[0:00] Ryan Warwick: And instead, people are left floundering thinking, "Oh, investm- investing is just a game. It's a casino because every time I've tried, I bought here, and then the market went down, and- Sure... and then I got scared, and I sold, and, you know, so now I'm done." What are we gonna do when the market, in that moment- Mm-hmm... dropped 58%?
[0:19] Shannon Warwick: Yeah.
[0:19] Ryan Warwick: You were easily scared out. This is a casino. Yeah. I'm never gonna do this again. Yeah. And, and then you can't recover. Wow. I like to say we can eat the eggs without killing the chickens. It provides us a buffer against uncertainty and volatility in those moments when it matters most, when we can't afford to panic.
[0:39] Shannon Warwick: Mm.
[0:40] Ryan Warwick: We know that when, not if, when the market falls next- Mm-hmm... we don't need to panic. Yeah. We like to say the market uptrend is permanent. The downturns are temporary, always. And it's not for a moment. It's not based on today's circumstances. It- I remember one new, uh, relatively new widow who came to us, and after having about an hour conversation, it- she said, "For the first time in my life, I understand what you do."
[1:14] Shannon Warwick: Wow.
[1:15] Ryan Warwick: Yeah. Because if you understand this,
[1:19] Ryan Warwick: you can rest at night. We have, we have people that, that will ask the question, "Okay. Remind me how many years of safety do I have right now?"
[1:28] Ryan Warwick: Welcome to the Worth Beyond Wealth podcast.
[1:30] Shannon Warwick: Where net worth meets personal worth. I'm Shannon.
[1:33] Ryan Warwick: I'm Ryan. We help families navigate the emotional, relational, and personal realities that money alone can't solve.
[1:40] Shannon Warwick: If you've built wealth but still wonder what it all means, or how to keep your family grounded while protecting your legacy, you're in the right place.
[1:48] Ryan Warwick: We sit down with experts and with you to talk identity, purpose, and connection beyond the balance sheet.
[1:55] Shannon Warwick: Because true wealth isn't measured in dollars. It's measured in the impact we make and the relationships we nurture.
[2:02] Ryan Warwick: So grab a seat. Take a breath. And let's redefine what it means-
[2:05] Shannon Warwick: To be truly wealthy together.
[2:07] Ryan Warwick: This is the Worth Beyond Wealth podcast.
[2:10] Shannon Warwick: Worth Beyond Wealth. Okay. Well, welcome to the Worth Beyond Wealth podcast. Um, today we'll be chatting about a favorite topic, I think, years of safe money. Um, I know when I first started learning about this from you, I thought it was absolutely fascinating, and still think it's fascinating and continue to learn all the time. So I'm excited for today. I hope you're ready for today, as we were just chatting about, you got in at 11:00 o'clock last night- Yep... from LA. So.
[2:44] Ryan Warwick: But I'm, I'm ready to go. I'm, have, have had coffee, and- That's not coffee. Nope, but I've had plenty.
[2:50] Shannon Warwick: Perfect. Good.
[2:52] Ryan Warwick: It, it's an exciting topic today because- Yeah... it's something we use all the time.
[2:58] Shannon Warwick: Mm-hmm.
[2:59] Ryan Warwick: Um, it's a very flexible framework for, uh, a lot of different things that we'll cover today. Mm-hmm. Um, and so excited, and it will be our first test of, uh, of a whiteboard- I know... uh, on, on video
[3:10] Shannon Warwick: Not even a whiteboard. Yeah. A large Post-It paper pad. Yep. Mm. Which I'm excited about. This is groundbreaking. High tech.
[3:22] Ryan Warwick: Very high tech. I like it. Yeah.
[3:24] Shannon Warwick: Yeah. I, um... So I think
[3:28] Shannon Warwick: as we'll chat today, and, and before we really dive into what you refer to as years of safe money, we have to revisit, as we were chatting and preparing for today, we have to really revisit the prior podcast, um, where we talked about redefining wealth management, and then you have to take all of that and put it into, to this framework that is years of safe money. So-
[3:49] Ryan Warwick: Yeah
[3:50] Shannon Warwick: ... can you
[3:52] Shannon Warwick: recap what we chatted about on the last podcast with how RW Investment Management approaches redefining wealth management?
[4:03] Ryan Warwick: Um, we'll try to sum up an hour-... uh, conversation.
[4:06] Shannon Warwick: You have two minutes to sum that up.
[4:08] Ryan Warwick: We'll... So re- redefining is really about, you know,
[4:14] Ryan Warwick: w- to frame that up, what does the, what, what's the traditional model? Mm-hmm. So that would be, um, hey, to be a good investor, to be a successful investor,
[4:26] Ryan Warwick: the general idea out there is that I must need to outperform. I, I need to go have, have really good performance in, in some way. Mm-hmm. Whatever that means. Mm-hmm. Right? Outperformance, we would say, is, is the ultimate siren song that is an illusion, um, because when we really think about outperformance, what we're measuring is our performance against the market. So-
[4:51] Shannon Warwick: Mm-hmm
[4:52] Ryan Warwick: ... if you're in, if we're talking about stocks and, and bonds and, but the stock market, uh, for, for our purposes, then you would say something like
[5:02] Ryan Warwick: successful investing is outperforming the S&P 500. Okay. Well, then, how does the traditional, uh, mindset try to do that?
[5:11] Shannon Warwick: So it, so it's an illusion of market timing?
[5:13] Ryan Warwick: Well, so if I'm trying to outperform, then yes. Then how do I do that? And that would be through market timing. Okay. Uh, would be one thing called, uh, you know, that we would call an illusion. Mm-hmm. Because the idea that you can time the market effectively, successfully, and consistently-
[5:31] Shannon Warwick: Mm-hmm
[5:32] Ryan Warwick: ... o- over a long investment period is, is really not proven out in, in, uh, the, the scope of, of, uh, experience or, or evidence. And, and so then the question, the, the second attempt at outperformance would be what we call the illusion of, uh, of selection or investment selection. Mm-hmm. So to be a good investor, and, and therefore to outperform, I have to go find the next great company-
[6:00] Shannon Warwick: The next great
[6:02] Ryan Warwick: ... gold- Sure... Bitcoin, real estate, whatever it might be.
[6:04] Shannon Warwick: This is where noise-
[6:05] Ryan Warwick: And that's where I, and that's where I then pile in. That's, I, I'm gonna concentrate on this thing. I'm gonna- Mm... over, overweight to this one thing, which all of these things-
[6:16] Shannon Warwick: Mm-hmm
[6:16] Ryan Warwick: ... uh, create really a short-term mindset that introduces all sorts of risks into- Sure... the investment process.
[6:25] Shannon Warwick: And this is where the noise is feeding, is feeding this, right? What you're hearing on social media, from your neighbors, from whoever it may be. From the media. News media. Yeah, yeah. Yeah, yeah.
[6:35] Ryan Warwick: Yeah. Um, I mean, turn on CNBC for an hour and, and see if you don't hear- Sure... all sorts of pontifications about- Mm-hmm... uh, the market is gonna do this, or we think the market will do that, or this company this- Mm... or that company that.
[6:50] Shannon Warwick: Sure.
[6:50] Ryan Warwick: And, you know, as they say, um, you've, you've never met a one-handed economist.
[6:56] Shannon Warwick: Mm.
[6:57] Ryan Warwick: They, it's always, "On the one hand, it could do this, and on the other hand..." So they're- They-... they're really, they're really not giving you any advice. They're, they're just filling air time- Yeah... which is the role of media.
[7:10] Shannon Warwick: That's what they're supposed to do.
[7:11] Ryan Warwick: Yeah, they have to do-
[7:11] Shannon Warwick: Right. They have... Yeah
[7:13] Ryan Warwick: ... 17-plus hours of content a day. They have to have something to talk about, so this isn't for somebody to actually get value-added advice. Sure. Uh, but what it does is it creates, uh, short-term thinking- Mm-hmm... uh, mindsets that, again, introduce risk, um, rather than- Mm-hmm... um, allow you to, uh, take steps toward goal attainment, putting a plan together, and then a good portfolio, uh, that could actually meet your- Mm... very important, uh, and achievable, um, lifetime goals. Yeah. And instead, people are left floundering, thinking, "Oh, invest- investing is just- Mm... a game. It's a casino because every time I've tried, I bought here, and then the market went down, and- Sure... and then I got scared, and I sold, and, you know, so now I'm done. I'm just gonna go buy gold, real estate," whatever it might be.
[8:08] Shannon Warwick: I'll, I'll stay safe.
[8:10] Ryan Warwick: Yeah. Mm. And,
[8:14] Ryan Warwick: and so what does, you know, what does safe mean? Right. Um, that kind of leads into the other- Oh, sure... um, you know, another part of this, which is-
[8:23] Shannon Warwick: Yeah
[8:23] Ryan Warwick: ... many times over the years, we've, we've been able to meet with, um, people,
[8:30] Ryan Warwick: and there is a perspective that there are risky things and safe things- Right... uh, to invest in, so stocks equal risk, bonds, cash equal safe.
[8:43] Shannon Warwick: Mm-hmm.
[8:43] Ryan Warwick: And, you know, we wanna put to bed the idea that that is, um, necessarily the case.
[8:49] Shannon Warwick: Mm.
[8:51] Ryan Warwick: Stocks have risk. Um, it's the risk we call volatility. Mm. And what that means is stocks move up and down. Mm-hmm. The price of companies... So let's not, like, let's even stop using the term stocks.
[9:06] Shannon Warwick: Mm, mm.
[9:08] Ryan Warwick: We own companies.
[9:11] Shannon Warwick: I, I like that.
[9:11] Ryan Warwick: We don't play the stock market. Mm. We, we own companies, so w- when we-
[9:16] Shannon Warwick: I think that's a great way to start shifting mindset. Yeah. Yeah.
[9:19] Ryan Warwick: When we, um, buy shares of Coca-Cola-
[9:23] Shannon Warwick: Mm-hmm
[9:24] Ryan Warwick: ... w- we're an owner of the company Coca-Cola. We're not playing the stock of Coca-Cola.
[9:30] Shannon Warwick: You know, it's so interesting when you say that, what comes to mind is a position of feeling strength and empowerment and actually more control as opposed to feeling that gambling sensation with uneasiness. I'm owning something. I control that versus I am just doing my best to keep my head above water, and I hope I made a good decision. I, I like that.
[9:54] Ryan Warwick: It even turns, turns it from a game-
[9:57] Shannon Warwick: Yeah, a game into an actual plan
[10:00] Ryan Warwick: ... to a lifetime endeavor- Yes... of owning good companies.
[10:06] Shannon Warwick: That's really powerful.
[10:06] Ryan Warwick: A- and what do companies do? Just Coca-Cola, as an example- Mm-hmm... has produced a product-
[10:15] Shannon Warwick: Mm-hmm
[10:16] Ryan Warwick: ... with a special formula that has had a lasting value. You know, people drank Coke, I don't know, 100 years ago, whatever.
[10:25] Shannon Warwick: You know the formula's changed, right?
[10:27] Ryan Warwick: I don't know.
[10:28] Shannon Warwick: Well.
[10:29] Ryan Warwick: Not on the inside of Coca-Cola, so. Yeah, mm. Um, but
[10:33] Ryan Warwick: s- people liked Coke 100 years ago, and they like Coke now, and so they buy Coke. And back then, it sold for a penny a can or a bottle, and then it went to five cents, and then 10 cents, and 15, and 25. And, you know, a, a, a bottle of, of Coke now is, what, $1.25 from a vending machine? I, I don't know.
[10:52] Shannon Warwick: I don't even know.
[10:53] Ryan Warwick: But the- Yeah... the idea then is as an owner of that company, you participate in the growth of the revenues that Coca-Cola generates because they get to keep, uh, increasing the price as long as their product has value.
[11:11] Shannon Warwick: Sure.
[11:12] Ryan Warwick: And if they do a good job, uh, of managing costs and other things, then they have earnings. Mm. And as an owner of Coke, then I participate in, you know, getting some of those earnings. Mm-hmm. And as the earnings grow, the price of the company grows. And so investing is not gambling. It's not a game. I'm actually owning a company- Mm... that is doing research and development-
[11:38] Shannon Warwick: Right
[11:38] Ryan Warwick: ... putting products together that people want- Yeah... employing people- Yeah... paying cash flows, i.e. dividends-
[11:45] Shannon Warwick: Mm
[11:45] Ryan Warwick: ... to the owners of the companies. Mm-hmm. And so it's a complete mindset shift when we think about-
[11:51] Shannon Warwick: I agree
[11:52] Ryan Warwick: ... I own companies versus, um, I'm playing the stock market- Yeah... or I own stocks. So just even- Okay... little things like how we talk about it and the, and the terminology that we use- Mm-hmm... is important in, in framing this up. So- Sure... does Coca-Cola-
[12:09] Ryan Warwick: As, as a, uh, just using that as an example, um, because everyone knows what Coca-Cola is. Mm-hmm. So-
[12:18] Shannon Warwick: Do you remember the days when we used to be able to actually drink Coca-Cola without thinking about it? Do you remember those days? Oh, yeah. They were a long time ago.
[12:24] Ryan Warwick: I was probably in high school or college. College. Metabolism was better.
[12:30] Shannon Warwick: You were in college. Yeah. Yeah.
[12:31] Ryan Warwick: Um, but they've... I mean, yeah here's what's amazing. Here's a company that then develops something that we can drink that kind of tastes like the original, which is Coke Zero. Coke Zero. So, um, but that's the value of being an owner of that company- Yeah... because now you're participating in that new product that is-
[12:49] Shannon Warwick: Exactly
[12:50] Ryan Warwick: ... selling even when people don't want as much sugar. So.
[12:53] Shannon Warwick: I think it's... Yeah, this is a great example.
[12:55] Ryan Warwick: So in, in Coca-Cola's case, um,
[13:01] Ryan Warwick: what was I gonna say?
[13:04] Shannon Warwick: Well, I think, I think even just moving on just sort of in this, in this quick overview, this quick recap, so volatility, did you want to say anything?
[13:12] Ryan Warwick: So I was going there, yeah. Thank you. Okay. Mm-hmm. So in, in Coke's case, you know, over time you can look at this long picture of, of their, of their the company's price per share. Mm-hmm. And it's not without volatility, right? It's not as though Coke has had this amazing, uh, ride from, I'm making up numbers, a dollar a share to $100 a share- Mm-hmm... and is this straight line. No, not at all. Sure. There's moments when people think they're in trouble and moments when people think they're the best thing in the world. And so there is- Mm-hmm, mm-hmm... volatility.
[13:47] Shannon Warwick: Yeah, absolutely.
[13:48] Ryan Warwick: Um, and, and so that is the risk when you bring it back to you, I own companies, companies have risk of volatility, and volatility, as we said on the last podcast, is effectively an expression-
[14:03] Shannon Warwick: Yeah
[14:03] Ryan Warwick: ... of the uncertainty that exists in the world, which we cannot get rid of. So- No... there is uncertainty in the world. Right. Mm.
[14:11] Shannon Warwick: And that will never change.
[14:12] Ryan Warwick: That's never gonna change.
[14:13] Shannon Warwick: That, that is a constant. Yes.
[14:15] Ryan Warwick: Yep.
[14:16] Shannon Warwick: Yes.
[14:16] Ryan Warwick: And it's why when we are willing to own something, uh, like a company that has no guarantees, no guaranteed returns when, when we buy any investment- Mm-hmm... um, but we are rewarded by accepting that uncertainty. Mm-hmm. Exactly. That, that is why there is the possibility of return. Mm-hmm. And so that is a risk in, and on the flip side when we wanna talk about the things like- That are safe... bonds and cash- Mm-hmm... that are safer- Mm-hmm... if we wanna think about-
[14:55] Shannon Warwick: When you say safe, you-
[14:56] Ryan Warwick: If, if we want to think about the context of do they have volatility? Not as much, but sure they do. If volatility by definition is just movement up and down in price, yes.
[15:07] Shannon Warwick: Right.
[15:07] Ryan Warwick: There is movement up and down in price in bonds, um, in particular.
[15:12] Shannon Warwick: Mm-hmm.
[15:13] Ryan Warwick: Um, not so much in cash. Uh, but
[15:18] Ryan Warwick: there's not as much as, as stocks. So people when they walk in think stock's risky, bond's safe.
[15:23] Shannon Warwick: Mm-hmm.
[15:24] Ryan Warwick: Well, what if over time, and now let's not talk about just Coke, let's say you own 1,000 different companies all over the world. So now we have a diversified- Mm-hmm... portfolio of companies. Right. Um, there's still volatility. Mm-hmm. We've eliminated, um, the risk of, of just one company, of concentration in Coke if Coke something happened there and they went away entirely. So now we have a diversified portfolio that goes up and down-
[15:53] Shannon Warwick: Mm-hmm
[15:53] Ryan Warwick: ... according to risks in the economy, global markets, on and on, right? Lots and lots of risks out there that create the uncertainty.
[16:02] Ryan Warwick: Bonds on the other hand, um, you know, go up and down very little.
[16:08] Shannon Warwick: Mm-hmm.
[16:09] Ryan Warwick: Stocks go up, as we talked about in the last podcast- Mm-hmm... about 10% a year over time, so long-term average return on, uh, in the stock market is about 10%. Mm-hmm. And for bonds, what'd we say? Five? Six? So-
[16:26] Shannon Warwick: Yeah, I don't remember what we said, but was that- Yeah... approximately?
[16:28] Ryan Warwick: I mean, so lo- intermediate to longer term bonds- Mm-hmm... over long periods of time have been five to six. Mm-hmm. After inflation, okay, so what is inflation? It's the, I, I like to call it the insidious hidden tax-
[16:46] Ryan Warwick: ... um, that we all pay.
[16:47] Shannon Warwick: How do you really feel?
[16:47] Ryan Warwick: Yeah. Well, it, it-
[16:48] Shannon Warwick: So hard to know
[16:49] Ryan Warwick: ... it's, you know, the price of everything getting more expensive over time- Right... is, is inflation. And so our investments, we need our investments to
[17:00] Ryan Warwick: increase to keep up with inflation, but hopefully they provide a return in excess of inflation- Mm-hmm... which we call a real rate of return.
[17:09] Shannon Warwick: Mm-hmm.
[17:10] Ryan Warwick: Okay. So after inflation, what's the real return on stocks? It's about 7%.
[17:17] Shannon Warwick: Mm-hmm.
[17:18] Ryan Warwick: After inflation, what's the real return on bonds? Right. Oh. It's about
[17:24] Ryan Warwick: 3 to, uh, 2 to 3%. Right. Okay? Mm-hmm. So let's call it 3%. Yeah. So stocks- Significant... are about two and a half times better. Right. I, th- there I am just falling back into an old, you know, a habit, uh, calling them stocks. Ew. Companies-
[17:40] Ryan Warwick: Ownership in companies is about two and a half times better- Right... after inflation than ownership in bonds. Right. So if what we're concerned with in a long-term, uh, investment plan and, and strategy-
[17:57] Shannon Warwick: Mm-hmm
[17:58] Ryan Warwick: ... over say somebody's retirement years- Mm-hmm...
[18:03] Ryan Warwick: and a nice way to frame that up is a couple retires at 62 today, if they're both 62 and in good health, then it's-
[18:12] Ryan Warwick: On average likely that one of those people will still be living at, at 92. Mm-hmm. So-
[18:20] Shannon Warwick: Right
[18:20] Ryan Warwick: ... 30-year lifetime, uh, in retirement. In retirement, mm-hmm. Okay, so
[18:26] Ryan Warwick: we need- We can't just get conservative-
[18:29] Shannon Warwick: Mm-hmm
[18:29] Ryan Warwick: ... because, oh, now we're retired. Mm-hmm. We actually need
[18:34] Ryan Warwick: inflation projection. We need growth throughout a 30-year retirement- Mm-hmm... because things will get more expensive.
[18:40] Shannon Warwick: Yeah, and the, and then- And-... that mindset shift that comes with shifting from saving to spending in those years.
[18:47] Ryan Warwick: Yes, there is a- Right... yeah, and, and let's come back to that in- Yeah... in just a, in just a moment. But the, the thing to recognize, to tie a, a bow on this risky, not risky- Mm-hmm... is what if over 30 years, yes, this has short-term price volatility- Mm-hmm... but it gave us seven s- companies- Mm-hmm... gave us 7% after inflation- Mm-hmm... and bonds gave us 2%.
[19:14] Shannon Warwick: Yeah. So a 7% real rate of return versus a 2%.
[19:17] Ryan Warwick: So we grew our wealth-
[19:19] Shannon Warwick: Right
[19:19] Ryan Warwick: ... versus our wealth kind of stagnated over time.
[19:22] Shannon Warwick: Yeah.
[19:23] Ryan Warwick: Over any reasonable period of time- Mm-hmm...
[19:28] Ryan Warwick: if out- if keeping up with increasing prices in our life a- and outperforming inflation to perhaps even leave a legacy to our heirs or the, uh, causes that, that we love and, and cherish- Mm-hmm... is the goal, then ownership of companies- Mm-hmm... starts to look like a safer investment- Sure... while
[19:53] Ryan Warwick: bonds are something that felt safe in the short term, start to felt, fee- feels a little more risky. Sure. And, and that's the, I think, the idea that I want to, to frame up is that there is no pure risky and safe- Mm-hmm... world. It's risk and risk. Right. It's risk of volatility and risk of not keeping up- With purchasing... with purchasing power and not- Mm-hmm... growing your assets. So- Right... both have risks. And the question then becomes, and where we left off in the, in the podcast was, hey, we, we said we don't have time to dive into, hey, how should we pair those risks together- Mm-hmm... or pair companies and bonds, or ownership of companies and ownership of company and government debt, which is what bonds are.
[20:39] Shannon Warwick: Mm-hmm.
[20:40] Ryan Warwick: How do we pair those in a portfolio? And, and that's what we're gonna talk about today, and then, uh, how do we think about that throughout a retirement- Mm-hmm... with a concept we call years of safe money. Yeah, and it's a framework to give, um, to empower people- Mm-hmm... to, um... First of all, it helps us understand how do we pair these different risks that exist in the marketplace. Mm-hmm. So the first thing to understand when we talk with people is there isn't risky and safe, it's risks. Mm-hmm. And we need to pair those risks according to some of your goals. And so we, we back into it through- Mm-hmm... um, conversation, through goals, through, um, deduction. We, we look at, um, things historically, we call them lifeboat drills. Mm-hmm. And we might talk about how far the market might fall, and- Mm-hmm... this is what would happen to the- Yeah, that's great... company side of your portfolio, and how would you feel in those moments, and we have those conversations. So, um, we've just continued to evolve this framework- Mm-hmm... um, that, that we're excited to-
[21:45] Shannon Warwick: Yeah
[21:45] Ryan Warwick: ... to show. But, um, you know, lots of people talk about having
[21:51] Ryan Warwick: cash on the sidelines for a few years of, of living expenses. Mm-hmm. Yeah, that- And, and I think that's a start to this concept. That- that's a fine, uh, beginning approach to it. Um, but historically, there were some ideas that, um,
[22:13] Ryan Warwick: really would say something like, "Hey, the amount of bonds you should have in your portfolio,
[22:21] Ryan Warwick: uh, would be, um, your age." I mean, so- Mm-hmm... if you're in, if you're retired and you're 60 years old, maybe you should have as much as 60%. I mean, that would be, to us, a really, really conservative portfolio that probably- Mm... isn't going to be
[22:38] Ryan Warwick: highly successful over a 30-year retirement- Right... in, in some of the measures of, of success- Sure... that we would, we would call it.
[22:45] Shannon Warwick: So those traditional numbers are-
[22:46] Ryan Warwick: But I think those are antiquated ideas. Yeah. Like, uh, you know-
[22:49] Shannon Warwick: Those traditional mindsets are not going to serve you. Yeah. And, and- Not well
[22:52] Ryan Warwick: ... maybe they were okay when interest rates were- At the time... 10%. Right. Right.
[22:59] Shannon Warwick: Exactly. Um, so this framework really gives people, you would say, gives people comfort and understanding so that they can confidently begin to take income from their accounts, their portfolios in, in both good and bad times during their retirement?
[23:15] Ryan Warwick: And, and not just in your retirement. I mean, it's a good framework for, um, y- at any moment, uh, throughout a person's, or any part of a person's lifetime, um, whatever s- phase or cycle they're in.
[23:29] Shannon Warwick: Mm-hmm.
[23:30] Ryan Warwick: Because, um, people may, you know, there always may be a need to have access to liquid funds. Absolutely. Um, what are liquid funds? We probably need to define and- Okay... um, but access to liquid funds.
[23:44] Shannon Warwick: Mm-hmm.
[23:45] Ryan Warwick: And so for anybody of any age, this, this is potentially a conversation to have. Mm. But yes, often it's something, uh, that we're talking to, uh, retirees about because they are in that distribution phase of a portfolio.
[24:02] Shannon Warwick: Well, and I think even backing up a little bit, I, uh, I would say it probably even is a conversation that you're having in order to help people understand when they can retire. Oh, yeah. Absolutely, because- Yep, yep... can I reti- I don't know. I, when, and then you have those conversations- Yep... and you say you can absolutely retire- Yeah... if that's what you desire.
[24:20] Ryan Warwick: Yeah. Well, and, and there is, um,
[24:25] Ryan Warwick: you know, you, you alluded to it. There's such a mindset shift, and I think it's one of the hardest shifts that people have to make- Mm... as they go from working and saving-
[24:39] Shannon Warwick: Yeah
[24:39] Ryan Warwick: ... and just the diligence of, of I make, we, you know, we make this much money- Mm-hmm... and we spend this much, and we're saving- Yeah... this much to meet some goals. And then all of a sudden, we, we stop that work. Mm. Uh, no more... What, what does that mean? No more paycheck.
[24:58] Shannon Warwick: Mm-hmm. No.
[25:00] Ryan Warwick: And, and now we have this nest egg.
[25:03] Shannon Warwick: Mm-hmm.
[25:05] Ryan Warwick: And wait a second, that's, that has to take us all the way through, as, as we just described- Mm... the next 30 years. And-
[25:13] Shannon Warwick: But I-
[25:13] Ryan Warwick: ... I'm really excited. This is, this may be the first time I brought my, um- Oh, now you- My HP 12C, the, the classic, um, calculator.
[25:22] Shannon Warwick: It is a classic. But- It is a classic, just like you, honey
[25:24] Ryan Warwick: ... all I was gonna say is if, if they're 62- Mm-hmm... and we're going to live a 30-year retirement- Mm-hmm... and we need, just making up numbers for, for conversation- Mm-hmm... we need $100,000 a year today.
[25:41] Shannon Warwick: Mm-hmm.
[25:42] Ryan Warwick: With 3% inflation-
[25:45] Shannon Warwick: Right... that's $242,000- Mm-hmm
[25:49] Ryan Warwick: ... a year. And so it's increasing gradually over time. So you don't need 100,000 a year over retirement. You need, you know, something closer to an average of maybe 150 or, or one, 175. But
[26:04] Ryan Warwick: that's why we need to accept ownership of, of companies, accept the inherent risk-
[26:12] Shannon Warwick: Mm-hmm
[26:13] Ryan Warwick: ... in companies.
[26:14] Shannon Warwick: Mm-hmm.
[26:15] Ryan Warwick: And to the degree possible, shun the, uh, what appears to be- Yeah... the inherent safety of- It's a unicorn... hard bonds and cash- Mm-hmm... um, because they're not gonna keep up with that. Yeah. So the framework we, we- That's great... give then is, is all about how do we balance these things? Mm. Because there is a place for bonds and cash, completely. Absolutely. We're not saying don't own them. We're saying-
[26:40] Shannon Warwick: No
[26:41] Ryan Warwick: ... let's not think that now that we are no longer earning and saving- Mm-hmm... that we, that we need to have safety. We still need growth because-
[26:53] Shannon Warwick: Mm
[26:54] Ryan Warwick: ... that's growing. And quite frankly, in, in the model we'll show or framework we'll show- Mm-hmm... a lot of times I'll, I'll look at somebody and say, um, "Look, this is, you know, this is an 80-year picture," and, and we'll draw that out. Mm-hmm. And while obviously, um, unless something changes dramatically in, in the healthcare field- Mm-hmm... if you're sitting here at 60, you're probably not gonna be sitting here in 80 years.
[27:18] Shannon Warwick: Mm-hmm.
[27:18] Ryan Warwick: So you don't have an 80-year life expectancy. But if you have kids or legacy- Mm... or grandkids- Yes... your money has an 80-year life. Right. So this picture is a perfectly acceptable framework for thinking about your money over the next 80 years. Yeah. And the power of doing that properly is really amazing.
[27:41] Shannon Warwick: How do people generally respond to you when they hear that, maybe for the first time?
[27:45] Ryan Warwick: Boy, there, there's been, um... These are some of the coolest, uh, comments over time, but I remember one new, uh, relatively new widow who came to us, and after having about an hour conversation, uh, she said, "For the first time in my life, I understand what you do."
[28:06] Shannon Warwick: Wow.
[28:06] Ryan Warwick: Yeah. And then, you know, we have, we have people that, that will ask the question, "Okay, remind me how many years of safety do I have right now?" You know? I love it. And so it gives, it gives a framework because look, we want, we want to have a portfolio that's designed so that we can grow, outpace inflation, meet goals, provide legacy, do amazing things- Yeah... and let you sleep really well at night.
[28:34] Shannon Warwick: There's just a, a sleep at night.
[28:35] Ryan Warwick: Yeah.
[28:37] Shannon Warwick: I love that.
[28:38] Ryan Warwick: Yeah. And, and so this was
[28:40] Ryan Warwick: tested in the fire. Um, maybe not as fully developed in the 2000 cycle. Um, I was brand new- Mm-hmm... uh, in, in '99, 2000. Um,
[28:54] Ryan Warwick: and, uh, but m- but certainly the conversations we had around this concept in the, uh, financial crisis of 2008 and '09, um, really, uh, solidified the value of this. Um, so that was, that was fun to see it in practice in what, um... You know, 2000 was bad, but it was, uh, really concentrated into, uh, largely into a sector of the economy. It was tech stocks, the dotcom craze that happened.
[29:27] Shannon Warwick: Right.
[29:27] Ryan Warwick: Um,
[29:29] Ryan Warwick: 2007 and the financial crisis really called into question whether or not capitalism would survive. The banks were on their backs. Real estate was falling. The market was f- There w- there was no place to hide. Mm. And so it was in that moment, um, where this, this really, this, this concept really, um, shone, uh, brightly. Mm. So that was fun. And so, um, interesting to think
[29:55] Ryan Warwick: that it was, um, it was nearly 20 years ago.
[29:59] Shannon Warwick: Right.
[30:01] Ryan Warwick: And-
[30:03] Shannon Warwick: We're old
[30:04] Ryan Warwick: ... so if you, if you have, if you have somebody now who's
[30:08] Ryan Warwick: 35- Uh-huh... you know, successful, out in business, have, you know, is now investing and-
[30:14] Shannon Warwick: Yeah
[30:14] Ryan Warwick: ... they don't really have a, an experience with that.
[30:17] Shannon Warwick: I, I agree. I was thinking about the, um, the wisdom that comes from the lived experience.
[30:21] Ryan Warwick: Yeah.
[30:22] Shannon Warwick: You know?
[30:22] Ryan Warwick: So the, the only-
[30:23] Shannon Warwick: Things that are painful are, are purposeful.
[30:25] Ryan Warwick: Yeah. The only thing, the only experiences, and, and that's, that forms the- Um, you know, we talk about experience being really critical in the formation of being able to give advice, uh, in a stewardship framework or, or being a steward-
[30:44] Shannon Warwick: Mm-hmm
[30:44] Ryan Warwick: ... um, because, hey, you can't just pass a test and all of a sudden be a steward. You can, you can be a fiduciary. Mm-hmm. That's a legal standard, but, um- Yeah... but boy, it's those, it's those bad times- Mm-hmm... where, where you build the reps of talking people through the massive uncertainty that is right in your face-
[31:11] Shannon Warwick: Yeah
[31:11] Ryan Warwick: ... and, and come out the other side. You've probably built some scar tissue. A few, a few gray hairs.
[31:19] Ryan Warwick: Um, but those are the times that really, um, solidify the value of some of the things you do, and it's that, it's that refining by fire.
[31:29] Shannon Warwick: I agree.
[31:30] Ryan Warwick: It's not in the good times that we grow. And so-
[31:32] Shannon Warwick: Mm
[31:33] Ryan Warwick: ... uh, since 2008, we've had, we, we've certainly had bear markets- Mm-hmm... but they've been more shallow.
[31:44] Ryan Warwick: And those bear markets have been, um, have quickly recovered. Mm-hmm. So that one lasted a peak of O- October of '07, basically, uh, bottomed out in March of '09. I mean, that was a long, a long downward slide with really big moves. COVID was big, too- Right... but it happened really, really quickly.
[32:07] Shannon Warwick: Quickly.
[32:09] Ryan Warwick: So anyway.
[32:09] Shannon Warwick: Um, but also would you say that this helps them as investors to take advantage of these volatile markets?
[32:17] Ryan Warwick: Oh, yeah. I mean, it, it completely, um,
[32:24] Ryan Warwick: uh, produces a mindset-
[32:26] Shannon Warwick: Mm-hmm
[32:27] Ryan Warwick: ... uh, of, um, seeing market volatility in, um-
[32:33] Shannon Warwick: A whole new light
[32:33] Ryan Warwick: ... potentially a positive light. Yeah. Um, one that we can take advantage of. Mm-hmm. But most certainly allows them to
[32:43] Ryan Warwick: s- uh, better stick with a plan.
[32:45] Shannon Warwick: Yeah. W- There's something, it was kind of funny, that you had shared with me. Um, uh,
[32:51] Shannon Warwick: really clients that you've been working with who've, who've embraced this mindset, who are all about education, and, and they love this, and they're thriving, um, th- they're so funny because you'll have people call and say, "Markets are down. Yee-haw. Let's- " Yeah. Yeah... you know, "Let's do this." And you're saying, "Hey, they're not down enough. It- Yeah... just hold the line."
[33:10] Ryan Warwick: Yeah. Yeah. What we want is, uh, we think good investors are often contrarian thinkers, okay? When the crowd is moving one way-
[33:20] Shannon Warwick: Yeah, the crowd mentality
[33:22] Ryan Warwick: ... what, is there something else we should do? Because crowd mentality, I mean, there's a book written on it. Yeah. It's called Popular Delusions and the Madness of Crowds. Um, a very-
[33:32] Shannon Warwick: We've seen it at Disneyland
[33:33] Ryan Warwick: ... quite, quite an old, old book. Yeah. Yeah. Um,
[33:37] Ryan Warwick: y- yeah, it, it's pretty rough, um, there.
[33:39] Shannon Warwick: It is rough there.
[33:40] Ryan Warwick: But
[33:41] Ryan Warwick: can we do something different- Mm-hmm... than what everyone else is doing? When the average person goes to that, that Christmas party and-
[33:50] Shannon Warwick: Yeah
[33:50] Ryan Warwick: ... you know, small talk, uh, has small talk with, with people they see- Mm-hmm... once a year, and, and they're talking about all the, the things they've done- Uh-huh... and the successes they've had and- It's so great... it's almost like a social media moment where you only get the, the best glimpses into somebody or- Right... if they're even telling the truth. But- Yeah... yeah, um- Great point... well, why am I not in Bitcoin? Or why am I not in, you know, some, some talk- stock that- Absolutely... or company that, that's taken off? So-
[34:17] Shannon Warwick: Mm
[34:18] Ryan Warwick: ... yeah, it's, it's, uh, all of these emotions are real. And so- Yeah... our framework, just to kinda also tee this up, is- Mm-hmm... is to say, look,
[34:27] Ryan Warwick: we can design a mix of companies or- Mm-hmm... assets designed for growth- Yeah... and assets designed for
[34:38] Ryan Warwick: more safety- Mm-hmm... and more liquidity in moments when other assets are, are volatile
[34:47] Ryan Warwick: in such a way- Yeah... that it, it is right according to how much spending money you need. So we're gonna walk through this. Right. But we call this logistics, so this, this is a strategy that addresses the logistics of what needs to go on in, in your family's plan portfolio- Mm-hmm... um, spending patterns- Mm-hmm... uh, and distributions, and the emotion. So- Yeah... we, we think about both. They're, they're both critically important because I could put together a, a, a mix of companies in, in cash and bonds that logistically is absolutely right for you- Mm-hmm... and works every time, I can show you in the models, but when the market goes down- Mm-hmm...
[35:39] Ryan Warwick: and your friends are telling you to get out- Yeah... and the media's screaming at you-
[35:42] Shannon Warwick: Mm-hmm
[35:43] Ryan Warwick: ... and this is new to you- Mm-hmm... it could create that emotional, uh-
[35:50] Shannon Warwick: Well, money is emotional first-
[35:51] Ryan Warwick: furor, you know? That-
[35:52] Shannon Warwick: ... rational second
[35:54] Ryan Warwick: ... yeah. That-
[35:54] Shannon Warwick: So, so we're gonna push back- Yeah. So-... on this. Yeah
[35:56] Ryan Warwick: ...
[35:58] Ryan Warwick: so, you know, you may not be able to stay in, and I've, and I've seen that a few times. Mm. Interesting. Um- Mm... fortunately, um, it's pretty rare after we've walked through this process. And then this is the, um, you know, we, we drip on this. Uh, this is the conversation in, in many meetings, and it's a conversation that a- addresses lots of, of questions. I'm gonna start with black.
[36:22] Shannon Warwick: All right. All right, honey, take it away. Yours is safe money.
[36:28] Narrator: Thanks for listening to part one. The conversation continues in part two.
[36:33] Ryan Warwick: And I f-, you know, hear these, "We can't live through another 2008. Now we're retired. We don't have time to recover." If you just retired, you need to be doing this. You need to take that distribution for the next 30 years. You can't not experience the next 2008. No. Companies. Because what we're trying to build, and this is a really important point, is we want to build a framework where we never have to sell stocks when they're dank. And I think I said it last time, but I'll say it again. Had a client and, and when we, um, when we started working together, he'd been with somebody else and was looking at spreadsheets every month and- Yes... and how much income he could take and, and was just stressed and, you know, laboring over, um, his investments and, and if they were going to meet, you know, their goals for that month or forever. And once we started working together with this as a framework, he stopped that. He started living. Right? Let's just say it goes down 50%. Now I don't have a million dollars, I have $650,000 because my stocks went down $350,000.
[37:47] Ryan Warwick: Okay. But that doesn't matter because I wasn't living off this side. Exactly. Thank you for listening to the Worth Beyond Wealth podcast. If you liked this podcast, please like, share, and subscribe. The highest compliment you could give would be sharing this with a friend. Thank you. The opinions expressed in this program are for general informational purposes only, and are not intended to provide specific advice or recommendations for any individual or any specific security. RW Investment Management, LLC, DBA RW Investment Management, is a registered investment advisor. Testimonials given by current clients are not in exchange for compensation. This document is solely for informational purposes. Advisory services are only offered to clients or prospective clients where RWIM and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by RWIM unless a client service agreement is in place. RWIM is not a legal or tax advisor.