Is Delivery The Future?
In this episode we touch discuss a handful of recent topics:
- Walmart earnings and the growing trend of delivery / convenience services in retail and food industries
- The Fed's latest minutes
- Will SC see a state income tax deduction?
- A huge upswing in life insurance claims
- The recent market volatility and how investors can think about the road ahead
Thank you for listening.
Sources Referenced:
Walmart slides (from Walmart Q4 slide deck report)
SC State Income Tax article from AP
Think Advisor Article on Life Insurance Claims reaching 200 year event
Charlie Bilello article- The Price of Admission
Unedited Transcript
Is Delivery The Future?
people, pay, year, talking, market, thought, walmart, prices, money, business, companies, crypto, investors
Michael Baker 00:03
All right, welcome back to the money huddle. My name is Michael Baker. And I'm here with vacation nation, the man himself, Ross Marynell. Ross, how you doing, buddy?
Ross Marynell 00:13
Hey, it's good to see you, Michael. Great to be here. Yeah, vacation that, you know, it's been inflation nation. It's talked enough about inflation, the last few episodes, it's time to start talking about vacation. This is where Oh, yes. What is it? No household is about to take a short little trip this week, okay to get away to the beach. So it's vacation nation in our house. But also, I think this is the year we're going to see folks get outdoors, back out on vacation and mass. And I can't imagine what the lions will be like, at Disneyland and some of the major attractions this year.
Michael Baker 00:50
You know, I didn't think about that. I do think I mean, I I think that a lot of people kind of did their own thing last year, personally, during the summertime and did on law trips. But I would imagine, I would imagine, especially with what we've been seeing with a lot of the restrictions being lifted, that people are ready to go.
Ross Marynell 01:11
I agree, I think internationally to we're seeing a lot of European countries just lift all COVID restrictions. So if people can travel fly in and out of countries without being potentially quarantine, I think we're going to see a lot more activity back to a lot of those countries. So and you know, look, I mean, maybe everyone takes their electric vehicle there. Sure. Are we all going to drive EVs to our vacation destinations this year? I
Michael Baker 01:30
don't know. But if you watch the Superbowl, there was actually another contest instead of just being the rams and the Bengals. There was a there was another contest played out with the commercials and that was electric vehicles versus crypto. And who do you think Who do you think won that?
Ross Marynell 01:49
Electric vehicles hands down. I counted six or seven. Evie commercials. Yeah, it was a lot of enough. Like let's pump the brakes a little. Well, that was the interesting thing too. A lot of these cars won't even be available this year. It's just kind of forecasting what's coming in obviously the shift Evie is on it's going to come full force now from all the major auto manufacturers look like they're getting in the game. General Motors BMW Kia, we already know Volkswagen is there. And of course, Tesla. So Tesla is going to have some some heated competition. And it's it's on so now the EB game is on.
Michael Baker 02:27
I think, you know, for me, one of the commercials that stood out to me the most was as I was watching it, my inner monologue was like, wait a minute, is this another electric truck? And so you know, we've got Ford has announced they're doing the lightning. And now Chevy, of course, right? They can't let Ford have a vehicle that they can't compete with. And so now Chevy's got a electric vehicle electric truck that they have, as well, man, these things look amazing. They look amazing. I hate this. I hate to think what they're gonna cost people but they look amazing.
Ross Marynell 03:01
I don't know if I'm ready to spend 70 or 80 or $90,000 on an electric vehicle truck, but the market is going to be
Michael Baker 03:08
you don't want a 15 year car note. You're getting long as was gonna take to finance these things and take the 15 year option.
Ross Marynell 03:17
I will say real quick though, seeing meadow soprano, driving that Silverado a lot that Yeah, to pique your interest a little bit. That was that was probably my favorite of the TV commercials. But on a side note, what are what are these celebrities doing representing crypto companies? Like just stop the the crypto exchanges the I just don't understand the attraction that syllabaries have the hawk Hawk these exchanges.
Michael Baker 03:44
Listen, I can tell you I mean as we were watching, you know, as I was watching the Superbowl, it never fails every year and this is what I'll tell you straight up. It's money, bro. That's all it is. You know when you when you are famous. When you are famous you have a very for most people, not all I mean there's this the super celebrities that are like perpetually famous, but you have like this finite window of time that you can make just read Dick Ulis amounts of money where people will pay you to show up to clubs, people will come you know, pay you to come and since you know give a 10 minute keynote at account right? Shake hands take pictures, they will pay you a ridiculous amount of money to show your face and a Superbowl ad and you got to cash in and that's 100% what that is I fully believe you know and I say this like from you know my time out there. The weirdest paradox for me to understand was the minute that you're famous enough and wealthy enough to afford all the like the things that you could that you could possibly want people start giving you those things just so you know the designers give you clothes you know Auto manufacturers give you cars. You know, it's ridiculous just so well
Ross Marynell 05:04
now nobody was trying to get us to buy crypto. So I'll take a pass. Thank you very much Pat knows your acting career, I will do that take investment advice somewhere else. So, alright, Michael, great Super Bowl. Happy for Matthew Stafford. I thought Jobar I'll play great. Sorry for my Cincinnati friends and family. Oh my gosh. But it was a great game. It was amazing. I'm glad
Michael Baker 05:28
it was tough. It was a tough game to watch for about a quarter and a half because there was a defensive struggle. But hey, that's what it was.
Ross Marynell 05:34
I got a little dry, but it picked up in the end. So alright, Michael. Well, we got on tap today.
Michael Baker 05:38
Alright, so I want to, you know, start out with, with Walmart, you know, leading is going to be buried today. It'll be buried because the the news headlines today, as we're recording this is, you know, possibly renewed tensions over there at the Russia Ukrainian border. There's, you know, disagreements between the leaders about who's doing what it feels like two children fighting in, you know, they come to mom and dad. And you know, mom and dad didn't see what happened. And the other one that keeps telling me no, it wasn't me, it was them and vice versa. So that's gonna dominate headlines today. But Walmart came out and had a pretty nice fourth quarter, not I'm hopping but pretty nice fourth quarter, but I went through their slide deck that they released and for fiscal year for their, their adjusted EPS for 2022. was right at 17.9%, which is pretty solid. But the one thing that came out and jumped out at me, and I know we've already talked about this, I know it'll kind of dovetail into something you wanted to discuss was one of the things they pointed out was that Walmart, we know they have 1000s and 1000s of stores, I think. But they have approximately 4600 locations that are now doing pickup services, where you can order on the app or order online, and go right to the store, pick it up. So for those people who are just not wanting to be in a Walmart for whatever reason, you can like go right in and pick up your goods and then leave. And then they also had said greater than 3500 stores or locations that are now doing same day delivery. So we are becoming like, we weren't like truly instantaneous shoppers. It's not only about who can deliver, you know who who has the goods and provide a seamless platform for you to purchase things. But who can get it to you the fastest?
Ross Marynell 07:33
I think delivery is the future for shopping one, maybe maybe people don't want to be in the grocery store any longer. Whether that's COVID related or just time related. It's a lot. You know, my wife has been shopping online for two years now. Yeah, whether it's pickup or delivery. I think this is the future. I think the businesses like Walmart and even Amazon through the whole foods chain, they have the footprint to do this without building a new infrastructure without having the capex expense that some other businesses may need to support to support the delivery. Now, look, there's inefficiencies right now, if you do if you're ordering food from from Walmart, they may deliver three times one item. I mean, it's not. It's not efficient process yet, right. But they will obviously get better at that. I think she was inflation pick, picks up and continues to hit food prices, people are going to be more willing to shop for deals. And if you can find something on Amazon, that's $4 less than going to the main the local grocer, they're going to do it. Because if they'll deliver it the next day, what's the difference? I think people will be on the hunt to save costs on food, and other items they might pick up from the grocery store more than in the past. And also, there's a price difference now. So I maybe it has always been that way. And I've just not noticed it. But I'm seeing a greater distinction between some of the pricing at a local grocer versus one of these online delivery services, whether it's Whole Foods or Walmart. So one thing I'll say about about Walmart, some other businesses, as we're seeing inflation, you know, 40 year highs, the businesses that have true pricing power, May power through this next period a little better. So I'm thinking about the Walmarts of the world, the McDonald's, the Starbucks, the the businesses that can tweak prices up five 10% and not send their customers out the door or keep people from coming. And they I think Walmart is one of those businesses that has pricing advantages and pricing power. And we're starting to see it and some of their results in in their earnings growth.
Michael Baker 09:39
I think so too. You know, this is one of those things where you hate to see I mean, I'm a huge proponent of local businesses, and mom and pop businesses. I don't want to see them swallowed up by you know, these mega retailers, like Walmart. However, this this is the kind of environment that we're in and you know, Walmart Obviously poised to, you know, be able to flex a little bit right now. But I will say one of the things to me just as a consumer, I'd be interesting to see how people price convenience, because I can tell you, we, at the baker household, we pretty much are completely converted to target pickup, like, I don't go into Target for hardly anything, you know what I mean? It's like, I go on the app, I'm like, here's what I want, click, click, click, click, and then I tell them to come get it and I can pick it up and, and slowly but surely, like, at least at our local Target here, that we go to slowly, those those pickup lanes are expanding, they're getting more and more and more lanes there where that to me seems like it might be the future of shopping for a lot of things. Now, you know, what would be interesting, and the thought I actually had about Walmart was, you know, Walmart is typically the you know, everyday low prices, low price leader, whatever their slogan, slogan is, you know, falling prices. I can't remember. Rollback, rollback, okay, rollback prices. But it would be really interesting, if Walmart kind of started doing what target did did. And maybe they do. And I'm just not familiar. But target started creating like these little mini partnerships with like, name brand, or designers for their clothing, where they might have like, I know, I remember specifically, they did like a Lilly Pulitzer collection, it wasn't Lilly Pulitzer, but it was kind of a partnership. And that stuff, like was gone in like the the first day it hit the shelves, like the next day, it was gone. And to me, I see there potentially an opportunity here for somebody like Walmart to say, Hey, if you want distribution, you know, to have some of these things to give consumers a little, a little spark, and a little way to see Walmart, maybe in a different light, I don't know. But just interesting to watch those numbers come out,
Ross Marynell 12:01
I would say as far as paying for convenience, nothing illustrates that more than DoorDash. Because DoorDash had a strong quarterly or earnings report as well. Now, I've not stoop to the laziness level of not being able to pick up my own food yet. And I'm really pretty much refuse to pay for Dash, six or eight bucks to drive to the dark side. I will not die yet. I you know, but there is a marketplace for it. And their earnings are growing, you know that? Well, their revenue is growing. So it's obviously something that's attractive to people that they don't want to go out and get food. So I haven't gotten to that level yet. The delivery is the future, there is no doubt about it. And it's the recurring order, too. So you know, if you go through Amazon, it's like, Alright, how they're basically learning your buying habits. And there will come a time where they are delivering the food to your door without you requesting it because they know that you're consuming it at a certain pace. That's, that's integrating it. Oh,
Michael Baker 13:04
I didn't, I didn't I didn't order these chocolate chip cookies. Well, sir, oh, we know that you want it we know that you're doing and you're like, actually, you're right, I was really wanting this all along.
Ross Marynell 13:15
So just remember, you know, the businesses, they can get products that can fill their shelves that have pricing power, when we're in this inflation and supply chain issue or, you know, could potentially Thrive Of course, we don't make stock recommendations on this podcast. But we're also seeing areas where the prices are throttling through the roof. But if you can't get the material what you can't book, you can't get paid. And I'm thinking about some of the construction companies remodeling businesses, I was talking to an owner of a renovation company here locally. And yeah, you can sell all the jobs, um, you know, in the in the city, but if it gets material, you can't finish the job and get paid. Right. And so they're doing all this front end sales work right now quoting ordering material waiting weeks and weeks and weeks, if not just truly months. Yeah, to get cabinets in and to get you know, bathroom materials in in. You're just sitting there. Yeah, just have all the sales where you can't complete the job and get paid. So that's that's becoming a challenge.
Michael Baker 14:15
That's really tough. All right. Well, I feel like we we have to do at least a quick, quick bit on the Federal Reserve because you they just dominate the headlines, at least this week, the the minutes came out. I thought they were just a big nothing burger. I mean, seems to be consensus across the board. There was nothing really material in there, which everyone's trying to figure out is the Fed going to raise 25 basis points or 50 basis points in March. They did not tip their hand at least in those minutes. Which those minutes were done before the latest inflation numbers came out. So not really much there to report other than just you know, we're still kind of in that my favorite type of market environment where everyone's just waiting to see what the Fed is going to do. What are your what do quick thoughts on that
Ross Marynell 15:00
they're letting the narrative do the work for them. Yeah, they haven't had to raise rates yet the markets priced in, you're seeing 10 year Treasury rates increase just over I looked yesterday, at eclipse 2%. For the first time in a long time, you gotta think during the lows of the COVID. You know, pandemic we write, what 60 basis points on a 10 year Treasury points,
Michael Baker 15:22
there's already there's already room for them to move the rates up. And in fact, there are a lot of people a lot of people that feel like they are behind the curve on on getting, you know, getting off zero. So, nothing that nothing really
Ross Marynell 15:34
that's a pleasant way to say completely miscalculated the last year at least. So yeah, but I do think that they don't, other than put the news out there and stand behind the narrative. They haven't had to do a lot yet to have the effect that they probably want, which is to slow things down, increase race a little bit, you're seeing the 10 year already do that. We'll see what their next step is. But I think until then we probably can, hopefully, we can park the Fed for for an episode or two.
Michael Baker 16:02
All right. So you had some news about South Carolina?
Ross Marynell 16:08
Oh, look, I'm smiling. Why? Well, so I thought I saw this come through the AP, this was the headline booming economy lead South Carolina governor and house to bigger tax cut. So that proposal would cut the state's highest tax bracket. So this is 1.1 million people of the 2.6 million people in South Carolina pay from 7%, down to six and a half percent immediately. So we're talking about South Carolina state income tax, with plans to continue to cut down to 6%. So that's good news. We've had a strong booming economy. And we've had a number, I mean, let's say a big influx of people coming to this state because of low taxes because of good public schools, low crime, good access to jobs through not only South Carolina, but also the Charlotte market. And of course, you know, we are competing with other states like Florida, Texas, Tennessee, for those, you know, blue state transplants. And so those those three states I just mentioned, have no state income tax. So I think it's smart to bring those down a little bit. They are a Washington money right now, we know that's a lot of times temporary, and it could change. And so we don't want to go too far. But I think this is a nice step to give give a little it's in a back to those income earners in the state.
Michael Baker 17:27
Well, you know, I agree with that. And I think that, you know, this is one way that states especially, can look to make themselves more economically attractive, not just for companies, but people that want to relocate. And in especially in this environment, which we've talked about before, where you may or may not be tethered, locally to where you work, if you have the ability to work remote, like you may be able to work somewhere, but work from home. And so that, that if that trend continues, which it definitely appears that workers want that trend to continue, that state income taxes are going to be kind of a big deal, because now you might be able to attract people moving to your state that want to work remotely because of some of the other things your state offers. And you know, and I'm biased, I'm from South Carolina, but you know, we've got mountains in South Carolina, we've got Beach, we've got, you know, a great state, the climate is pretty good, except in the in the summertime, where it's sweltering, but, you know, these are the prices you pay when when you live in the south. So I think it's awesome. And so this is a proposal, right? This is a proposal. Okay.
Ross Marynell 18:40
Now, I've you made a good point there. I think in the past, a lot of the, you know, influx of people were probably more in the retirement age range coming to join their families that were already here. They're their children, grandchildren, grandchildren are the best magnet in the world. So you know, if they're, if their sons or daughters were in this area working, people would move, it's a good retirement destination. But I think you're right, what's happening now is we're attracting that that working class that may be working from home or working remotely. And we do need to do something to keep those those people attracted to this area.
Michael Baker 19:14
Yeah, especially if they can move other places. So well, let's let's let's hope that that gets through because, you know, obviously, our offices, our main offices in South Carolina, we have a lot of people that live in South Carolina that we serve, and that would love to have a little state income tax cut or a little tight tax relief. But you know, the other thing too, is we're very tethered to North Carolina and South Carolina gets a little too competitive. This may put pressure on North Carolina to do the same which would benefit our North Carolina folks.
Ross Marynell 19:44
let's see. Alright, cool. What's next?
Michael Baker 19:47
You were telling me about something you saw as far as group life insurance claims rising up in the in the age of COVID. It just was get you to elaborate that on that
Ross Marynell 19:59
I thought was startling statistics. So this was the headline COVID-19 Driving group life deaths past the 200 year event level. So this was the CEO of what America J. Scott Davidson said last week, he was talking to the Indiana Chamber of Commerce. So the death rate of people ages 18 through 64 is now 40% higher than normal. And well above what the life insurer had believed to be the one and 200 year event level. I'll continue just one more moment. So primary Rika, who's one of the larger term life issuers in the country said it paid 2.1 billion in terms of life death claims in 2021, up from 1.4 billion in 2019. So you're talking 700 million more paid out in claims? And, you know, there's a number of reasons why. And it would be hard for us to pinpoint what, but you're talking about that working class cohort 18 to 64. So could that be increased drug and alcohol deaths? Could it be COVID-19 related deaths? Could it be? Yeah, there's a number of things that that could be causing them. But what's happening is, that's also putting pressure on these term life insurance to pay claims on time. There was a story out of the city wire, they have a new editor, and it was Laura Perkis. And she was relating the story of her dad's life insurance or dad passed away and life insurer at the point of seven months, it's still not pay the claim. Wow. So we're seeing that it's a startling increase
Michael Baker 21:39
in the number of the insurance company.
Ross Marynell 21:42
Well, so that's part of the challenge. And one of the things that we wanted to kind of talk about from a planning perspective is having a central document vault, whatever it is, with all of these related policies, because it's hard to track down who the insurer was, if you don't know, a lot of times someone passes? And we don't know, we know they had insurance. But who was it? Who was the provider? Was it a group life policy was a personal policy. To start that claims process, you need to know where to look. And so one of the challenges in that situation was not knowing who the actual claim should be processed through. So first, you got to find the policy, who you know, who's the carrier, submit the claim, you got to provide all the documentation and get the get all the i's dotted and T's crossed? And of course, you're in an emotional state that you're not prepared to do paperwork, if you just lost a loved one, you're not you're your mind to somewhere else, you're not thinking about, you know, how efficiently can I get these forms, but the reality is, a lot of people will need that money in need it quickly. Because, you know, if they're not, if they haven't saved to the point where you can cover short term income gaps, the life insurance may be the thing that helps pay for a funeral, that helps, you know, the next two to three months of living, while everything else settles, especially if there's probate and other things that could delay six, eight months. So what are your thoughts on that? Is that eye opening or what?
Michael Baker 23:12
It isn't, it is interesting one for sure. I, you know, I think, you know, group group claims are going to be, you know, looking at a specific segment of the population. But that the, you know, it definitely appears that it's an outlier, which, of course, we're you've are on year two, maybe year three, depending on how you you're counting chickens for the pandemic. So it's understandable that some of these numbers are going to be a little distorted. I would think, however, from I want to address what you said, as a planning issue. And this is a big thing. I'm because I have, you know, we have together done this, I have personally now done this multiple times in the last six months, where I'm going through the process of helping somebody organize and settle in a state either from a parent who had passed away, or you know, in for even unfortunately, like a spouse who's passed away. And I can tell you, that is an administrative process. And so I can't encourage people, you know, I can't encourage you enough to get your estate plan in order. If you've had, you know, if you did wills and things like that 10 years ago, 15 years ago, go get them looked at again, go get them refreshed. Make sure you have property and assets titled correctly, make sure you know where all your insurance policies are. Make sure your beneficiaries are labeled appropriately and correctly, because I can't tell you how many times like I'm looking at an old 401k and I'll see an ex spouse or somebody will have their mom and you know, they've been you know, as the beneficiary on an old 401k from a job Two years ago, but they're married and they've got kids. I mean, so life happens. And that's why we just continually need to do our own housekeeping. And especially when it comes to the insurance itself, insurance claims can can be they're not always, but they can be a burdensome process, some companies, I mean, you show them a claim ticket and then get a check to you almost immediately. But that's not the norm. In my experience, my experience is it takes a couple of weeks to just go through that process, send the paperwork and give them the death certificate, do they want a copy? Or do they want an original? Well, if they want to, you know, if they want to, you know, anything like that, you know, it takes time. So you need to think through how you're going to cover those bills or expenses and short term short term income. So I guess my biggest thought is, is like, don't take estate planning lightly. Let's make sure that we have that buttoned up. We're not trying to, you know, give the universe permission to take anyone out of here. But at the same time, we don't want the people that we love to be dealing with a total mess if something were to happen to us.
Ross Marynell 26:03
Yeah. All right. Good point. What's up next?
Michael Baker 26:07
All right, so I figure we can we could probably end on this. I know that you've been having meetings this week. And I have as well, a lot of people asking about market volatility, wanting to know what is going on in the world, you know, Has the world gone crazy? What do we think is going to happen next, you know, all the questions that tend to really bubbled to the surface, especially in an environment where it feels like they're, you know, nothing but red flags, waving day after day. So there was an article written in, it's actually a couple weeks old, but it's called the price of admission in stocks by Charlie Bilello. And I'll make sure we have a link to the article on the on the website on the podcast. But I love that because he breaks down, you know, all these different things. And it's really kind of a psychological thing about what we anchor to. And if you notice, he starts out with all these major economic events like the stock market crash, you know, Black Monday the.com, bubble, the financial crisis, and then you know, most recently, the pandemic crash that we had in 2020. And what's funny is, that's when you read headlines, I found myself doing this too. When you read these negative headlines, oh, like, oh, Margaret hasn't done this since. And they will always anchor it to, like this horrific event to really get everyone's blood pressure pumping. And, you know, there's a lot that he covers in this article, but was was funny, as he shows, you know, the historical trend line, which if you follow markets and investing, you know, the the chart that is used over and over and over again, is the long view, right? The chart that just goes up into the right up until the right and, and we all know that but the battle is constantly with our emotions. And so we've talked about this in the past couple weeks is how, you know, for the last six months, we've been in kind of this sideways churn in the markets, we're a little bit down, but it's, you know, it's been, it feels like the markets are starting to try and normalize themselves after we after we had that ridiculous run up, recovery run up after 2020. And the Fed pumping for a period of time, it felt like oh, you know, just pop the champagne, things are good life is good. markets going up. 401k balances look really robust and healthy. And now all of a sudden, you know, people are wanting to know, like, who broke the market. So I love this article, and it broke down. And there's one chart specifically that I'll make sure is up for the viewers. It's his, he shows s&p corrections that are greater than 5%. Since March 2009. And it's a stunning list. It's just just over the last decade, it's it's a list, it's like this long, of how many moves that the market has. But you know, we when the market just kind of doesn't give us a lot of volatility for a while for whatever the reason, investors a lot of times can be lulled into sleep. And the whole point of the article is that this is the price of admission when you invest. Right volatility is the reason that we are allowed to expect higher returns over time is because of the volatility. Because we know what risk free money is paying right now paying nothing is paying nothing risk free. Money's paying nothing. And I know that that doesn't make people that are a little nervous right now maybe comfortable. But the way I'll tie it into planning is this. One of the things that we always are trying to do as planners, is we're trying to make sure we have your time horizon. Correct. Because I don't know about you, Ross and you answer me this. But I get asked all the time about you know, someone will come up to me and say hey, well, I just got this money. What should I do? And I'm like, well, we'll tell me what you want to do. with it and like, well, I want to invest, and I'm thinking you could put it into something. But you know, my kids are like, 10. And I'm going to need braces and like, you know, probably another year. So I don't know. I mean, what do you think? And I'm like, well, is the time horizon a year? Is it two years? Because if, if that's it, then you just need to keep it in cash. And then they look at me weird. You know, but what about you? I mean, do you find people struggling sometimes with time horizon and what they should do with their investments?
Ross Marynell 30:26
So it's, that's a great question. I will say a couple things to just about the market volatility and, and so the movements that just naturally occur and stock market. I think if you left and went to Mars on February 2020, you came back on June 2020, you may not even know what happened. Or you may not have realized that there was a 35% drawdown over 22 or 23, trading days, and then a very, very swift recovery back. I think it's very easy to look too frequently at our account balances and what's happening in the market when we're a long term investor. So we're long term investors, we're short term viewers. Right? So we're looking every day, but really, we're like, we may have a 10 or 20 or 30 year time horizon. You know, so I think that's a challenge it's in the reason we look is because it's in our face, because we talk about it, it's just like, why do we talk about politics, because it's on TV every day. I mean, I think the same way about about the market movements, you know, there's a lot of incentives for people who run TV shows and sell newspapers and, and financial, you know, magazines to want to have that be top of mind for us. When it comes to the life changes that may put money in our, in our hands. So maybe it's an inheritance, maybe it's a rollover from a job or something, you know, that just instantly kind of comes, you know, we fall back to the hierarchy, the hierarchy of savings. And so we create a pyramid for our clients, and we look at where does the money need to go and we start at the bottom right was, so that may be just your emergency fund your savings, what do you have to have to be comfortable to, to not fall into debt in the event of a short term income change, right, so job loss job, whatever that might be. And then you move to the next layer, the next layer and the layer above that. And once we have those buckets filled, then you look for all the alternatives, right? So maybe it starts with the emergency savings, it goes to your tax preferred investment account, so whether that's an IRA or a Roth, what based on your tax bracket where to go, and you just keep working up the list. And it depends where you are on that on those rungs, right? As to what you should do with that money. A lot of times, it probably should be just saved, and there and available for those short term income needs. But if those are covered, then no, you go to the next level, and you keep building it up to the point that you're ready to be an investor and ready to be a long term investor.
Michael Baker 32:43
So yeah, go ahead. I was gonna say, I agree, I agree with that. And I think that one of the things that we just have to continue to stress even though in times, these are the times that and really, let's be, let's be realistic, it's, you know, I'm not saying there still could be more, you know, more movement to the downside before, you know, things kind of find their their true support. But if you're, if your investment time horizon is the next 25 years, you know, the worst thing you could be doing to yourself on a day to day basis is turning on whatever your favorite financial app is, and like checking a balance, and I know people do this. And I know that it's really hard to not do it. But at the same time, it's like you give yourself no peace. And I think that that's, that's one of the biggest challenges that investors have is to actually find ways to protect themselves from themselves, you know, is not getting on there and listening in every day and like what's going to happen and in trying to, you know, predict, because, you know, I don't know about you, but in the last decade, there's been I don't know how many times where we thought the market was going to do one thing, and it did something completely different.
Ross Marynell 34:00
I would I would comment I would add to the behavioral aspect of what you read and what you watch, and how frequently is really just knowing what your own biases and reaction is to it. So in some cases, we're very fortunate, right, we're able to represent a lot of what I would call Spartans. I mean, really just resilient, tough, strong, invest investment, professional people. And so if you if you look at it, you see it moving, it doesn't bother you, okay, don't worry about it, watch can consume all you want be as informed and is close to it as you really want to, but if you know that that drives you over the edge, or it makes you anxious or nervous, then maybe you should just limit yourself to say, Okay, I'm going to be informed. I'm going to look at my statements as they come monthly or quarterly. But I'm not going to get too much into the minutiae of what's happening day by day because it affects me. You know, we are we are built for it because we look at it every day for the last however many years, you know, over a decade, so it doesn't get Be anxious, but if it does, you got to take that into account and do something different to keep yourself committed to your long term strategy. So I think it's really individual, because somebody will probably like, I don't care, it doesn't bother me, I just go out. So what happens, and that's the price of admission, like your title said, and then some people go, Oh, my God, but I was here yesterday. And I was my account was this high five days ago. And for those folks, one of the things that I always encourage people to do, starting as soon as you can, is just calculate a net worth benefit every year, just go through the process with yourself and your spouse. And just calculate where you are financially today. And use that as a good router. Because a lot of times we will go through these 10 or 15, or 20%, draw downs, and it's painful in the moment. And then you look back a year, a year ago and go, Well, that's where I was a year ago. And then you go back, well, that's where I was five years ago, holy cow, look how far we've come in our financial savings and wealth building. The smaller movements that happen as frequently, as you said, like Charlie Bilello, identified, you know, in the last decade, it's just numerous times that the markets fallen 5%. Right. But if you know, where you stand over time, and how you're growing and saving, those things start to matter less and less.
Michael Baker 36:17
I agree. And I think, you know, the biggest thing that we always tell people, especially those that we're trying to help plan for retirement is yes, you are at most risk when you are very close to your expected retirement date. We that phrase, the retirement redzone was made famous, I think, by Prudential ad campaign years ago, but it holds true but for everybody else, if you if you have your time horizons, correct, you know, the short term day to day movements in the market are largely inconsequential, you know, we encourage you just to stay the stay the course. And and don't stress yourself out, you know, don't do the things that are going to create stressors for yourself. That's the best way I could put it. But so we'll make sure the article gets put up there. It's a great read. He breaks it down with lots of charts and data. So if that's your thing, you'll enjoy it. But for everybody else we just to give you you know, encouragement, hang in there, continue to work your plan, continue to work on the things that we know we can't control, and don't focus so much on the things that we can't control. So for those of you who joined us, you know, we appreciate you thank you for watching. Thank you for listening. As always, if you got a question, feel free to shoot us an email at the money huddle at VC planning.com. And Ross, I'll let you just tell them. We'll talk to them next time. Right.
Ross Marynell 37:36
We'll see you soon. All right.