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Welcome to Make your Money Matter, the show that aims to change the way we think about financial advice. So, you can make better decisions.

Brad Barrett is a managing director and partner at One Capital Management, a wealth management firm serving nearly 1500 clients nationwide. With over $2.5 billion in assets, they’re a group of advisors dedicated to ensuring their clients achieve their investment and retirement goals. And now here's your host Brad Barrett. [0:26.1]

Brad: Welcome to Make your Money Matter. The show for truth seekers who are fed up with outdated financial advice. My name is Brad Barrett, I'm a Managing Director and Partner here at One Capital Management. And it's my goal on this show to reaffirm what you know, to be true and to challenge the advice you may have been told is true. Here at One Capital, our mission is simple to help our clients and you listeners live well and not just survive, but thrive. Friends, we're in a world where we are consuming information at warp speeds, and it's easier than ever before to access information yet more difficult to find the truth. And that's what we're after because after all your money matters and knowing how to plan your financial future is vital to your financial success. As a certified financial planner, myself, it's my goal as an advisor and my colleagues here at One Capital Management have the same philosophy. Our goal is to show you how to avoid some of the most common money, mistakes, and grow your wealth, so you can look forward to a secure future. And to those of you who have subscribed to the Make your Money Matter podcast, Thank you. And if you haven't go to onecapitalmanagement.com, click our media button and you can subscribe right there or go type in, Make your Money Matter on any one of the podcast platforms and you can download and subscribe our podcasts because on the previous episodes, we've talked a lot about planning. [1:50.9]

And so, I want to switch today a little bit and pivot to the engine that drives the planning ship, if you will, of investing. I want to focus on three things that any portfolio should have. And those three things have a lot to do with some of the basics when it comes to planning. And in weeks to come on the, Make your Money Matter podcast, we're going to hear from some of our advisors at our firm, our dedicated fiduciary advisors that help our clients on different aspects of planning for their specific client types. We're also going to hear from our investment team, that's a goal of this podcast to show our clients who listen here to our podcast, to hear from our portfolio managers, our chief investment officers, our founding partners of how we derive the philosophy that you can read at onecapitalmanagement.com on our investments and how we tailor that investment philosophy and the team that we've built here at the firm to put your portfolio in motion to again, achieve the goals and objectives you have set out for us when it comes to our black book, which is our financial planning our wealth management tool to help build for our clients. [3:02.4]

And so, when we're putting together an investment portfolio and it may seem like an impossible task to many, but to us here is what we do. It's what, it's our lifeblood. It's, it's what we get up in the morning and are passionate about. But I'd like to take a moment today to break down in its purest form three things that should be in a portfolio. And to get past all the jargon, the clutter, and some of the complicated investment vehicles and discussions that you can read about or watch on TV, the basics of any successful investing plan, boil down to what I'm considering three simple goals that also fit into your overall plan, each of which should match and probably matches key considerations in your financial life and financial planning and investing is pretty much about making money, do what you want it to do. So, in order to get the fundamentals that your investing plan must address, all you have to do is establish your money needs at the most basic level possible. Something we do in our discovery meeting for new clients and something we talk about heavily in our review meetings with current clients. [4:06.7]

And our clients listening today, know that have gone through our process of discovery and our tailor unique planning for each of them, no one plan works for everyone. So those of you listening, who aren't clients at the firm, you know, understand that building a plan specific to you is important because if you're rich beyond all dreams, then you don't really need your money to work at all. You just have to keep it from losing it, right? Which is something we'll talk about to the psychology of money. But most of us can build these three reasonable expectations for money that also tailor into the three items that should be in your portfolio. [4:43.2]

One, you want the money you invest to grow over time, right? That's the goal of investing. You want to grow and protect. That's our goal to help design that plan for you. But the simple basics of it is to grow your money. You want the money you invest to grow over time. Two, at some point, either now or in the future, you'll want your investments to create a stream of income for you to spend, to be able to have what we call a sustainable distribution from the assets that you save. And three, ideally you want your investments to protect you from as many known risks as possible. We talked last week about planning and investing in an uncertain world. This has a lot to do with this third point. Again, you want your investments to be protected from as many risks, as you know, as possible for whatever risks remain, you want to seek out other ways to protect yourself. And that comes into the three overarching categories from a plan. So, let's now go into the three things that fit those items when it comes to your portfolio. [5:42.9]

All right, so for the first topic here, investing for growth. Now, unless you can save all the money you'll ever need, you have to find ways for your money to grow. So, over the long run, you look at just historical data stocks have done the best job of producing that growth. So one of the things that we do as a firm is provide equities. We want equities in a portfolio. We use ETS and individual stocks that are all research and developed here at our firm internally through our investment committee team. But you want to have equities inside there. You want to have a, a good balance between what we consider value and growth. And in general terms, a value company is a large and established company. Something like a Procter and Gamble, or a Johnson and Johnson, something like that. That's more established that provides a dividend, if you will. And a growth company will be the opposite. They're still in growth mode. So, the earnings that they're making, they're reinvesting back in the company itself. But great businesses. If you think about it, do more than just rise in value, they produce value. [6:41.1]

And typically, in a great example, this was Apple. They went from growth, a growth company, if you will, to move a value company when they instituted the dividend a few years ago and they really became established, right? And these companies like Apple or others have given investors big growth, and they did it by innovating and giving their consumers or their customers, if they will exactly what they wanted, as long as they keep doing so, they should continue to grow. So, our team, when it comes to our equity research are looking for good fundamentals, good price to earnings, multiples. And understanding that we want to build a portfolio from a risk tolerance perspective for each of our clients. Because those of you listening to that, our clients and those that are listening, that they heard about us from either their friends or their colleagues or through the media channels, like our radio program. Okay. Understanding your risk tolerance, if you haven't looked at that yet is important because we want to any good manager should tailor a portfolio to fit those three basic needs of growing. Ultimately growing and relating to distribution and protection comes into having a good diversified portfolio globally, I might add. Something we do here at the firm. Globally, you know, multi-asset class investing is important for a well-rounded portfolio. And the growth side of it comes from having strong companies and owning those individual stocks. [7:59.9]

And quickly for more reference on our investment philosophy, you can go to our website at onecapitalmanagement.com. You can read a great writeup around our investment philosophy and how we see asset allocation and portfolio management. And if you want to set some time to talk with myself or one of our advisors, you can give us a call at (805) 410-5454. Or if you're on our website at onecapitalmanagement.com, you can set some time there as well to meet with one of our advisors on our teams to go through how you are investing for your growth and take a look at your current portfolio. [8:31.4]

And we'll talk more on this podcast and we're going to have some of our investment professionals, our CFA's, our chartered financial analysts, portfolio management team, also our chief investment officer and our deputy chief investment officer on the show to talk more about this in depth. But again, go to our website, you can find out more about our investment philosophy or set a time to talk to one of us, because it's really important to understand your growth strategies and the words to your investment portfolio, making sure hitting all the goals and objectives you want to hit there. And that leads us into the second topic or the second that I think every portfolio should have. And the second planning topic that that investment strategy will address is Investing for income. [9:08.6]

Now on the planning side, investing for income, what I meant earlier was regarding when you actually retire. So some of you are listening right now. Retirement's a little far off. So, the distribution phase of your life is still years away. Although some of you listening as well might be closer or already in retirement, so, you already are accustomed to this. But when it comes to investing for income, you know, growing your money is great, but eventually you'll also need to draw income from your portfolio. So, balancing your growth and income needs will determine which investments essentially you should own. And something we do here at the firm to help design your fixed income, your bonds in a relation and an allocation perspective to your equities. And fixed income. In particular, as I mentioned, that's what we know as bonds and bonds come in different formats, right? Municipality, bonds, government bonds, corporate bonds, and understand which of those should go in your portfolio is something we heard the firm take great pride in and understanding how we fit all those together. [10:05.7]

And if you don't need any more growth, by the time you retire, then fixed income investments like bonds can produce that modest income and still needs to be in relation to an overall allocation. So, you want to have some good, you know, happy medium between your inequities and your, and your fixed income, but with low rates. You know, dividend paying stocks actually can pay more income than many bonds right now. It's again, it's a similarity between the economy and the market. So, understanding your risk tolerance is important when it comes to allocating between equities and fixed income. [10:37.3]

Now the third item to put in a portfolio, as well as to manage some of the planning environments we mentioned is investing for protection. Financial risks, okay are everywhere. Risks in general is inherent in life. And, you know, risk today means sphere like 30, 40 years ago, risk meant opportunities. So, we've had a little bit of a shift in an economic and we'll call it political environment. There's a lot of fears going around. So again, one of the things that we pride ourselves on at One Capital Management is going through the psychology of money and how specifically the psychology of our clients, your money, because it matters to you when we relate to the amount of assets you have accumulated how those assets are held, whether they're in tax deferred assets like IRAs or 401ks or 403 Bs or their after-tax, because believe it or not, they're two different animals. Managing a trust account or an after-tax account has different functionalities in managing IRA for tax purposes, growth purposes in different arenas. So, investing for protection, there's many things out there to address these risks. And we address the risks, if you will, in a portfolio, through active management, rebalancing, and properly allocating our client's monies and their portfolios to their overall goal. [11:52.0]

Now, one of the things I'll bring up internally inside the portfolio, especially nowadays with low interest rates and kind of what we're seeing on our investment committee, going forward is the effects of inflation, that's one risk I'll bring up inside the portfolio. We want to adjust for that, understanding our rate of returns, our yield. We're bringing off of both our equities and dividends, as well as our fixed income, or also things that we may use like treasury inflation protection securities, like tips and things like that. Now I'm not saying where you can do that across the board for all of our clients, but we assess risks in the portfolio through allocation, but also even more granular into things like inflation. Now, other needs though require thinking beyond your portfolio. So, for a second, I'm going to get out of the portfolio for a second and is clients that are listening to this and we work with our advisors here at the firm, thinking beyond your portfolio, things like insurances, disability, social security, benefits, all of these things to help protect your family against unexpected calamities, if you will like property coverage, you know, things like that. Those all come with a hole plan to insure in a way, your risks that are both in the portfolio, as well as in the risk of your overall planning. [13:00.0]

So, by an insurance, for example, it may seem expensive and it's not necessarily an investment, but it's an essential way to give you peace of mind to manage the risks or manage the investments that you have. And I'm not saying it's across the board, but us as advisors here at the firm, okay. Stepping out of investments for a second, I have to properly address all of our client's risks and assess the risks inside the portfolio, as well as outside the portfolio, when it comes to the overall plan. And to quickly break it down further, because of course, once you can start investing and start looking at these three basic things to have in there, it really becomes a little more cumbersome, obviously. And it's easy to get lost in a lot of the complicated items, but even as you expand your knowledge, keep these three simple principles in mind. It's something we bring up with our is making sure we're managing the growth, managing our income relative to the growth wall on our accumulation phase, but also managing the income when it comes to our sustainable distribution rate, that we'll talk to you about our clients and managing the risks inside there. Because if you really think about it, there's five areas in this world to invest in. There's cash, that's cash in our pockets, CDs money markets, cash you have under your mattress, okay? There's stocks or equities that's can be in the form of mutual funds, ETFs individual securities. There's fixed income, which we talked about from the income side. And those can be again, municipal bonds, corporate bonds, government bonds. There's real estate, that's your primary home, for example. It could be corporate real estate, raw land, it could be rental income, rental properties, for example. And there's commodities, oil, corn soybeans. [14:38.4]

So, if you think about it, when I talk about allocation and diversification, as much as those words can be overused, sometimes we're really taking those five areas and allocating assets to make sure that we have a proper diversification amongst those so that when something happens in the economy, something else in your portfolio, something else goes negative, something else in your portfolio goes positive. It's something we talked about called uncorrelated assets. So essentially in the same economic environment, something that goes down in your portfolio, something else will go up. That's the essence of proper diversification as it comes to your portfolio.

Thank you for listening to the, Make Your Money Matter podcast. If you haven't subscribed, go to our website at onecapitalmanagement.com on the media tab, you can click subscribe, or you can go to anywhere where you download your podcasts and hit the subscribe button. Let us know what you think. You can also tune in every Saturday morning at 6:00 AM and 10:00 AM on KV TA 1590 fo our Make Your Money Matter radio program. Next week on Make Your Money Matter podcast, we're going to be talking about the 6 things to avoid when investing in the stock market. Stay tuned, I'm looking forward to it and always remember, Make Your Money Matter. [15:51.4]