SPEAKER_01: 0:25

Welcome back to another episode of the Make the Most of Your Money podcast. Colin, how are you? Good, Taylor. How are you? Pretty good. We're both dealing with kind of related to our last episode, the the throws of kids and their unpredictable schedules. But happy to be here. We were talking before. I guess I'm just going to dive right in about what I want to talk about today. Saturday, I was at the OU Texas football game at the state fair and was talking to a couple of friends before the game. And they, you know, people, when they know what you're doing, they kind of talk to you about certain things. Like, oh, the Taylor Financial Advisor, what did you think of the markets yesterday? And just kind of a lot of comments about it was a terrible day and all this. I think the market was down like 2%. And I was dealing with a kid all day Friday and I said, What happened? What happened in the markets on Friday? I had it, I knew what it did at a high level, but like not really, really paid attention or looked at anything. And they were dumbfounded by this. What do you mean? What do you mean? And I said, guys, I don't, if it weren't for you all ask me questions, I probably wouldn't check the markets that often because it really doesn't matter a whole lot. And telling you that story, you said, that's an interesting topic idea. Like what when do you update your portfolio? When should when should what should you be looking at? And how should you be thinking about reviewing them? And I know you're kind of you're getting near year end, doing some year-end reviews of investment portfolios. And I think that that's a great topic of okay, we've talked in the past about how to invest in investment allocation, but when do you make changes? When do you not make changes? What changes do you make? What should you be looking at? So that's what I want to talk about today, uh, reviewing portfolios. And uh hopefully it goes better than the football game on Saturday.

SPEAKER_00: 2:12

Um yeah, I mean, I'm right in the middle of of kind of fall review season with clients, and you know, one of the topics we bring up this time of year is reviewing your portfolio allocation. And um after a few years, it it can be a little repetitive with those those same clients. We've we've looked at it year after year, and and so I think this is a good opportunity to to just talk, take a step back and and like think about what are we actually looking at when we do a portfolio review, not what does, you know, m what do most advisors out there say are important, but what's actually important and when do you need to change something? What are you actually looking at?

SPEAKER_01: 2:51

I I think if you've properly thought through what and how to invest on the front end, which we'll talk about, a little bit refresher, you don't need a review. I I think like I mean, there's it's it's all related, but like that that's my takeaway, especially working with younger people. Like if you've invested properly in the front end, there's nothing to check every six months or three months or nine months. And for a lot of advisors, it's frankly just like filler to make it seem like we're doing something for our clients, is my opinion. But um, I've heard you're not wrong.

SPEAKER_00: 3:25

Yeah.

SPEAKER_01: 3:26

Yeah. But but for if you if you're if you're distributing from the portfolio, it's a different conversation. But okay, so let's talk about this. We we have talked, I don't remember which episode number, but investment allocation, how to invest. I really think if you if you understand how to invest on the front end, it also it also illuminates what to look at later on. And so um the way I think about how to determine what to invest in, you look at what is the, you know, what money are we talking about? What's the purpose of the money? Is it for retirement? Is it for kids' school? Is it for the mortgage payment? Kind of in answering that question, you'll also answer what the time horizon is. That's really what we're trying to get at. It's it's two things, like uh, but really the time horizon is this, you know, are you investing for the next three years, five years, 25, 40 years? Very different answer. And then the most important thing is like how much what's your risk preference? Uh, how much risk do you want to take? And risk is a combination of your emotional risk tolerance, like how much can you withstand emotionally? Can you watch your investments drop 40%? Um, and then also risk capacity, which is like how much can you like, if you removed emotion, afford to lose? Like if this investment portfolio got cut in half, could you not retire for another 10 years? Or would it be a bummer, but you're okay? So um it's really they're they're all very related. The the time horizon can the purpose can inform the time horizon, which can also inform the risk that you can take. But if you properly factor those in, what it's for, time horizon and risk, that makes the investment allocation decision pretty easy. And the the high level would be the longer the time horizon, the more risk you can afford, the more stocks you would invest in. Um, and we're talking about stocks in general, generally a diversified index fund is most likely where we're gonna land, not individual stocks. Um I'm making sense or am I cluttering that up? You want to clean anything up that I've said?

SPEAKER_00: 5:17

No, I think that's 100% right. I mean, in previous episodes when we've talked about how do you pick the right allocation and we're framing it broadly as well, what percentage do you want to have in stocks? Diversified total stock market, US international stocks, you know, what percentage do you want in stocks and what percentage do you have in bonds or or fixed income or cash that's going to be more stable but lower returning? And the the answer really boils down most fundamentally to when do you need the money? If you need that money back uh in the short run, you know, say the next five to seven years, that money that you need in the short run should probably be in fixed income. Um, if you're not willing to take losses on that. Um versus if you're investing for a longer time horizon like retirement still 10, 20, 30 years away, you know, that money you can ride the ups and downs, and that should be broadly invested in in stocks. Um, you may not need any fixed income exposure for that. And so, yeah, we've we've talked about this before, but but that's kind of our general framework for how do you come up with an initial allocation? You know, it's what is this money for and when do you need it?

SPEAKER_01: 6:31

Yeah. So maybe we should jump to uh because I figure what you just said just naturally introduces when should you not make changes to your portfolio? And I think the example I talked about on Saturday, the market dropping 2%, 3%, 10% even. Is that a reason to change? This is what I say, not if you did things right on the front end, because what you just said is if it's 10-year money, we don't care if it drops 10%. That's going to happen. It's 10% is a nothing move. Let's talk about real moves, 40%. I think over a 10-year horizon, it's most likely going to drop 40% at some point. So you don't care. And if you need the money sooner, like call it in three years, it shouldn't have been invested in that anyway. So that's where I come back to like if it's done properly in the front end, these moves don't matter. They're normal. They have to happen. Um, so yeah, I mean, I would say like a 3% move, it can seem dramatic, but that's not a reason to change anything.

SPEAKER_00: 7:30

Yeah, there's there's always gonna be a reason for those big moves, and and they're gonna sound scary, you know. It's it it's it's going to be there's gonna be something in the news. A market drop of 3% is gonna make headlines. Everybody has heard, you know, generally if they listen to radio, if they listen, if they watch TV, they're gonna hear about those moves and there's gonna be bold, scary headlines associated with them. And so yeah, I mean, I I think you're exactly right. Like if you have done the hard work at the front end of figuring out, okay, when do I need this money? How much can I afford to lose in the short run and and still meet my goals? And you've figured out an allocation or portfolio that's appropriate for those goals that you have, then you shouldn't be surprised when when the market moves like it did, you know, a couple last Friday, or or you know, even when there's a bigger, you know, downturn, um, call it a 10% or a 20% move. Like you you are expecting that to happen at some point.

SPEAKER_01: 8:30

That that's the key. And like this is where I'm gonna I'll look up the episode number and put it in the notes or something where we talk about this. But proper expectations of market are is so, so, so important to where like literally, if you're investing in a versified portfolio of equities for 10 plus years, 100% expect fully to see it drop 40% at one point. That's huge. And and if you do that, then you won't panic. So I don't know.

SPEAKER_00: 8:56

I'm just repeating like it's just and and maybe you'll have the the fortitude, you know, to put more money in when there's when everybody's scared. I mean, that's that's kind of like the the buy when there's panic in the streets and sell when everybody's, you know.

SPEAKER_01: 9:14

Yeah, but okay, but even that's a it's uh the be greedy when others are fearful, fearful when others are greedy, Warren Buffett. Problem is that that kind of encourages that timing attitude. It does. And and I think if you look at the data, we're not very good at doing that. Um Well, and something I I do want to point out and be very fair about this, that even though I said expect a 40% drop, that's super easy to say today. I mean, it's it's yeah, like, oh of course, yeah, I got I'm on board. I I get it, a 40% drop, sure. But when it happens, there will be the reason for it to happen, and that will scare the crap out of you. And there will always be this, this time will be different. You know, it could be the banking system, the the three major ones in the last 25 years of the tech bubble bursting, then the financial crisis where it looked like the banking system was gonna fail. I yeah, and that was down more than 40%. Like, and then the world was shutting down for this virus thing, that was a 37% drop. Like, there's a reason in the moment. So I'll like I can sit here and be like, you know, if you have proper expectations, it's easy. I would counter argue my argue myself and be like, yeah, but in the moment, it's gonna, it's gonna feel really, really scary. Um, and and we could talk more about how to think about, or we have talked more about how to think about that. Um but yeah, that's so uh so yeah, like if you if we've thought this through properly, properly invested for the time horizon and the risk you can afford to take, a 3%, 10%, 20% move shouldn't really change anything. If anything, it could be an opportunity to buy more.

SPEAKER_00: 10:37

Um and I think I think it's important to talk about this from the other direction too, because this is kind of the market we're in right now where we're hitting all-time highs every few days and and chasing, you know, wanting to chase those higher performing asset classes, that kind of fear of missing out is rampant right now when you see, you know, uh videos of of people who otherwise aren't in the markets every day, you know, making investment recommendations or pitching, you know, the latest, the latest and greatest thing. You know, what should should we be buying more into this AI thing when prices are already inflated? Um you know, that's probably not the time to make a change to your portfolio either. That may not be the time to get more aggressive because prices are are high right now.

SPEAKER_01: 11:29

Yeah. Well, there's there's a couple of things there. One, the the market being at all-time highs, like if it's gonna continue to go up, it kind of like inherently has to be. You know, you know, if you have a long-term trend of market going up, um, it's gonna spend a lot of time at the all-time highs. There's all sorts of fascinating research about like in vet like 10-year investment returns when the market's at all-time highs. It's pretty much it's normal. Like it, yeah, it's it's not as good as like after a crash, but like market being at all-time highs, if you have a 20-year investment horizon, does not does not mean don't invest. Sure. Uh, but oh, the other thing you said that kind of hit me is um open enroll. We talked about open enrollment and like some 401k. People are sometimes revisiting their 401ks this time of year. Um, I think it's partly the way it's displayed when people go in to choose their 401k, but it'll show you like one year, three year, five-year performance of an investment. And it can be so tempting to be like, well, why wouldn't I choose the one with the highest numbers? Yeah. Um that's a tough one. Like, because there's a lot of nuance to how to interpret those numbers, but um that would again say, and this is a bit of a cop-out, like if you chose the proper one on the front end, then that the historical performance doesn't really matter. Um, but what would you think? How do you have any thoughts on that? Of like when you're faced with like choosing these funds and there's historical performance in your face, like do you ignore it? Do you factor it in? What how do you think about that?

SPEAKER_00: 12:50

Yeah, I mean it we we say this all the time, but like historical performance is not an indication of future returns. And so just because something has done well doesn't mean that it will continue to do well. And there's all sorts of you know reasons for why certain asset asset classes, if we're talking about diversified classes, say we're talking about um, you know, growth companies or tech-focused companies, which have had an amazing run, you know, the it's not surprising that they have outperformed the market as a whole in this environment. Um now we should also expect those kind of high flyers, those riskier um investments to underperform when things turn. Um, such that, you know, if if now is the time you're thinking about chasing what has performed well in the recent past, like you you may be getting into it at at the wrong time. You may be getting into it after a big run and then suffer the consequences of that whatever you call it, reversion to the mean, or or um you know, when it gets brought back down to to earth. And so that that's kind of my initial thought. I mean also there there's all sorts of stuff. If you go out if you're thinking about like active fund managers and evaluating their performance, there's all sorts of survivorship bias in even like what options you are seeing to invest in. Because if a fund manager has poor returns for a year or two, like their fund goes away. And and it's not a choice for you to invest in that fund anymore. So you're not seeing the losers. All you're seeing are the ones that have performed well. Um so there's that survivorship bias that you have to look out for. And if you truly believe like I do, past performance isn't necessarily an indicator of future returns, then um, you know, you you you've got to uh uh look at those with a healthy, healthy dose of uh skepticism.

SPEAKER_01: 14:53

Two two things, two important things come to my mind there. Um the first I want to say is yeah, it depends on what you're looking at. Are you looking at actively managed funds versus indexes? But let's just say you're looking at a bunch of indexes that it's you could choose between small cap, international, develop, emerging, blah, blah, blah. And you go, well, emerging has been the highest for the last five years. I should choose that one. There's this great chart. It's called the periodic table of returns. I think you might have a lot of us advisors have seen it, but it basically is like shows different boxes for the different years. So there might be like 15 rows of the different classes, and then the columns are years, and like it's it's a mosaic. The colors are all over the place. And the point is, like, there's one, there's always a highest performing, there's always a lowest performing, and there's no rhyme or reason to which one's which. And so the danger of going, wow, you know, the small caps have been great. Let's go invest in all small caps is like we're trying to pick the next five years, not the last five years. And there's like no predictive value in looking backwards. That's one thing. So that's why you do diversify across all these. Um, the second with the historical performance thing is like the the difference between individual stocks and funds, like an index fund, where I always use like an overly simple example. Like um, like the imagine you have a donut shop that triples, has 300% returns every year for 20 years, and it's now like a$5 trillion company for some reason. And you go, wow, historically it's tripled every year. There's an upper limit to how many donuts you can sell. And so, like, like it doesn't mean it stops growing, but like there can be kind of like at some point it's grown out, it becomes a mature company, a dividend paying stock, and the the massive growth potential goes away. Versus fun an index fund where you're investing in the broad market, you'd be like, well, it's it's grown 15% every year. It can't continue forever. It's a different argument there. Um crime scene over there, Colin's office. I don't know if that'll get filtered out or not, but uh swell on the button with the siren going by. Well, hopefully we can filter it out. Um just an index fund, there's a difference because you're you're you're always shifting the winners and losers in there. And so like that's something for me to keep in mind of like, oh, this an individual stock might be super richly valued and had a great run, and maybe it's not a great we're not stock picking here, but like great time for that name. But for an index fund, it could be a little different argument. So I don't know if I said that super clear, but um I think the main point, if we get back to like reviewing your portfolio, um market moves themselves should be they're part of they're part of it and aren't aren't a reason for changing the investment strategy. Um I I think really to answer my question, how do you determine when you change? You change your investment allocation when the underlying time horizon purpose and risk tolerance change. Um which could be a you know a 40-year-old invests a certain way and now they're 60. Time horizons change. Now we got to start making some changes. But I think at that point you go back through the same exercise. Okay, when do you need the money? Money you need in the next five years or so, probably should be in fixed income or bonds. The rest of the investments. So that that's one that's one time that that to me is the answer. Like the proper answer is you change your investment allocation when the underlying reasons for investing change. Um, but there's some other ones we wanted to talk about too.

SPEAKER_00: 18:04

Yeah, I mean, what are I think that's the main thing. You you change your strategy, your allocation when those which which can be, if you're young or you have like it can be a very long time.

SPEAKER_01: 18:19

Literally 20, 30 years. And in even for a six-year-old, they may have a portion of money that has like could be you know long, long term that doesn't get reallocated. So it's okay. Don't feel this pressure about I need to be looking over things every six months or a year. You really don't if you've done it right on the front end.

SPEAKER_00: 18:34

So yeah, I mean that brings up a good question. When we uh I hear clients all the time and they look at me kind of sheepishly when they admit, like, ooh, I don't look at my portfolio as often as I should. How how often should I be looking at it? Um and and and maybe the answer is different depending on on different ages, but I actually don't I don't know if I believe that if if you've got a good plan in place or a system in place. Um but if you're like a 30-year-old, the answer should be maybe you don't look at it for a decade. You know, uh everybody's always surprised by like how much their 401k has grown over those, you know, those years when they've been making the automatic contributions to it and they haven't even looked at it. They've just been invested in a in a target date fund or something that's doing all the diversification for them. Um and and you you you won't believe how much it's grown in in that longer time frame. Um and so my answer for them would be, you know, you probably shouldn't be reviewing your portfolio every year. You've got a good solid target date fund, you know, that that's that's good enough. Don't look at it. You know, just do what do what you need to do to uh focus on other areas of your life, your career development, your um family. Like totally.

SPEAKER_01: 19:54

And doesn't that like isn't that I if you love money and like this stuff, then you can look at it for entertainment. But if you really don't and it's a chore, like that means things assuming you you you invested correctly, that's kind of the overlying assumption with all this. Like, that means you're killing it if you're not looking at it. You know, oh I don't really think about it. Good. That's the dream. That's where we're trying to get everybody to get to. You don't need to be checking this stuff every day because it like it just it just yeah. So like the people who say, like, oh, I don't really look at it that much, I'd normally try to be like, well, you're probably gonna be one of the you're gonna do great. You know, like that's one of the best habits you can have. Um, I've long said, like, I wish and I mean this, like for the younger folks, when they check their investment portfolio or their 401k, they just saw a black box that didn't tell them the value. Because all there's like almost nothing good that can come out of it. You're either gonna see a higher number and start to feel really wealthy and then spend more money in your present day. It's called a wealth effect, or you're gonna see it down and freak out and panic.

SPEAKER_00: 20:48

Yeah. And and sell things, sell stocks, and be out of the market for an extended period of time and and miss the rebound. And so um, yeah, I I think big picture, the less you look at it, probably the better. I mean, if you're doing a portfolio review once a year, that's plenty. Um I think we should talk about some other things that we look at when when we do a portfolio review, some things that you might make changes to more frequently. Um and and these I kind of view as like more tactical things, um, either for maintaining that original plan, um, or or you know, some some things you can do around the edges for maybe tax efficiency or or other things. And so this isn't necessarily changing your plan, your investment plan, but it it may be when you know, for example, it's maintaining the investment. When do you remain balance?

SPEAKER_01: 21:48

Yeah, it's maintaining the investment.

SPEAKER_00: 21:50

So yes, I think it's a good idea. So for example, like when do you rebalance your accounts? You know, you say you you came in and you had a target allocation of we want 80% in stocks, 20% in bonds, and now stocks have done really well. Now we're up to you know 90% in stocks. When do you rebalance? Uh what what's your what's your kind of perspective on this?

SPEAKER_01: 22:12

Yeah. Um the fac because daily's too much, every 10 years is too little, somewhere in between's the answer. Um you know, I I d I should have a better answer for it. I don't deal with that as much day to day. Most of my clients were run a lot of like hundred-zero type allocations. But um I think biannually at most, annually is is plenty to just get get portfolio back in line. Um it definitely it also does depend on the the type of account. You know, when there's uh tax deferred or tax-free accounts, there's not really any tax implications to selling and rebalancing versus a taxable brokerage account, there would be. So probably more of an annual approach there, making sure that it's we're not creating a short-term capital gain unnecessarily. Um yeah, there's a a poor answer for me. What about you?

SPEAKER_00: 23:07

Yeah, I would I would generally say the less frequent is better. I mean, there will be folks that tout, oh, we'll rebalance your portfolio monthly, or we're, you know, to make sure that your allocation stays on track. And I think there's pretty clear evidence that that's too frequent, that that the cycles uh take longer than that. And so if stocks are going to outperform, it's it's gonna outperform for you know a period of many months or or years. And so by rebalancing too frequently, you you may be um losing some performance. Um so in in terms of like when to rebalance, I either think about it as a let's set up a threshold, like a boundary. So if if say our stock allocation is now 15% higher than our original target, like then we'll rebalance. Um or setting up, you know, or or doing it strategically. And this is, you know, this may be waiting a little bit into like trying to make market timing calls. Well, they I do think it's a little bit different, but like when to rebalance? Well, if we do have one of those 40% drops, like that's gonna probably be a pretty good time to rebalance. You know, your stocks are weighed in on, and so you're probably underweight. And so by rebalancing after those periods of big movements, you know, you you may be able to capture a little bit extra on a rebound or something like that. So that's not a you know, there's no hard and fast rule there, but just uh there's a couple of ways to rebalance too.

SPEAKER_01: 24:44

You could straight up sell the the oversized position and per purchase the undersize. So like let's say you have an 80-20 target and it's become 90-10, you could sell 10 of the stocks and put it into the bonds. That's one way, right? Yeah. Um another that I've done with some like because I have a lot of like 75-25 like US international mix portfolios. And that that doesn't stay 75-25, but when there's new money coming in, we'll purchase most of the underweighted one to kind of we're not gonna sell some of the the larger, but we'll just try to like target it and and as you go. And I think that's something people could do at home as well if they're freaked out about buying and selling something. Um just if you're making contributions, using those contributions towards putting those towards the underweight ones or the undersized ones.

SPEAKER_00: 25:30

Yeah, or if you're on the other side, if you're making withdrawals, you know, make your withdrawals from the overweight position. And that way you're kind of always doing a little bit of rebalancing, but it's not a big like question of when do we do the the the big buy and sell.

SPEAKER_01: 25:46

Yeah. But it but this is important too. Like rebalancing is important. It is. But ultimately, whether it works or not depends. Like, like you said, if stocks outperform for 10 years, then not rebalancing an 80-20 portfolio was going to be better because you had the the stocks run, right? But if it if it's if stocks underperform, then you wish you would have rebalanced more often. And it's that's where like there's just not a clear set, do it this frequently or these thresholds. And there's a lot of thoughts on it, but there's not an obvious right answer. Is that a fair statement?

SPEAKER_00: 26:21

Yeah, I think that I think that's fair. Um Yeah, what are some other you know, tactical changes you might make, you know, that are that are more kind of around the edges of your portfolio? Um Do you have something in mind? I can answer my yeah, I'll answer my own question.

SPEAKER_01: 26:37

I think I know what I know you want to talk about.

SPEAKER_00: 26:39

And a lot of people talk about the value of like tax loss harvesting. First of all, I mean getting a little bit on my soapbox here. You know, if uh uh some people get excited about this. Oh, look at all these losses we harvest. And and it's really not something to get that excited about because the fact that you have losses, yeah, you lost money. You know, now uh you you may be recouping a little bit of that loss by by offsetting some taxes, but that still means you lost money. So um but yeah, but still a tax loss harvesting strategy is where, you know, in a taxable account, this is not in a retirement account, in a taxable account, you you may sell a position that has a capital loss. And you can use those capital losses to offset gains that you may have taken in other places, or if you haven't taken gains in other places, you can offset up to 3,000 of ordinary income per year. Um and and doing that over time, you know, can can help with the caveat that if you are you know harvesting something that's down and repurchasing, you know, another asset or a similar security that's also down, you can't buy and sell the same thing and capture the loss. Um, but say I sold an SP 500 and bought a total US stock market, they're enough different that you can recognize the loss. But what you've just done is set your cost basis lower in the in the new security. And so when you have to sell that, you're gonna end up having a bigger gain. Um, but still, you know, around the edges, some doing some tax loss harvesting, especially if you can offset higher income years or um other capital gains you've had to take, um, I think is a reasonable thing to look at, you know, kind of around this time of year is when I look at it. Or whenever whenever we have a big down downturn in the market. Oh, are there any opportunities to harvest losses?

SPEAKER_01: 28:31

Yeah. Tax loss harvesting certainly is valid. Um I I I would still always caution, don't let the tax tail wag the dog. Like make sure if you are going like don't put tax savings in front of the overall investment strategy, like if it's still, if it fits and there is a clear uh security. Um it's also really hard to tax loss harvest in a bull market when things are all up. There's not a lot of losses. So I I think I it's a balance. A lot of this, um, and I know this is becoming more direct to consumer tax loss harvesting stuff, but a lot of it can sound really cool that an advisor can do for you. Doesn't always add value or done correctly. Like it can work, but don't be like, oh, I'm gonna pay a bunch of extra for managed money because I can tax loss harvest. Like you may not have any losses to harvest during this time. So definitely a good thing to keep in mind.

SPEAKER_00: 29:22

And it are if you're talking about like direct indexing, which I think is another one of the things that investment advisors push. Like, oh, well, we can buy, instead of putting you in an index fund, we'll buy all 500 stocks in the S P 500, and that way you can tax loss harvest the ones that are down. Um, you know, so you may be in an upmarket where the, you know, on average the portfolio is up, but there's still going to be some losers within the index. So y yeah, I mean that can produce some, you know, some tax losses that you can harvest even in an upmarket, but think about also the complexity that that adds then to your portfolio. And what do you do the next year when now you've got 400 stocks, all of which have gains, and you know, you you've just got a you've created a mess for yourself. And so I don't know. I I I I'm still a little skeptical of the benefit of doing that for most investors.

SPEAKER_01: 30:23

Um it's um it It can absolutely work, but it's not like a clear and obvious does always work, to where like everybody needs to go out and direct index and tax all harvest. You know, in certain in certain return sequences and time periods, it absolutely can help. It's a good thing to be aware of. But yeah, it's not like I'm not gonna out here like we tax all harvest and direct index. Everybody have us manage your money. Like it's not the magic bullet. Some people might disagree, but that's my opinion. Yeah.

SPEAKER_00: 30:53

And then on the flip side, like if you what do you do with with positions that have large gains each year? Well, if you're someone that's giving, you know, making charitable donations, you know, that may be something you look at to donate. And so that that's not necessarily changing your overall investment strategy, but it's it's looking for ways around the edges that you can.

SPEAKER_01: 31:15

No, that that's a that's a really good one of like, yeah, let's say that you want to give, you know, a meaningful amount of money, fifty thousand dollars or something like that, and like should it be cash or appreciated stock? Yeah, then take a look at it there. And I think probably the way that would work is your your the investment allocation is gonna stay the same. There just may be the move of transferring out stock and purchasing with cash, which I think we talked about in some past ones. We don't need to explain all the ins and outs of that. But that's a very that's a great point as well. Um for a time to look at changing the portfolio or making a move in the portfolio would be giving. I like that. Um so what so what we're just to recap this, the main message was properly invest on the front end by establishing the purpose for the money, the time horizon, and your risk preference, how much you how much risk you want to take. You change that the underlying allocation when those underlying facts change. Um rebalancing is a valid one annually is a good idea. We we talked about different ways to to do that, but no hard and fast rule there. Um giving is a good idea. Um you can be intentional with your contributions and your distributions from accounts. That's another way of rebalancing. Um don't rebalance just because the market does what the market does and goes up and down. Right? That's kind of the main thing. Um anything else you would add to the recap of that?

SPEAKER_00: 32:41

Yeah, I mean it's it's I feel I don't want to undersell this because I uh but you know, portfolio reviews are are are kind of supposed to be boring. You know, if you've checked all the boxes ahead of time, like when you've got a proper allocation and and a good plan in place, yeah, there shouldn't be much we're changing on when we do that annual review.

SPEAKER_01: 33:05

Yeah. And I this is I I'm gonna crystallize my thoughts on that. An annual portfolio review, I think, is a potentially harmful waste of time. Um checking in and updating your financial plan annually is a phenomenal use of time. But just staring at performance and creating some emotions up or down based on that, probably not the best thing. Like I don't I will go on record saying I don't like the idea of just talking about how your investments did for the last year. It shouldn't freaking matter. And all it's gonna do is make you feel really good or really bad and probably cause you, it's called intervention bias where you feel the need to do something when probably doing nothing is the right thing. So that's the stand I want to take. I think portfolio reviews are a waste of time. It's a lot of times a way for value advisors to make it feel like they're doing something and for clients like, yeah, I meet with my guy once a quarter, once whatever it is. But checking in and updating your plan, making sure the underlying facts didn't change, seeing how you're doing, talking, like explaining things, phenomenal use of time. So there you go. There you have it. Hot take. Hot take on the record. No, that's good. Um awesome. Well, this is fun, and it all started with a conversation at a state fair. All right, Taylor. All right, man. See you next time. See you next time.