Welcome to Retire Smart Austin. My name is Cynthia De Fazio, joined today by Phil Capriotti senior of Empower Wealth and tax and to our viewers at home, as you are aware, 2024 is an election year. Well, with an election year comes a lot of fear, not only about policy changes, administration changes, but what happens to your investments, what happens to your portfolio, what happens to the stock market? We’re going to talk a little bit about some of those fears during an election year. Phil, how are you today?
Good morning. I am wonderful. How about yourself, Cynthia?
I’m wonderful, too. Thank you so much for asking, and I’m so glad that we are doing this show today, because there’s a lot of fear in our country right now, a lot of apprehension with how things are going to go. And you and I both know this can also change someone’s temperament towards investing, if you will.
Yes, many of the questions that I’m getting from existing clients and even new clients that are coming on board is, it’s an election year. This is a very unique election year, and there could we’re concerned with major drops in the market during an election year? Yes. And you know, folks, if your investment advisor is- are- if they are managing your portfolio actively or tactically, you basically are managing it no matter who’s running for office, no matter who’s winning or losing. It’s really irrelevant. As a matter of fact, from 1953 straight on to the present, the S&P 500 has had an annual increase on average of 11% per year. Okay, okay. And so, there were really only two terms where we had presidents that we had losing. We had we had losses, and that would be President Bush and 2008 and then that would be a Tricky Dick back in 1973 back in our day, my day, not your day. So, Richard Nixon, yeah. Nixon, right, exactly, yeah. So, with that being said, you really have to look at the market, and you have to look at what’s going on. So right now, when you take a look at what caused, what caused that downward spiral in 2008 well, was the subprime mortgage collapse absolutely had nothing to do with the President, although he got blamed for but irrelevant, he should have gotten blamed for it, because he could have corrected the policies that caused the problem to begin with. What actually caused that problem to begin with is, you remember one of the taglines by one of the parties was, everyone deserves to own a home, whether they can afford one or not. And I remember back then that care, that administration, back in the 90s, actually kind of strong armed the banks and actually told them that if they did not approve these mortgages for certain folks, certain class of folks, whether they had the income or not, that they would revoke their FDIC charter. So, we see all that. And that was the cause a lot of these banks had to take on these notes. Needless to say, they had to package them with good notes. And voila, you had to Bear Stearns. And that actually caused it. It just happened to be that President Bush was on the way. Now, by the way, that did open up the gates for President Barack Obama to kind of take the helm. But that aside, the market has increased the stock or stock market, specifically the S and p5 111% a year. Okay, so we need to act tactically when we see events like subprime mortgage, mortgage collapse, or covid, the election infection of 2020, so lot of clients, that’s what they call it. Okay? So, if we, God forbid, we’re to see, and I say, God forbid, a terrorist attack, you know, the next covid or the next, I don’t know, major emergency that causes a global and domestic selloff, then we need to stop the bleeding at a certain point. But all in all, the election causing the market to drop, really not happening.
Yeah. Think it’s interesting because we’re so caught up sometimes in that one-word fear, but it’s fact that it’s, I think it’s appearing real. I can’t remember exactly what that acronym is, but it’s so true. And if you remember, when we flipped over from 1999 to 2000 remember everyone thought the computers were all going to crash nationwide, we woke up the next day and they worked exactly the same,
yeah. And what happened shortly after that, in 2001 we had the terrorist attack, and then we had a lot of folks. We had an 89 and 99 an explosion, because all of all the including companies, they were going out and buying new computers and all of a sudden. But they call it the lost decade, from 2001 to 2010 the S and p5 100, really, on if you take an average, was only increased 2.2% but we had two major downturns, as a matter of fact, in 2008 not caused by the election. It was caused by policies, government policies, okay, doesn’t matter what side you’re on, that’s what really, that’s what was the underlying cause of it. But we had the S and p5 100. If you take a look at October 15, 2007 through March 2, 2009 during that time frame, that 16 months, the S&P dropped 52% now many folks are concerned with this fear because of that 52% so for instance, if you had a million dollars, and many folks did If you had a million dollars in your 401K, and you were invested specifically in S&P 500 or all equities are primarily equities, you saw your portfolio drop 40, 45, 50% the problem with that is, what? Where are you, with respect to retiring? Yes, if you only have one or two or three years left to work and you’re fully invested, we see this a lot. You know, you want to squeeze every little dime you can out of this AI explosion, great, but if we saw something like that, a subprime mortgage collapse, then we might have an issue. But it’s not because of the president that was in office. It was because of the policies that were implemented
Absolutely, and Phil, I just thought of that acronym. It’s False Evidence Appearing Real. It took me a minute, but that’s what fear is. Coffee kick in, actually. So that’s what it is. Evidence Appearing Real. Fear, the acronym for fear.
Well, there you have it. So, there’s a lot of fear today, and I understand that. I mean, just a short time ago, it’s been over 40 years that we had an assassination of a president or a presidential candidate, and Oh, Sweet Lord, look what happened. And I believe if it weren’t divine providence of God, we would be telling a different story. But again, it just happens to be an election year. But at any rate, the market is doing well, and I got to tell you, one of the things in the market that’s really pushing it is technology and AI eventually it will come to a peak, and when it does, we’ll take layers off to accommodate not, you know, not reaching a trough in that but, but at any rate, all of you folks that are watching today, if you have a fear, because it’s an election year, maybe you’re concerned with all of our newcomers coming across the borders. Maybe not every one of them love us, okay, maybe not every one of them are looking for a job. Maybe there are terrorists. I don’t know. I don’t think anyone really knows, to be honest with you, but if you’re concerned that if something were to happen that would actually shake domestic markets, like, God forbid, a terrorist attack, like we saw 9/11 or anything like that, another covid x, or something of that nature. You want to make sure that your portfolio is protected against a downturn, and you want to make sure that we have a definitive value or percentage on how much you’re willing to lose to chase that 11% return, especially in any year, not necessarily in election year.
Absolutely. Phil, thank you so much to our viewers at home. There’s a number to call on your screen, 888-818-6557, and if you’re sitting in the viewing audience day and you’re having some apprehension about the current climate that we are in the election year, causing you fear, anxiety, not sure what investments are going to do. For peace of mind, this is the perfect time for you to call in. 888-818-6557, Phil and his team actually set aside five spots for new viewers of the show each week. Don’t miss this opportunity to grab one of those spots. 888-818-6557 or go ahead and grab your smartphone. It’s even simpler still. Click on that QR code at the bottom corner of your screen that will take you right to the landing page for Empower Wealth and tax and you can claim one of those five spots. Accordingly, we’re going to take a very short commercial break. Don’t go anywhere. We’re talking all about fear in an election year. And what does that do to someone’s overall investment strategies. Stay tuned.
Our office is in cedar park. We employ 14 people. We have experts and professionals. Everyone is licensed. If you fit into our company, you love people, you care people, your service oriented. So that’s our home office. We just opened a satellite office in Horseshoe Bay. Within the next 12 to 15 months, we’re opening up another satellite office in Sun City, in Georgetown. I told my wife, I said, we’re going to open up. She said, What? Open up another office? When are you going to retire? I said, Honey, I am retired. This is what retirement looks like to us, and you better. Might as well hold on to your hold on your skirt, honey, because we’re probably going to open one up in Dripping Springs. To my son Philip, he and his wife, who’s also involved, Erica, she’s wonderful, will probably end up running Cedar Park office. My son Parker, he may run the Horseshoe Bay office. My daughter Lisa is going to be running the Sun City office, and I guess I’m going to need a grandchild to run the other dripping spring office. But at any rate, I was really blessed in that out of my five children, three are in the industry to directly work for us. This is really their legacy as well.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio, joined today by Phil Capriotti, senior of Empower Wealth and tax. And we’re talking all about this being an election year, the different fears, the apprehensive feelings that you may have inside. How does that dictate the stock market? We’re doing a deep dive today. Phil, today’s show is very important, obviously, as we know we’re in an election year, and with that, can have some fear and some apprehension, if you will, not sure what’s going to happen, afraid of change, and that’s usually the biggest thing. People are nervous with change. But let me ask you a question, how often do you have people that make emotional decisions, such as pulling out of the stock market completely because they’re feeling anxiety?
I’m seeing it a lot. As a matter of fact, I’ll just lean on a story and tell a story at one just one of the prospects that came in actually called into the show their portfolio was up significantly over the last six seven years. And of course, the market has been up significantly over the last six seven years. It really started out when President Trump was elected in 2017 it truly took off before that, we had what was called stagflation. You know, we with the new normal. You know, we can only expect one and a half 2% growth. Not nonsense, that policies cause that, not an individual, okay, okay, policies cause growth. Policies cause decline. For the most part, I would say 90% of markets up and down are due ups and downs are due to policy decisions that our lawmakers implement.
Okay, so legislative risk is what we’re looking at.
Legislative risk Exactly. So, when we take a look at this particular case study, this client did extremely well, and what they did in January and February of 2023, was moved all of their money into money markets, because at that time, our money market accounts were paying four and a half 5% I’ve seen some clients move money into CDs. You know, 12 months CDs and things of that nature. That’s fear talking. Yes. Now what happened? And many folks actually move their money into cash and a cash account, not a money market account. Well, cash account, you don’t make anything, right? Just sits there. It just sits there, idle, does nothing. So, what he was irritated about was that in 2023 because of his fear, he lost a 33% increase our large cap growth portfolio is because of the expansion of AI and technology. Large cap growth. Us, large cap growth funds, especially, and I will say about a dozen different companies, including the video, have gone through the roof. Absolutely they have Okay, not only that, because he was fearful after losing that year, he left the money in for 2024, and. And missed that big growth spurt as well. Okay, so he finally said, You know what, Phil, I’ve been watching you for the last three years. I finally came in because it’s obviously I’m too fearful to manage my own portfolio. Timing the market is senseless. You really need to have experts that go, that do a deep dive into analysis. We want to look at analysis. We want to have professional portfolio managers that guide us. That’s what I do, absolutely so with that being said, fear in the market, especially in your investment portfolio, sometimes it’s worth to pay a percent to hire a professional investment advisor who is a licensed fiduciary, who has experience managing portfolios, specifically multimillion dollar portfolios, so we don’t succumb to the fear and jump out of the market. What happens is they sell it the worst time, on average, over 95% of the time, proven fact, and they buy at the wrong time.
Unbelievable. And we do have some solid data that says you should stay your course with your investments, regardless of the presidential election.
And I believe that, because history dictates that. But I’m a firm believer in the planning. It’s not just folks. It’s not just the portfolio growing. You need to understand about inflation, and you need to understand about taxes, if you do not incorporate inflation and taxes into the management of your portfolio, whether you have an advisor, whether it’s a big box retailer that you know is one dimensional, or it’s you yourself who, many times could be one dimensional. We have to look at these other variables. And if not, we’re making a big, huge mistake. So, I told the client. He says, I think we’re at the very, very top now I’m afraid to get in. I said, let us take over the portfolio. We know how to manage it, within your suitability, within your risk tolerance. This is the return we’re expected to gain. This is the amount of drawdown we build in the portfolio. So, if we do see another 2008 like financial collapse, no worries. We have your back.
Well, Phil, we can’t stress enough the importance of planning, especially tax planning, because we did a deep dive into some changes that could occur. So, I’m sure a lot of people are apprehensive about that as well, with this election cycle.
Big time. And as a matter of fact, those two shows that we did a couple weeks back were amazing. The phone literally is still ringing off the hook and again, one of the things I think I might have mentioned to you, we’re getting about 60% of our Collins are, I think they’re concerned they’re not going to be one of the first five are clicking that QR code, and we, we want to get everybody in to see us. We have many advisors. Okay, not everyone will get to meet with me. However, everyone has been trained by me. I think I mentioned this in previous episodes. All of our employees are licensed, and they all follow the fiduciary code, meaning we’re always acting in your best interest all of the time. I don’t work for a company. I work. We work for you. But getting back to this topic about fear in the election, there’s a lot of fear in the election. I don’t think about the market, because with this expansion of AI and quantum computing and even the Green Deal, okay, and by the way, I don’t want to go off topic, but I believe, in my heart of hearts, that forcing us to buy EVs is going to turn out as history will show this as one of the worst mistakes ever. And by the way, nothing against policy or particular policy. I think it’s about education and knowledge. Many folks need to have more education and knowledge. The simple reason for it is these batteries only have a 10 year life span. The other issue is they’re extremely toxic. The other issue is we don’t have charging stations every everywhere. The other issues are we working on other technologies that use hydrogen that will fuel all types of transportation vehicles. So, I believe as we truly get green, because I don’t believe EVs are truly green. I think it’s more like a passing fad. This is why government should not mandate anything, in my opinion, or force people to buy we should leave it up to the market and leave it up to individuals themselves. I’m very great on green, but let’s really make it green. Okay, so getting back to that, another election, it’s policies, not who’s running for election, that help dictate the ups and downs in the market.
Phil, thank you so much to our viewers. At home, there’s a number on your screen. That number is 888-818-6557, if you find yourself today in the viewing audience, feeling apprehensive, feeling nervous about this election cycle and what it’s going to do to your investments, this is the perfect time for you to call in. That number is 888-818-6557 if you don’t have a pen handy, you can grab your smartphone, click on that QR code at the bottom corner of your screen that will take you right to Empower Wealth and tax landing page, and you can schedule your time accordingly. It’s not fun to live in fear. It’s better to have peace of mind and with proper planning, that is the security blanket for you to feel that you’re going to be okay. Phil’s giving you that opportunity today. This could be the most important call that you make, 888-818-6557, we’re going to take a very short commercial break. We’re all we’re talking all about fear in the investment cycles with elections. Stay tuned.
Phil Capriotti, you know, some of the folks that come into our office are concerned that they might outlive their money in retirement at in power, wealth and tax, we’re able to address those concerns by answering your questions and by developing a comprehensive, tax efficient retirement income plan. Now this includes a cash flow analysis, a tax and risk assessment, as well as a comprehensive investment portfolio review. Remember, this is a complete and comprehensive analysis, and it’s prepared by one of our licensed fiduciaries, absolutely free. As you know, we never accept compensation for this service. We simply want you to be educated and informed. So, call us today or select one of the options below and start empowering your retirement right now.
Welcome back to Retire Smart Austin. My name is Cynthia De Fazio, joined today by Phil Capriotti, senior of Empower Wealth and tax and we’re talking all about fear with investing during an election year, Phil, I can almost guarantee that the one question on everyone’s mind right now is, should I get an EV vehicle? No, I’m kidding. That’s not the number one question. How should I invest my money? How should I invest my money? People at home are probably thinking that in the viewing audience, what do I do?
The very first thing that you need to do is to run a riskalyze. Score on yourself. Okay, we do this with every client, my younger son, my younger son, my oldest son, Philip, does this with unbelievable expertise. Fact, he’s been teaching me a few things. It’s really paid a lot to be training him over the last decade, because now the young mind is saying, Hey, Dad, did you know about quantum computing, this and that? Well, at any rate, folks, incredible. So, what a good question. Really good question. So, you want to run a risk tolerance, or we call it a Riskalyze score, and what that is, is a series of questions that we ask you. You know, for instance, you know, if you have half a million dollars, million dollars, just pick the value. Man. Many times, folks with the smaller portfolios are really, are get, really, get into this. So, let’s use $1 million let’s use seven digital IRA. And one of the questions would be, if your portfolio lost 15% over the next four weeks, would that bother you? Okay? And many times, folks will say 15% that leaves me 8.5 No, I’m okay with that. How about 20% How about 25 so what we want to do, folks, is we want to quantify how much you’re willing to risk in order to attain said return. We’ll call it eight, 9% a year. Okay? So, we want to we what we want to do is we want to grasp a return percentage, whatever your expected return, what you want, and then we want to basically fill in the blanks to see where your risk tolerance lies. Only then can we construct a suitable portfolio to help you understand second thing in this score is we want to talk about at the death of the first spouse. Okay, do you want your taxes to go up and down? So, we ask a series of questions. I won’t go through all of them, because you should come into our office. Dial 888-818-6557, and let us do a professional risk allies for you with either myself or my son Philip, but we want to understand number one, how close are you into retirement? Are you in retirement yet? Are you depending on withdrawals from your portfolio for your income? Are you depending on just Social Security? Do you have a pension attached to that? If. If not has your advisor suggested building your own private pension using, say, a fixed, indexed annuity. I know we’re going to do that on our next show, but we want to take a look at all of the variables, because here’s the bottom line, folks, as long as you have your mailbox money set up, okay, so if you require, say, $100,000 a year and after tax dollars to live as long as we have at least 80% 90% of that guaranteed through outside sources. Many times, your risk tolerance becomes more increased. Okay, you’re not depending on returns to and not You’re not depending on returns and added inflation to find out that 20 years later, you’re out of money.
So really, just being properly allocated in the market is the key, a good plan that’s going to encompass anything that may come your way, including tax changes, potentially.
Tax changes, you have to be able to turn on a dime with tax changes. And we I’ve said this many times, if your financial advisor is not also your tax advisor, and I’m not talking about just doing your taxes, I’m talking about recommending what accounts to draw from to make sure that your Social Security is tax efficient, potentially tax free, and to also make sure that your required minimum, minimum distributions or RMDs are properly, properly structured. If your advisors not doing that, fire them. What’s that old saying you’re fired? Yeah, you’re fired. So, it’s extremely important to understand your risk tolerance, and then the fear goes away.
Yes, absolutely. Well, Phil, we only have about a minute left of the show this week. Final words of wisdom and guidance please to those who are feeling apprehension.
Yeah, folks, if you’re feeling apprehensive about the election or about many of the things that we’ve seen happen, especially this year, give us a call. Let’s make sure we understand, and you understand what your appropriate risk tolerance is, and so we can help you construct a portfolio that falls within that. So, dial 888-818-6557, we have a couple spots left. It’s been a nice, slow Sunday, I guess more people are at church, especially over care and events. Give us a call. Come on in, and let’s help you determine exactly how much risk in return is in your portfolio.
Phil, thank you so much to our viewers at home. Thank you for spending time with us today. On retire smart Austin, that number to call is 888-818-6557, or go ahead snap the QR code at the bottom corner of your screen. Be safe. Be happy and be blessed. Most of all, we’ll see you next week on Retire Smart Austin. Take care.
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