A hearty welcome to “Grandma’s Wealth Wisdom” with your neighborly hosts, Brandon and Amanda Neely. This is the only podcast that helps you take charge of your cash flow and leverage your assets, simply and sustainably, the way Grandma used to.
Brandon: Hey, I'm Brandon and welcome to Grandma's Wealth Wisdom where we help you break through to a smart, stable financial future with the tried and true wisdom Grandma used.
Amanda: And Hey, I'm Amanda. Today's Episode is number 52, “Recession Lessons from Grandma or with Grandma.” Today we're going to share four things you can do during a recession to improve your financial path. And then we'll bust a myth. You might be hearing lots of people with 401(k) saying right now, “It'll be in the stock market”, “It'll be back” or “It'll come back.”
Brandon: It'll.
Amanda: Yes, we believe that's a myth. [01:02.9]
Brandon: Before we get to that, we have a very special announcement. Did you know in February, 2020 what you know now about the world economy?
Amanda: Could you tell in advance that a virus could shut down the world's largest economies?
Brandon: Does it bother you that your financial future might be tied to things that you can't see, expect or control?
Amanda: Let's step back for a minute. Is this market collapse a one off event?
Brandon: Or is it a regular pattern of financial abuse?
Amanda: What is the stock market really been like for you and investors over the past 20 years?
Brandon: The average financial advisor looks at the average of a stock ticker’s, ups and downs.
Amanda: But we've just discovered that is dangerous in an unhelpful way to predict the future.
Brandon: What's the not so average way to evaluate Wall Street’s gains and losses?
Amanda: We want you to know the truth. [02:03.3]
Brandon: We have an upcoming live joint episode in partnership with not your average financial podcast where we will walk you through exactly what you need to do to build real wealth in turbulent times.
Amanda: So take a break from Netflix bingeing and join us live to discuss how to antivirus your money and recession proof your retirement on Saturday, April 25th at 11:00 AM Eastern 10:00 AM Central
Brandon: RSVP NOW!! There's limited seating. All you have to do, and it is virtual seating, limited seating at bit.ly/GWWLIVE25 bit.ly/GWWLIVE25 and that's all caps. [02:58.2]
Amanda: Yeah. So you in B as in boy, I T.L Y and then a slash and then in all caps, G W W L I V E, the number 2 and the number 5 participation on this live call is encouraged but not required. And now on with Grandma's Recession Lessons
Brandon: In preparation for this episode, we Goggled, Are we in a recession right now? And that's, we Goggled it on March 20th, 2020. The first page of results was pretty unanimous that either we're in a global recession or one is looming quickly and it's gonna be bad. Very bad!. [03:40.4]
Amanda: And if you've been to our homepage, maybe on the, from the Google’s, you've visited Grandma’sWealthWisdom.com recently, you might've seen the words Get Ahead of The Curve, Fortify yourself against the volatility of the market and break through to a smart, stable financial path. Followed by the words Recession Resistant and deploy strategies that keep growing even when the economy isn't growing. Those words have been there for quite some time because like we know recessions happen and we want to make sure that we're sharing lessons that will be with you and help you even if we go into a recession.
Brandon: Yeah, or people that were prepared during this procession. To be clear from the top here, one of the key ideas behind our work and why we're Grandma's wealth wisdom and not Mom and Dad’s is a key belief that we have. We believe the financial practices of our Grandparents' generation that came of age during the great depression are more applicable to our generations who are living the prime years of our lives. Just after the great recession and whatever this thing is going to be called next. [04:58.9]
Amanda: Yeah, the Corona virus or session or something. But now no one knows what the future holds and that's exactly why we focus on building financial strategies that are Recession Resistant and actually give our clients more options when a recession hits.
Brandon: Now we record these episodes weeks in advance of when they come out. Things might've changed by the time you're hearing this, but we believe what we're sharing will be helpful and hopeful no matter if you're listening in April of 2020 or 2021 or 2030 whenever you're listening, I believe that this is going to be helpful for you. [05:39.4]
Amanda: Now, you may or may not remember the day March 16th, 2020 when the stock market had crashed over the past week and that individual like day point drops included the three worst point drops in us history. We remember that day and I think we'll remember that day for the rest of our lives because that day we decided the next day we would send an email to all of our clients saying this, “Congratulations! Your money is safe and continuing to grow as expected. You're really smart. Good job. You did it.”
Brandon: Now the other side is maybe you're not in that boat or maybe you're not in that situation as much as you'd like to be. You really would love to be in that situation now. This episode is all about giving you some tangible actions to take to get through whatever recession we have and however bad it gets. [06:38.3]
Amanda: Now typically as typical with a lot of our sessions, there's some really good years that come before the recession. There has to be that buildup that happens before the decline and in most cases, and that's true for us, right? Look back over the past 10 years, we've been in one of the best markets in history. You know, like in terms of it's been increasing for a really long time. And when things are going well, we humans have a tendency to think that it's us that made them go well. So the things we did, good job us, we're, you know, buying the right stocks, we're doing the right things. But when things are difficult, we tend to think outside circumstances have caused it, you know, it's just the virus. It was outside of my control. You know, the markets are gonna do what the markets are gonna do. [07:27.6]
It's everyone's selling, that's why blah, blah, blah. And that leads us to believe that there's nothing we can then do, right? If it's outside circumstances that have caused our situation, then there's nothing we can do. Yet, we believe there's plenty you can do during a recession and plenty you can do specifically to improve your life and your finances. Today we're going to talk about four things you can do in general that will hopefully inspire you to take them, make them unique to your situation, seek out more ideas. We're going to kind of stay at a high level here so that you can apply them to your situation. Everyone's going to be unique and different. And we'll talk about how to get these ideas applied to your unique situation as well. [08:09.7]
Brandon: So number one — Expand your connections, share ideas, thoughts, and resources, and allow ideas, thoughts, and resources to be shared with you. Remember what you thought you knew may be different, may not work anymore. So, be teachable. This is a perfect time to learn more about your financial options. Knowledge is power. If you're feeling powerless against your situation, simply learning more and seeking out additional resources might be the perfect first step to take. [08:44.4]
Amanda: Yeah, so number one — Expand your connections. Number two — Shift from focusing on the losses and instead focus on the path forward. Whatever value lost on the stock market, whatever income you've lost by a reduction of your hours, focus on where you are and what you have now and look for the path forward. Your financial journey will most likely cut a new path and we'll have new ideas and new energy that's required to go down that new path. And when you shift your focus to that path forward with exactly your new situation in mind, that's when you're going to see the creative steps that you need to take and which way you need to go. But if you keep trying to go down the same path you were on under these new circumstances, it's going to be a uphill kind of path, a really hard path to go. And we feel confident enough to say that if you focus on the losses, you're never going to see the way forward and you'll never have the energy to take control of your financial future. But if you shift that focus and you start looking for the new path forward and the new energy to move along that path, you might just be surprised the steps that you see ahead. [09:59.8]
Brandon: Yeah. I just think, thinking about people who shared as far as 2008 that people ask, “Hey, where were you at in 2008 in that trajectory, as I listened to podcasts?” they said, well, this was a big shift and change. I think we're going to see that again and it's really up to you of how's this gonna change your life, for positive or negative?
Amanda: Yeah. Good so we are going to number three.
Brandon: As you look at the new path forward, peer for ways you can grow as a human being. Challenges are always opportunities for progress and what ways can you grow as you take your next steps. [10:39.2]
For example, maybe this is the time you finally learned to prepare more food at home instead of spending more eating out or having food delivered. Maybe this is the time you get serious about building up that emergency fund you've always thought would help you feel secure. Maybe that's what we want to start thinking about. Individuals tell me all the time that they don't like stocks and don't want to be invested in the stock market, but they aren't sure what else they can do. Turns out this is a great time to make sure your wealth aligns with your values and what you want your money to do for you. [11:22.1]
Amanda: Yeah, so great point there. We got number one, ‘Expand your connections’. Number two, ‘Shift from focusing on losses to focusing on the path forward’ and three, ‘As you start to look to that path forward, look for ways you can grow as a human being.’ And then number four here, ‘Keep the long term in mind.’ We've been really intentional with these first three about about talking about this path as like the next steps forward. You know, the one or two things that you can start to do. Yeah, and it's going to be really hard to think long-term into the future, but maybe this is exactly what we all need to be doing right now. I mean, I've heard people say over and over again lately to focus on the next 24 hours and just get through the next 24 hours and then we'll see the next 24 hours and maybe that's true on like a health perspective, you know, like with healthcare workers like serve the people in front of you. [12:15.1]
Don't worry about what, you know, how many people are going to be here tomorrow, that kind of thing. We just got to get through it. But for like me, just in my own life, and this might not be for everybody, but for me this is true. It's been super helpful during this crisis to read history books or books that have been written a long time ago. That long-term historical perspective has really given me hope that will survive and maybe even have some positive things come out of our current situation. That's what's happened in moments of crisis in the past. And in a similar way, it's also helpful for me to think about my long-term goals and dreams and believe they can still happen. In fact, that's actually where the creative ideas for how to make the most of the next 24 hours come from for me. When I think long-term and visualize where I want to go and who I want to be, it shows me a creative step to take to get there today. [13:09.5]
Brandon: I do have to say I was listening to God and Guinness book about the Guinness company and how it was created and all of that stuff and I didn't know about the potato famine and all of this stuff that happened in Ireland and how Guinness overcame that the company and they're still feeling the effects of what happened back then a hundred plus years ago. And so really listened to that book, it was very encouraging from a business perspective and I agree with Amanda Grandma's long-term thinking both historically and into our own future is very important during crisis and recession. [13:51.1]
Grandma always said, “Eat your vegetables. Look both ways before crossing the road. And never risk your financial future on elements of the market you can’t control.” That Grandma, always good for some tried-and-true advice. And although some of her wisdom seems to have skipped a generation, you don't have to be left behind.
Download “Grandma's Top Tips for an Independent Financial Future” absolutely free, when you visit Grandma’sWealthWisdom.com. Don't wait. Get Grandma's best tips today. [14:23.9]
Brandon: Now we're going to go to the promised myth-busting part. Like we said at the top of the show, you might be hearing lots of people with 401(k) saying right now, “It'll come back.” You'll hear a financial gurus on TV say it. I mean, we've heard them say it multiple times. You might hear coworkers say it. We even heard a neighbor say it, of course from a safe distance we heard her say it. I mean, I wasn't like in her house or anything. We were just on the porch are on—I was on.
Amanda: The street. [14:57.9]
Brandon: Yeah. So on March 10th, 2020 Dave Ramsey dropped a YouTube video titled and again, March 10th, 2020 he dropped the video titled, Dave Ramsey reacts to potential stock market crash. He said in that video that “The stock market going down is as artificial as it can be.” His quotes, “The stock market going down is as artificial as it can be.” He's curious why people are panicking. My first reaction to this video is a question. If the stock market going down is as artificial, couldn't the reverse be true? Couldn't the stock market's going up be as artificial as it can be too and isn't that dangerous?
Amanda: Well, so that was posted to March 10th and remember like we shared earlier, by March 16th we had seen the three biggest point drops in stock market history. [15:57.1]
Brandon: After you hear the math we're about to share, we'll let you decide for yourself who you agree with Dave Ramsey.
Amanda: Yeah, and we
Brandon: Ramsey or Grandma's wealth wisdom.
Amanda: No, no, no, no. Don't, don't say that. Just let the math speak. Really what we're about to share comes from my good friend who was really honest with us. At one point and said, “No, it never really comes back.” And he, he used to work on Wall Street. He's a really smart guy. We had to take him seriously. And as we look at the math as we sought out, what would the math say about when we have a steep decline in the stock market? Does it really ever come back? We actually tend to agree with our friend and we're going to get into some of the math here as we go forward. [16:42.0]
Brandon: At the time of this recording, we're hearing from people who have 401(k)s and IRAs and are actually looking at their balances that they've seen about a 30% drop in their account balance. Those are the ones that are actually brave enough to look at it. Now I know not everybody, we shouldn't all look at that, but one younger person we chatted with has seen all of her gains wiped out. The only money in our account is the money she and her employer put in. That's it. [17:15.0]
Amanda: So the question we ask and we invite you to ask along with us is what does it take to come back from a sharp drop? We just experienced the sharp drop. What does the math tell us that the market needs to do to get back to even? And the math tells us that if we want to make up for a 30% drop within a year's time that we did an increase of 42.9% so if the market dropped 30% by March 16th, by March 16th next year we would need an increase of 42.9% if we just like date date to date. But you probably expect the market over a year to increase, not just get back to even. So if you expected the market to go up about 5% per year and you've built your financial strategy around that, then to make up for that 30% drop, you actually need the 42.9% plus another 5% for 47.9% increase over a year. [18:09.5]
Now, I don't know about you, but within the next 20 year or within the past 20 years, I know there's been at least one 30% drop or two that have happened within it, even just a year's time, but I don't know of any 47.9% increase in just one year. Sure. Maybe that happens over a much longer period, but not in one year. I at least I don't. Maybe you can find that and show it to me in terms of, you know, like in terms of the stock market overall and sure, that's totally possible. The market, the stock market could increase 47.9% we're not saying that that's impossible. What we're asking is does it ever really do that? Does the market at when it has the sharp of a drop, does it ever really come back that quickly? Decide for yourself. [18:56.0]
Brandon: Then decide what you're going to do about it as you move forward. Remember, you've never been the age you are now and the next time this happens you're probably going to be older. I would assume, I'm pretty heckerred on that one. [19:12.3]
Amanda: Yeah, the math, there's a speaks for you too. Unless time stand still. So to recap today we've shared four positive actions you can take. One, expand your connections two shift your focus from the losses to the path forward. And three, look for ways to grow as a human. And then four, keep the long-term in mind. And then we've asked you to consider if the stock market will come back is a myth. Now we're to recap today and we're going to get seriously deep and real and we promise we're going to end on a positive note and we're really cautious about what we're going to share. And we invite anyone who might be triggered by a discussion about domestic abuse or that might not want to go deep with us, just fast forward a minute or two. But because we're going to be channeling our inner Grandma and sharing something that's really hard to discuss but could dramatically change lives. So I'm gonna pause for a second. Go ahead and fast forward if you want to. [20:12.6]
Okay, here we go. Would you stay in a relationship if the other person drop kicks you and then hits you while you're down? We seriously hope not. Would you stay in a relationship that causes you lots of stress and anxiety? Because you never know what the other person is going to do or if they're going to start yelling and screaming at you without a moment's notice. [20:35.8]
Brandon: So this is where I jump in and, and here's a this is a hard thing for me to share about and I haven't really shared about this publicly or, or in general, but I've been in a type of relationship with a family member who I had to cut ties with her because there was this abusive relationship and it was going on and on and I didn't even know that I was verbally abused and there was all kinds of other symptoms and things that were happening. And I remember having an anxiety attack multiple times. And Amanda even had to take the phone from me once and told this person she couldn't talk to me that way and that this was hurting us, hurting me. And since then, we've only spoken a couple times. And that's really hard because I really care about them and I've only spoken to a couple of times over the past decade and decided that for my own health and for my own family's health, and the reason I bring this up is couldn't the stock market be that abusive relationship? Isn't that very similar? And we'll say in a, whereas things are good. Oh there they don't mean it. You know, that's different. And that's kind of where I feel with some of this is like I'm very cautious how I jump into this relationship now because of the pain I've experienced. And it's just a hard, hard place to be. [22:09.4]
Amanda: Yeah. And abusive relationships are very serious and we hope no one has ever in those types of situations. And if you are in one that you find a way out, you find an ally, some advocates that can help you with that. And the stock market and our relationship with the stock market isn't as serious. Right. But it is still serious.
Brandon: I mean it might be, depends on some people might do suicide or you know, there's all kinds of things that happen because of anxiety and volatility and I mean not again if you're thinking that way, talk to somebody.
Amanda: Yeah. You know, maybe the stock market can't drop kick you physically, but it does that with your wealth. [22:47.0]
A 30% drop and it's kind of like a Dropkick and then going up and down and up and down is like at punching you in your gut while you're down. And then the emotional and mental stress and anxiety of senior account values have start steep drops and then start seesawing is really hard and science shows that it can be life threatening. And if you are feeling lots of stress and anxiety, please seek out, help find someone to talk to. There are hotlines there are, there is ways that you can to to find that. And the, you know, this is part of why we're being told not to log in and look at our balances and if that is how it would make you feel like you would need to go to the emergency room, then yes, don't do that. [23:27.7]
Brandon: But, what if you looked at the balance, with a safe conversation from a financial professional, you know, is there to help you that they are there to help guide you through it. What if you said, “Why do I need to be in this relationship with stock market anyway?” Whoever said that “I have to invest in the stocks to have a great financial future.” These are questions you want to ask yourself now and maybe that the change in relationship is important. [24:00.8]
Amanda: Yeah, and we invite you with this last part in mind to go back and re-listen to this episode. We've shared four positive things you can do to take control of your financial future during a recession. Maybe they'll have a different ring to them when you're ready to ask questions. Like whoever said, “I have to be invested in stocks to have a great financial future and maybe you'll see the path forward the next steps to take as well as your longer term path be different because you're willing to ask that question.” [24:32.0]
Brandon: Now here's the disclaimer. We're not saying sell everything today or that the stock market doesn't have a place in your financial strategy. You want to take a deliberate approach here and that's going to be unique to you depending on what stocks you own and what kind of financial vehicles and so forth. We're here to help you make those decisions, but we never give investment advice. In fact, we specialize in alternatives to the market. So you'll be getting information from someone who spent hours of study and research on those alternatives and those alternatives that are safe and secure and giving access even in turbulent times. [25:15.0]
Amanda: So the positive note we want to end on here is that we're here, we have the time, we have the energy to invest in you and we want to chat with you, help you explore alternatives if you want, or talk about any of those things that we've shared today and how to make them uniquely applied to your situation. All you've got to do is go to Grandma’sWealthWisdom.com/call C A L L and sign up for a meeting with us. We'll do it by phone. No need to, you know, meet in person. We already work 100% virtually. So we're here, we're ready to be of service. All you gotta do is raise your hand and say yes me please. [25:55.9]
Brandon: So the next episode is about Recession Lessons with Grandma, but geared specifically to business owners, entrepreneurs, independent contractors and the self-employed. What can bosses do to be smart with their money during a recession? Join us for some practical wisdom, grandma's style.
Amanda: And until next time, keep building your wealth simply and sustainably so that you can break through to a smart, stable financial future. [26:21.1]
The topics presented in this podcast are for general information only and not for the purposes of providing legal, accounting or investment advice. On such matters, please consult a professional who knows your specific situation. [26:35.5]
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