Podcasts Business Retirement Answer Man #104 - Why You Should Ignore All Market Predictions

#104 - Why You Should Ignore All Market Predictions

Published: Feb. 9, 2016, noon

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Welcome once again to The Retirement Answer Man show. I\\u2019m Roger Whitney, AKA the Retirement Answer Man. This episode of the show is one where I really get to live up to that name, because I\\u2019m answering two very practical listener questions covering how to figure out your \\u201crisk tolerance\\u201d in light of the different types of investment vehicles you have in your portfolio, AND whether or not it\\u2019s smart to get your money out of the financial system altogether by investing in real estate. As you can see, there\\u2019s some great stuff on this episode, so be sure you take the time to listen.

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What is \\u201crisk tolerance\\u201d and what\\u2019s wrong with the way we assess it?

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You may have heard the term \\u201crisk tolerance\\u201d before. If you\\u2019ve got any experience in the investments arena you surely have. But what does it mean? In short, it\\u2019s the amount of risk you\\u2019re willing to endure in order to potentially get greater returns on your investments. But I have to admit that I\\u2019ve got a pet peeve about this whole concept\\u2026 and I\\u2019m not really sure it\\u2019s the best way to go about assessing what you should be investing in. Why? I\\u2019d love to fill you in, and I will on this episode.

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Should you be following the advice of those making market predictions?

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The very short answer is \\u201cno,\\u201d you shouldn\\u2019t. But do you know why? It\\u2019s almost every day that you hear somebody espousing another \\u201cnew\\u201d way to invest that gives greater returns, do you know why it would be a mistake to follow the advice of these people? It\\u2019s because I have a quarter that has a better chance of determining the right investments for your money. Really, I do! If you\\u2019re confused, that\\u2019s OK, I\\u2019ll unpack all of that and more as I tell you why those making market predictions are not to be trusted, on this episode.

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Should you take money from your retirement accounts and put it into real estate investments?

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On this episode a listener admits that he\\u2019s very skeptical of the whole investment scene because of Madoff and other scandals. He simply doesn\\u2019t trust it anymore. Instead, he\\u2019s considering putting his money into real estate in the form of rentals. Is that a good idea? I\\u2019m not one to discourage real estate investing by any means, but I\\u2019m also not sure that taking all of his money out for that purpose is wise. And I\\u2019m not sure that skepticism is the best reason to do so, either. You can hear why I say both of those things, on this episode.

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Should you treat your various retirement accounts the same when it comes to risk assessment?

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One of my listeners today asks this great question. It\\u2019s great because it\\u2019s taking into consideration the things that should be considered. Think about it. You have varying investment vehicles that you use - IRAs, 401K, bonds, stocks, etc. Each of them has their own unique characteristics, including time frames and investment strategies. Doesn\\u2019t it make sense that you\\u2019d want to have a unique approach to your risk assessment in light of those kinds of characteristics? On this episode I\\u2019m going to walk you through the basics of how to think about those kinds of issues!

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OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

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  • [0:26] Roger\\u2019s thanks and introduction to this great episode.
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  • [1:20] How you can get Roger\\u2019s \\u201c6-shot Saturday\\u201d emails.
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WHAT DOES THAT MEAN? SEGMENT

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  • [2:45] Today we define the term \\u201crisk tolerance.\\u201d
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  • [3:20] Questionnaires you may face when determining risk tolerance.
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  • [5:41] The problems Roger has with some of the \\u201cbest practices\\u201d behind risk tolerance.
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HOT TOPIC SEGMENT

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  • [11:11] A confession from Roger.
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  • [12:05] Should we listen to market forecasts? Why not?
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  • [14:19] Forecasting isn\\u2019t about predicting the market, it\\u2019s about marketing the prediction.
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PRACTICAL PLANNING SEGMENT

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  • [17:26] QUESTION: Does it make sense for us to redirect some of our 401K money into rental properties?
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  • [26:55] QUESTION: Should I handle my risk tolerance allocations the same in all my various accounts?
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TODAY\\u2019S SMART SPRINT SEGMENT

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  • [31:35] A question to ask when you make a purchase anytime this next week.
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THE \\u201cBE HAPPY\\u201d SEGMENT

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  • [32:16] Some insight from a friend of Roger\\u2019s about the issue of happiness in spite of difficulties.
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RESOURCES MENTIONED IN THIS EPISODE

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www.RogerWhitney.com/RPL - Find out more about retirement plan live!

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Contact Roger: http://www.rogerwhitney.com/retirementanswers/

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Roger\\u2019s retirement learning center: www.RogerWhitney.com/learn

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The Retirement Answer Man Facebook page: www.Facebook.com/RetirementAnswerMan

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http://www.nolo.com/legal-encyclopedia/is-that-residential-real-estate-investment-property-worth-it.html \\xa0

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