who want real answers about Retirement and investing so we can feel secure about our family’s future. Scott's mission is simple: to help other family stewards build and maintain their family fortress. A family steward is someone that feels family is the most important thing. You go to your job every day for your family. You watch over your family, you make sacrifices for your family, you protect your family. I work with family stewards because I am one; I have become an expert in the unique wealth challenges family stewards face. Scott Wellens is the founder of Fortress Planning Group - an independent, fee-only, registered investment advisory firm. Fortress Planning Group is dedicated to coaching clients toward a holistic view of wealth and family stewardship. Scott is a certified financial planner, a fiduciary and has been quoted in the industry’s leading websites including Forbes, Business Insider and Yahoo Finance. Scott is also a Dave Ramsey Smartvestor Pro in the greater Milwaukee and Madison areas.
    Copyright 2024 Scott Wellens
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Episodes
  • How to Overcome “The Wall of Worry,” Ep #244

    How to Overcome “The Wall of Worry,” Ep #244
    Apr 26 2024
    Why are we worried about the world, the economy, the stock market, and our investment accounts? The stock market started the year great. The S&P 500 was up over 10% at the end of the first quarter. But the stock market has dropped steadily in the first 19 days of April. My business Partner, Brian, wrote an article titled “The Wall of Worry.” In this episode of Best in Wealth, I’ll cover some of the details of his article and share why family stewards can take a deep breath. [bctt tweet="How can you overcome concerns about the stock market, inflation, and the geopolitical climate? I share some statistics to calm your nerves in this episode of Best in Wealth! #Investing #FinancialPlanning #WealthManagement" username=""] Outline of This Episode
    • [2:29] Why is everyone so worried?
    • [3:52] The market reacted to inflation
    • [9:52] The geopolitical climate
    • [15:03] What do we know?

    The market reacted to inflation The financial markets saw a great start in 2024. US stocks raced to almost 10% gains in the first quarter. Things have since been dropping, almost back to where we started. We saw the same pattern in 2023. The inflation report released in March reported a 3.5% annual rate—higher than expected. It also likely closed the door on a June interest-rate cut by the Fed. That news made the stock market drop quickly in April. Why? The stock market had priced in six interest rate cuts in 2024. But because inflation ticked higher, the expectation has shifted to maybe three cuts. Market participants are clearly worried. In June 2022, CPI inflation was at its peak at 9.1%. It’s dropped every quarter since. In June 2023, we were down in the threes. In March, it was 3.5%. When you look at the report, you’ll see progress. Battling inflation is a messy process. We should consider ourselves fortunate that inflation has fallen as much as it has, without a catastrophic event happening in the economy or labor market. We’ve avoided a recession so far. The average rate of inflation over the last 100 years is 3%. Our latest inflation rate was 3.5%. The Fed wants the inflation rate to be 2%. But 3% inflation might be the “new normal.” [bctt tweet="worrying? I share some thoughts in this episode of Best in Wealth! #Investing #FinancialPlanning #WealthManagement" username=""] The market reacted to the geopolitical climate Stocks were up while bonds and oil were down as Brian wrote this article on Monday the 15th. It was the opposite of what we thought would happen. What were past reactions to major geopolitical events? They might surprise you:
    1. In the six months following the onset of WWI in 1914, the DOW dropped 30%. The market closed for six months. But it rose more than 88% in the following year—the highest annual return on record.
    2. Hitler invaded Poland on September 1st, 1939, beginning WWII. When the market opened, the DOW rose 10% in a single day.
    3. The DOW Jones lost 1% and remained calm during the 13 day period of the Cuban Missile Crisis in 1932.
    4. The stock market opened up at 4.5% the day after JFK was assassinated and gained more than 15% in 1964.
    5. Stocks fell sharply after the 9/11 attacks, dropping 15% in the two weeks following the tragedy. The economy was already in a deep recession. Within a couple of months, the stock market had gained back all of its losses.
    6. The US invaded Iraq in March 2003. Stocks rose 2.3% the following day and finished the year with a gain of more than 30%.

    When the geopolitical climate is uncertain, it causes us to feel anxious and can lead to panic. But it rarely pays off to make portfolio changes in reaction to geopolitics. Why? We don’t know what’s going to happen. The more we dwell on it, the more our minds go to worst-case scenarios. While we might be right about our predictions, we...
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    18 mins
  • Understanding the Mutual Fund Landscape, Ep #243

    Understanding the Mutual Fund Landscape, Ep #243
    Apr 12 2024
    The mutual fund landscape is complex, with thousands of choices. In fact, at the end of 2023, there were 4,722 US-domiciled funds that we could choose from. Of those, 2,043 were from US equities, 1,124 were international funds domiciled in the US, and over 1,500 were bond funds. If you add all the money from these funds, it totals 10.6 trillion dollars. $5.4 trillion is in US equity funds, $2.1 trillion is in international equities, and $3 trillion is in bond funds. Whew. If you decide to buy an ETF or mutual fund, you’re spreading out your risk (as opposed to buying individual stocks). But how do you choose between the thousands of options? Should you choose between the thousands of options? My goal is to help you understand the landscape of mutual funds so you can make informed decisions in this episode of Best in Wealth! [bctt tweet="In this episode of Best in Wealth, I dive into the mutual fund landscape and how it works. Give it a listen! #wealth #investing #FinancialPlanning #WealthManagement" username=""] Outline of This Episode
    • [1:08] Did you fill out an NCAA bracket?
    • [3:32] The mutual fund landscape
    • [6:21] What is an active mutual fund versus an index fund?
    • [11:28] Actively managed funds aren’t performing well
    • [16:48] Are you an active or passive investor?
    • [18:02] Is there a better way?

    What is an index fund? An index fund is your first option for investing in a mutual fund. An index fund tracks indexes, such as the S&P 500 or Russell 3,000. You’re buying “the market.” You will receive the return of that market (minus expenses and tracking error). If you want to do better than an index fund and do better than the average of the stock market, you hire someone to manage it for you (i.e. buy into an actively traded fund). [bctt tweet="What is an index fund? I cover the basics of mutual funds (and how many there are to choose from) in this episode of Best in Wealth! #wealth #investing #FinancialPlanning #WealthManagement" username=""] What is an active mutual fund? An active fund is your second option for investing in a mutual fund. You have the option to buy that fund through your brokerage account or 401k. Active funds have a mutual fund manager and a team of people making decisions on the fund’s behalf. The manager is the “expert.” They look at all of the publicly traded companies and choose the ones that will be in the fund. That manager and his/her team might decide to sell some of those companies. You’re hiring this manager to do well, to beat the market. But how do you know if they’re doing well? The University of Chicago’s Center for Research and Security Prices is a great place to start. They looked at every single publicly traded company and created indexes to see how the market was doing. They’re how we learned that the US stock market averaged a 9% return per year. But this throws a wrench in things: It’s not looking good for the actively traded funds. Actively managed funds aren’t performing well On 12/31/13, there were 3,022 funds available to choose from. As of 12/31/23, only 67% of those funds still exist. Why? Those 33% weren’t performing well. When we look at winners, looking back 10 years, only 25% of the experts beat the market. You only have a 25% chance of selecting an actively managed fund that will beat the market. 15 years ago, there were 3,241 funds and only 51% of them survived and only 21% of them had beaten their benchmark. Only 45% of the funds that existed 20 years ago survived. Of the 2,860 funds available 20 years ago, only 18% have beaten the market. What does this tell me? Actively managed funds aren’t doing any better than index funds. Chances are, whether you buy into an index fund or an active fund, it’s not always the best...
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    21 mins
  • Solving the Two Biggest Retirement Problems, Ep #242

    Solving the Two Biggest Retirement Problems, Ep #242
    Mar 15 2024
    The #1 issue most people face when it comes to retirement is running out of money. Secondly, most people want to live the best retirement that they can. If there is anything left, they will gladly give it to their children—but it does not need to be millions of dollars. Too many people are dying with too much money and never got to live out the retirement of their dreams. You have been saving your entire life. You should not be scared to spend the money and fear it running out. So how do we make sure that does not happen? I will share some of the common solutions—and our strategy at Fortress Planning Group—in this episode of Best in Wealth. [bctt tweet="The #1 issue most people face when it comes to retirement is running out of money. How do we solve for that at Fortress Planning Group? Learn more in episode #242 of Best in Wealth! #retirement #RetirementPlanning #WealthManagement" username=""] Outline of This Episode
    • [1:07] Spending money in your retirement
    • [2:49] The two central issues with retirement income
    • [4:38] Solution #1: Purchase an annuity
    • [5:50] Solution #2: Live off your dividends
    • [8:00] Solution #3: The 4% rule
    • [10:04] Solution #4: Guyton and Klinger’s Guardrails
    • [15:30] Utilizing risk-based guardrails

    Solution #1: Purchase an annuity An annuity has the potential to give you steady income until you die. Let’s say you give $1 million to an insurance company in exchange for monthly payments. It might be $4,000-$6,000 per month. But when you pass away, the insurance company keeps your money. If the insurance company goes out of business, you lose those monthly payments. Many people still use annuities to fund their retirement. The biggest drawback is that most people do not think about inflation. That money will not go as far in 20 years. Solution #2: Live off your dividends Let’s say you have $1 million and you decide to buy a company that is paying a nice dividend. Let’s just say you are receiving a 5% dividend or $50,000 a year to live off of. But most people do not know that dividends can go down. Secondly, when the stock price fluctuates, your $1 million could lose value. Someone who invested in Wachovia Bank lost everything when they filed bankruptcy. The investment became worthless. [bctt tweet="Can you fund your retirement by living off your dividends? I share why this isn’t the wisest decision (and what we do instead) in this episode of Best in Wealth! #retirement #RetirementPlanning #WealthManagement" username=""] Solution #3: Follow the 4% rule Stocks can gain value over their lifetime. The 4% rule means that if you have $1 million, you could live off of a 4% withdrawal from your portfolio the first year. Every year, you take an inflation adjusted raise. If inflation is 10%, you withdraw $44,000. If you do that, your purchasing power stays the same. Bengen looked at every 30-year period in history and 93% of the time, the 4% rule works. What about the other 7% of the time? What doesn’t the 4% rule solve for? Solution #4: Guyton and Klinger’s Guardrails Guyton and Klinger’s Guardrails try to solve for both running out of money and dying with too much money. They propose that a 4% withdrawal can be too small of an amount. They usually start with withdrawals of 4.5–5%. How is their process different? If you start with $1 million and the portfolio goes to $1.2 million, you give yourself a raise as well as an adjustment for inflation. And if your portfolio goes down to $800,000, you have to be willing to take a pay cut until the portfolio gets back above your lower guardrail. When you take raises when your portfolio is doing well, it solves the issue of dying with too much money left. You rely on your guardrails to dictate what you do. But we do not entirely use this strategy—or any of these strategies—at Fortress Planning...
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    23 mins
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