The X’s & O’s

If you were to receive a lump sum of money right now, how would you invest it? This question can feel overwhelming to many people because of how many options there are. We hope to provide some clarity to this situation on today’s show. Brent, Matthew, and Joshua discuss some proactive ways to invest a lump sum of money, and why age is such a big factor in this decision.

The Hosts:

Brent Pasqua, Matthew Theal and Joshua Winterswyk

Transcript:

Brent Pasqua: We are back. We are ready to go. Everyone’s in a great mood, we’re ready to hit this podcast. Welcome to the Retirement Plan Playbook. I’m your host, Brent Pasqua, founder of RPA Wealth Management. We’re with Matthew Theal, certified financial planner, Joshua Winterswyk, certified financial planner.

And today we’re going to discuss what you would be doing if you had a lump sum of money. And whether it came from, let’s just say a rollover, an inheritance, you sold your business, you have this big lump sum or a small lump sum, but you have a lump sum. What and how would you do it? And I think why this is important. And what makes me excited to talk about this, is because these can be really life-changing decisions, right? I mean, if you get a lump sum of money and you do something right with it, that could really change your future.

All right. So let’s get into it. How are you guys doing? You ready for summer?

Matthew Theal: Yeah. I’m doing good, Brent. I’m excited for today’s show. It’s starting to get hot out here in California, which is nice. I like the heat usually by like August, September timeframe, I’m over it. But it’s June, it’s getting hot. It’s nice.

Joshua Winterswyk: I’m going to need to buy some new shorts. Stepped outside, I’m like, man, it’s already kind of hot.

Matthew Theal: Me too. Except I needed to buy new shorts for a different reason. It’s more of a waist expansion problem, than a not having shorts.

Joshua Winterswyk: Hey, don’t feel bad. The quarantine got me too. But, looking forward to summer. It was a good change of pace but I feel like I get tired of the heat very quickly. So, we’ll see how long I’m excited for.

Matthew Theal: Yeah. I mean, it seems like it’s already here and it’s hit fast.

Joshua Winterswyk: Yeah.

Brent Pasqua: All right. Let’s get in the Hot Take Headlines.

I feel like we’ve talked about this. I don’t know how many times already, but meme stocks are back in the news. This time more about AMC, the obvious popular movie chain, a stock search, 135% over a five-day period.

The recent surge led the company to file an equity share offering, which knocked the price down by almost 60%. in the FCC filing documents, the company said, “We believe that the recent volatility in our current market prices reflect the market and trading dynamics unrelated to the underlining business, a mac or macro or industry fundamentals. We do not know how long these dynamics will last.”

I mean, under these circumstances, Matt, what do you think is actually happening here?

Matthew Theal: Yeah. So, I thought that was an interesting statement by the company. Essentially, the CEO came out and said, “Hey, the share price doesn’t represent the fundamentals of our business. If you’re buying our stock up here, we’re almost guaranteeing you’re going to lose money because our business isn’t worth that much.”

And then he also went on to issue 500 million shares. And what that is, is an equity offering. So, a business, when they want to raise money, they could sell debt or equity. And they chose because their stock price was so much to sell shares of their stock. And that knocked the stock down by 60% hurting the investors who got in the day before. So now they have 2 billion in cash on their balance sheet, which is probably close to what the company’s worth. 2 to 5 billion, not the whatever 60 billion it’s worth today.

Brent Pasqua: So one of the other things I thought was interesting that he said is, “We caution you against investing in our Class A common stock, unless you’re prepared to incur the risk of losing all or a substantial portion of your investment.”

What are they preparing everyone for here? It seems like the writing’s on the wall, right?

Matthew Theal: Well, the company was on the brink of filing bankruptcy and going under. And it’s just kind of funny because the more you read into this story, the CEO likes to excite investors. He’s Tweeted, “You guys are going to take it this company to the moon.” But he’s on one side of the fence and the other, he is offering free popcorn to investors and shareholders. And he comes out saying, “You guys are the ones who we’re working for and it excites investors.” And then he just pulls out this big disclosure that; be careful, it might go to zero. So I just thought that this whole story was pretty crazy, just because of how interesting the CEO is.

Joshua Winterswyk: So before COVID happens, like in 2018, 2019, I was looking at AMC as an investment for myself. It was like a low single digit stock at the time. And the reason I thought it was interesting was because I thought maybe Netflix or Amazon would buy it. Because Netflix, Amazon, they don’t really care if they’re losing money on movie theaters, but for them, it could be a really good way to distribute their movies and gain a stronger foothold in Hollywood.

So that was like four years ago I thought that. But essentially, the business AMC is in, is a very bad business. And the reopening of the economy doesn’t change that. The movie business has been bad for five, six years now.

Brent Pasqua: So what brings on this sort of community hype that goes along with these stocks? I mean, they’re kind of kids playing around with stocks that have really no underlining value to them. Why the hype around it though? Is it just that these people think it’s funny? Because they really don’t have a clear idea of what they’re investing in.

Joshua Winterswyk: Yeah. They don’t, but they do, right? There are some smart people on these Reddit boards, you read the threads, you’re like, “Wow, this guy has a really smart idea.” But it’s the internet, right? It’s a wildfire. You got people with big followings going out and Tweeting or Instagramming or a TikToking… Is that what they call it? TikToking? TikToking, buying AMC, then their followers go, AMC is a $10 stock. So maybe $1,000 they can afford 100 shares and it’s just like a wildfire. Once it gets going, it takes off.

Matthew Theal: I think that the internet has made the younger investors… Their appetite for risk is just so much greater. So, it can get a really good following and a really big following. Not only because that fear of losing the money is kind of softened. And then also the FOMO of it. You’re a part of this community. You want to be part of this. You don’t want to miss out, you want to be able to put on your Instagram or Twitter that, “I’m a part of this AMC stock going to the moon.”

And we’re communicating with this CEO, who’s telling us, we’re with him and he’s the Godfather. I think that’s what they named him or that Ape Father because they call themselves apes for investing in AMC’s. So I think there’s a lot of variables to that, but it is pretty interesting.

Joshua Winterswyk: And I think they’ve made investing so much easier than when we started investing, right? I mean, now for us to open an account with Robinhood or some other custodian, you can get an account open, funded, and buying stock very quickly, which it wasn’t that easy years ago.

Matthew Theal: And find out so much information and have a community to talk to about it.

Joshua Winterswyk: Yeah.

Matthew Theal: That that was a lot different than 20 years ago.

Brent Pasqua: All right. All right. Let’s get into the next headline. As COVID starts to wind down in the US, companies are asking employees to start coming back to the office. Bloomberg is reporting that instead of coming back to the office, employees would rather quit. How is that possible? Are they really willing to quit their job?

Matthew Theal: Yeah, this is an interesting one. It’s kind of funny because work from home I think is definitely dying down in a lot of industries. I think for some people in jobs, it could make sense to have a work-from-home or hybrid situation, but for a lot of people, I think that day-to-day collaboration and seeing your peers is really important.

And I feel that the people who are quitting either, probably one; hate their job. Or two; have some kind of psychological impact from what we’ve all been through over the last 14, 15 months. So, maybe they’re scared to go back to the office because they consume so much COVID media that they’re terrified of getting it.

I don’t know, but work from home’s over.

Joshua Winterswyk: I think you makes some good points, but I also think that people have options. It really made you realize that a lot of people could work from home that they thought they never could. And there’s going to be a lot of companies that embrace more of a hybrid model or still work from home. And so as people research that as well, I think that what it’s doing is, for a generation, especially the millennial generation that do have so many options, this just gives you even more options to create your own culture. That hybrid model of working from home and the office, or just working from home.

So, I think that that plays a role, along with what you’ve also said, Matt, but it’s going to be a pretty interesting time for corporations and just seeing how they manage talent with going back to work and managing the culture of the company.

I think what’s obvious for us. And just as a small company, we see benefits in the work from home model. We see the benefits in the work from office model. So, I wonder how long it takes big companies to be able to study productivity and all the data around doing a hybrid model and working at both. And what lacks by doing that versus working all at the office or all from home.

Because like we’ve talked about, creativity and collaboration and working together in the office, you don’t have that working all separate from home.

Matthew Theal: You don’t.

Joshua Winterswyk: But do you need that every single day? Can you still collaborate half the week and then not have to drive like we have to here?

Brent Pasqua: Right. Yeah. And that’s a big benefit. And a lot of people have enjoyed the benefit of working from home.

Matthew Theal: If you’re young in your career, I would be very careful about work from home. If you’re not getting into networking opportunities or networking groups outside of work, because that’s how you’re going to learn. You’re going to learn from people who’ve been at the company longer, they’re going to train you and you’re going to want to be a face-to-face picking up all their information.

Joshua Winterswyk: Yeah. It seems like your learning capabilities at home would be sort of in a box.

Matthew Theal: Yeah. I agree completely.

Brent Pasqua: And just the social interaction. Lunches, communication, it’s healthy.

Matthew Theal: Right. Work softball teams.

Brent Pasqua: Yeah.

Matthew Theal: That kind of stuff.

Yeah.

Brent Pasqua: Yeah. But I think one of the big things with this headline though, is if people aren’t going back into the office out of pure fear, that’s dealing with a whole nother psychological issue that we’re going to have to deal with in this country.

Joshua Winterswyk: Yeah, definitely. And that’ll be something that we’re going to find out probably pretty soon, but like you said, a completely different issue that probably needs to be addressed.

Brent Pasqua: All right. Let’s get into the retirement planning topics. All right. So today we’re going to talk about, on this show, we’re going to discuss about how do you invest a lump sum of money? No matter where you got from, it from doesn’t matter. Today, we’re going to put a monetary amount on it as pretend just because it makes numbers easy, as a million dollars.

So where do you start? First of all, and we’re going to establish two different stages of life. One being a retiree, maybe you’re ready with your 401k you’re ready to roll it over, maybe you’ve got an inheritance.

The other millennial, maybe you sold a business, maybe you did inherit some money, many ways that people come up on a lump sum of money, but let’s say you have that money. What is your versed first thought, Matt, you’re going to handle the retirees. Josh, you’ll handle the millennials. What’s your first thought on that?

Matthew Theal: Yeah. So, are you giving me retirees because I’m old?

Brent Pasqua: Yeah. You just act the oldest.

Joshua Winterswyk: Yeah, you do act the oldest.

Matthew Theal: All right. Yeah. So, I’m definitely probably the closest to retirement in this group. So, I’ll take the retirees for sure.

So, when retirees get a lump sum, you got to think about, okay, where did you get this lump sum from? Most likely, if you’re in your late 50s, early 60s, to that latter half of your 60s, you’re probably getting your lump sum from, a separation from employment. So maybe you’re rolling over your IRA, you got a couple million. Or your 401k to an IRA, you got a couple million there. Or maybe you had some kind of buyout agreement at work where you retired and you’re going to a lump sum payout, 800,000, a couple million, whatever it is. And what you need to think about as a retiree is your income potential.

If you’re retired, you’re not going to be making as much money as you once were. Your fixed sources of income, unless you have a pension are going to be social security. So you need to think about that lump sum a lot differently than a young person. So that lump sum is meant to last you for the rest of your life. So you have to not only invest it differently, but you have to use it to create income.

Brent Pasqua: Josh what is your thoughts around a young person? Do you put it all in AMC stock and go to the moon? Or what do you do with it?

Joshua Winterswyk: It just depends on if you believe in that AMC CEO.

No, I’m just kidding. But I think it’s right in line with what Matt said in the sense of, you have to determine what is the goal of the money? That’s always going to be first, whenever you’re looking at investing money as an intro to this millennial side. You’ve probably received, if you did have a large lump sum, it probably came from an inheritance or like you said, Brent, maybe, it was a sale of a business or just some good fortune at a younger age where you’ve acquired some wealth really quickly through some good investments as well, right?

So all of those kind of examples still fall into, if you do have that lump sum of money, we have to tie that money to a goal. So is that money for retirement? Or the future? Determining what is that time horizon that you’re going to need the money? Because at some point, as a millennial, you’re going to want some accumulation, right? You’re not going to be using all of that money. You want to invest this. We are investing it because it’s potentially for the future. So we have to determine what is that time horizon for that money and we also have to determine what is the goal for that money before we even start looking at, at what the investments are.

Brent Pasqua: Important points. Matt, if you’re working with a retiree, what is the investment strategy that you’re looking at? How are you approaching stocks, active funds versus passive versus bonds?

Matthew Theal: Yeah. So, the first thing to do is figure out how much income that retired he’s going to need in life, right? So let’s just take an easy example. Let’s say they need a 100,000 and they’re going to get 40 from social security. That means they need 60 from their investments. So, on a million, that’d be a 6% withdrawal rate. We know that’s kind of high when we know we want to be around that 4% range for the money to last for most of their retirement.

But at the start, I would look at the investment universe. And as a retiree, you want the least amount of surprises. So you want the most tried and true investment method. I would probably use mutual funds, ETFs, and an approach of passive stock and bond investing, where you’re not trying to outguess the market. You’re just letting the market work for you and you’re taking your income every year.

Brent Pasqua: So I guess to put that number to work is if you were to use a balanced approach between stock and bonds, mutual funds and ETFs, and you had a million dollars, you’re taking 4% a year. The simple number is, is you’re taking about $40,000 a year to add to your social security income or your other fixed incomes.

Matthew Theal: Correct. Exactly. So, for that to become to 80, if you needed 100, you’re still short 20. So, you kind of got to make it up somewhere. Maybe you have a rental property, I don’t know. Or you take a little bit more, which some people do and they go for the gamble and when it’s out, it’s out.

Brent Pasqua: And to avoid surprises, you’re wanting to avoid surprises, I guess, because if the market does decline, you taking out $40,000 is going to become much more impactful to that portfolio because the percentage is much higher.

Matthew Theal: Absolutely. So, if you’re a retiree and you’re sitting there like, “Ah, my son’s getting in on this AMC, he made 250K, I could get in on this and make a 250K and my retirement is going to be that much better.” That’s not exactly true because you could lose the 100K or whatever it costs you to buy into AMC. And now you have even less for retirement. You’re adding a new obstacle to your plan.

Brent Pasqua: Josh, I see it a lot different from millennials because most millennials are actively working and they’re not necessarily trying to create an extra $40,000 to their income from their portfolio. They’re more looking at a growth strategy. How do they approach stock versus bonds and why don’t they look at it from more of an income perspective?

Joshua Winterswyk: Yeah, that is a good point. And I think even just from experience of like the millennial clients that, in this situation, it is for more growth in developing more wealth for the future. So there are more options because you aren’t necessarily looking for this lump sum of money to provide you income like you said.

So, the strategy changes, the strategy is; we want to maximize growth, but in a diversified way. So, we still love the stock to bond mix, using mutual funds and ETFs but I think also the spectrum of investments also grows a little bit, right? For even more diversification.

So you have to ask yourself also, what is your risk tolerance, right? Even going through a simple questionnaire through risk tolerance, or going through a chart that’s going to compare risk tolerance. But those things are going to help you develop really what your investment spectrum should be.

So, if it is low, some of the investments might not be good for you. Like, investing in hedge funds are startups that have maybe a little bit more risk than just a stock to bond mix portfolio that’s completely diversified.

But you can also none then look at a real estate strategy, right? Those are the other options. We have cryptocurrencies that you can invest in. So, developing an even diversified approach because our goal is different from a retiree, which is no income, but more for growth. We might want to add some, speculative investments in there to maximize that growth.

But it has to calculated. It has to be in line with your goal. It has to be in line with your risk tolerance as well. But they’re all… More options now as a millennial, because the strategy has changed for different investment types that are out there.

Brent Pasqua: I mean, for millennials, do bonds really provide any value in a portfolio if they’re really building it for growth?

Joshua Winterswyk: The simple answer’s no, if it is built for growth. Yes, if you want to limit the downside risk a little bit, but again, judging by your risk tolerance, if you’ve determined that, probably not.

If you’re not going to use this money and you want this to grow over the next 20 years, are bonds really helping you that much?

I think it’s more of analyzing each year, your overall portfolio and making sure you’re diversified and you’re comfortable than it is about limiting downside risk for a millennial. Because in these situations you have your six months in savings anyway.

Matthew Theal: Yeah. That’s what goes without saying. So if were investing a million dollars as a millennial, you got to make sure that debt’s paid off. You have to make sure your emergency fund’s set aside. We’re only talking about that excess that you didn’t need in that short term that we’re investing for long-term future.

Brent Pasqua: Now, one of the strategies, Matt, that I think we hear a lot about, let’s say you took this million dollars that you had, and maybe you inherited it or try to do a more distinct strategy with a 401k rollover, but let’s say they wanted to go buy property. You hear the so much. I feel like it’s ingrained into American culture to go buy this beautiful rental property that’s going to provide all of this great profit to you and this natural income. Does it work like that? And is that a smart idea?

Matthew Theal: No. In general, it’s probably an awful idea. Let me tell you why. So if you’re rolling over money from a 401k or IRA, it’s qualified money, you haven’t paid taxes on it yet. So, you’re going to be taxed on it. Once you hit age 72, you’re going to be subject to an RMD rule.

Well, if you go that kind of self-directed IRA route where you invest your rollover into a property, how are you going to come up with the cash to take your RMD?

Brent Pasqua: Now you’re forced to make a decision.

Matthew Theal: Yep. You’re not going to be able to do it. So that’s what we see happen to a lot of people who take that strategy because they think buying a rental property is a great idea. Maybe it gets you some extra income in retirement. But what I see from clients who have rentals is most of them pay somewhere between 4 to 5% a year.

Meaning, if you bought a million-dollar duplex or something like that, you’re probably going to extract something like $50,000 a year in income. Pretty much the same as you’d get from a portfolio.

Brent Pasqua: Yeah. And I think that you move that 401k money over to a self-directed IRA where you defer the tax and buy a property. Let me tell you something; if you’re getting 40 or $50,000 in rental income, that’s not all profits because you need a separate tax return completed for the self-directed IRA, you have all the costs to run the self-directed IRA, you have the distribution issues, the tax issues, there’s a lot that’s going into that that’s going to cost money and it’s not cheap to do.

Matthew Theal: I’ve never really been a big fan of rental properties but that’s just me. Some people love them. Some people make a ton of money. But I usually advise against it.

Brent Pasqua: Yeah. I think we could do a whole topic on real estate, but Josh, for somebody who is younger, we do again, get this same question. You have this lump sum of money. Do you go put it down as a deposit on a rental home? Do you pay a rental home cash? Is this a good place for somebody to grow it when they’re younger?

Joshua Winterswyk: I think it’s something, as you’re younger, if you do love real estate and you can see yourself as a landlord and managing property, sure. But you have to ask yourself those questions before we even look into a strategy. But like Matt said, the rate of return when we look at rental property strategies, isn’t it too far off. And Matt correct me, probably a little, even less than S&P 500 over the long term. So, it’s a lot of work for a lower rate of return.

Matthew Theal: Yeah. It’s a lot of work for definitely a lower return return than just invest in stocks, for sure.

Joshua Winterswyk: And I think for millennials, like I said, if that is your passion, there are a lot of people who do a very successful job with the real estate strategies. We analyze them as well. But I think that this opens up your world, right? Looking at real estate as a millennial, also looking at potentially starting a business or investing in a startup or another business on the private sector, not just the public sector with buying stocks through the open market.

There’s a lot of opportunity out there. And there’s a lot of really cool ways that you can do that with technology and with the advancements and making it a little bit easier. And there’s just so much information for millennials to build a very diversified investment portfolio.

And then I also think that all of your eggs shouldn’t be in one basket. So, if you’re thinking about putting that million dollars all into real estate, if you look at your bank balance sheet, all of your assets are now tied to the real estate market. So, do you really want all of those assets tied to just one sector? I don’t.

Brent Pasqua: Now let’s go into another one because I’m going to throw a bunch of investment options out at you. And you can pick a couple and tell if they’re a good idea for a retiree. But let’s say they’re looking at cryptos or startups, hedge funds, private equity, private business, or just keeping it in cash. As a retiree, are you looking at some of these options, if you want to diversify outside of possibly the mainstream to have a portfolio in real estate?

Matthew Theal: Yeah. I mean, you can make an argument that some cash makes sense, right? I like to tell my clients who are retired, “Let’s keep about one or two years worth of income in cash.” Right? That way we don’t really care what the market does. We know we got your income and who cares if it’s not really earning that much interest, the money is here for retirement.

But as for the other ones you mentioned the crypto, startups, private equity, the main problem I have with those is, is one; risk, right? So those are kind of, the riskiest investments on the investing spectrum. And then two; liquidity, it’s going to be hard to get your money back, especially if you’re investing in startups or investing in private equity, you might not see the money for the rest of your life. So, when you’re looking to retire, you want some liquidity without roll over. Stocks, bonds, and cash are the best for that.

Brent Pasqua: For a younger person, Josh, are you trying to hit big on some of these, the cryptos the startups, hedge funds, private equities, private businesses?

Joshua Winterswyk: I think as the distribution and if you are diversified and you’re looking into get into this space and you have the appetite for risk, like Matt said, it is some of the riskiest assets that you can actually invest in and you’ve determined that you don’t need the liquidity. I think that they can play a role. Should they be the biggest role? No, I still like to lean on that stock-diversified portfolio because it’s not only been proven, but we can have a little bit more of a projected rate of return as well. And it does have that liquidity.

But then also just the talk about the cash for millennials too. If you are of the entrepreneurial mindset, you might want to even keep a little bit more cash, right? You want to have cash available for other opportunities, for business opportunities, investing in like we said, private equity or startups.

So, I think that again, as a millennial, your investment spectrum, widens, there’s more options. But it’ll have to align with what your risk tolerance is. And you have to make sure that you do your research.

Brent Pasqua: So we just talked a lot about different investments and let’s say a retiree came to you, Matt, and wanted to determine what strategy is best for him, whether they’re stocks and bonds or real estate, how do you come to that conclusion?

Matthew Theal: It all starts with financial planning. Like Josh mentioned, when we’ve got into to this topic today… What’s the goal? For most retirees, they have one goal, “Hey, I want to make it to, and through retirement, without running out of money.” 99% of the people that we meet with have that goal, they might not say it that way, but that’s their goal. And we want to help create them a financial and retirement plan that helps them do that, right?

So, we’re looking at social security, we’re looking at income, we’re looking at pensions and then we’re projecting out what their is like. And then from there, once we know what it’s going to look like, we know what the rate of return they need to get on their assets is. So then we could build a portfolio that’s going to meet that rate of return.

Brent Pasqua: Yeah. Regardless of how much money you have or how little money you have, I think there’s two things that always come true. There’s things that you want to do. And there’s, you don’t want to run out of money before you die. And you got to solve for those. And this exercise of doing financial planning is going to help you communicate what your goals are and make sure that you’re not running out of money. Is it any different from millennials and how, if it is how so?

Joshua Winterswyk: It is Like I said, I think the investment options do vary a little bit more, cause you can accept a little bit more risk, but I don’t think the fundamentals change. I think that you do have to have a goal. And even as a millennial, you’re going to have a lot of life events that you don’t even plan for. And some that you do, whether if it’s getting married, whether if it’s having children, or whether if it’s moving, even to a different state or you have different goals, or starting a business later in life.

So, you know, you definitely want to have a plan because that plan is going to limit. And a plan with goals is going to limit you from making decisions that aren’t aligned with what you really want. And those investments are now going to align with your future and it’ll help you determine how much rate of return you really need. Because you might think you need 20% rate of return, but if you’re planning it out and building a financial plan, your financial plan to meeting all those goals could determine that you only really need 10 or 11, right? So you don’t even have to take extra risk if you didn’t want to.

Brent Pasqua: Yeah. I think that’s a great point. And one of the things that I feel like we always get questions on, before evening asking what to do with it, I think a lot of people want to know how they implement it. So you’re sitting on all this money. How do I make sure I don’t get into market out there one time and the market just drops and now I have so much less money? It’s that fear of how do we implement these strategies? How does that work?

Matthew Theal: The best strategy for doing that would be what we call dollar-cost-averaging. So we’ve talked about it before on the show, but, let’s say you take that million dollars, you put 25% in every couple of months. So that’d be $250,000. And that way you’re buying in at set prices you know what it is, if it drops, will you get it cheaper next time? If it’s a little higher while you’re paying a little bit more, but at least you’re getting that money in the market in stages. Very rarely do you ever throw all your money into the market at once. It doesn’t make a lot of sense. I think Brent, you and I, and Josh as well were buying a lot of stocks during the last March when the stock market was crashing, when the coronavirus was just hitting the economy. But we did it over a two, three week period. And then into the summer we kept buying. So we were doing a dollar-cost-averaging strategy.

Brent Pasqua: Is that strategy any different for millennials, Josh? I mean, what is the implementation for somebody who’s younger?

Joshua Winterswyk: I think that for millennials, it does depend on the time horizon, but again, I hate to just keep repeating, it is also risk tolerance because that dollar-cost-averaging strategy, especially in the short term, is going to lower that risk.

And so, if you don’t have the appetite, it shouldn’t all be going in at one time. And I think all three of us believe in that dollar-cost-averaging. Like you said, we’ve even used it multiple times and still use it now. I think it is an effective strategy to also making sure you just feel comfortable with investing, especially for millennials. To drop a million dollars into the market or into an investment all at once and to see it drop by half, you’re not going to have a very good taste in your mouth.

So, it’s okay to take things slow, especially if we’re investing over 20 years and doing it on a frequent manner. I think that that strategy is also fitting for, for millennials as well.

Matthew Theal: Or they could take that million and put it in AMC, catch a 10 bagger and they got 10 million. So then they’ll have a real good taste in their mouth.

Joshua Winterswyk: Not only are they going to have 10 million, they’re going to get free popcorn and invites to specialty showings or viewings at the AMC movie theater.

Matthew Theal: Can’t be that.

Brent Pasqua: I’ll tell you what not to do with it. Don’t get sold by a broker, insurance agent, somebody at the bank, somebody at an institution that just wants to sell you a product. You have a lump sum, reach out to a fee-only advisor. Don’t get sold if somebody that just wants to sell you some product, because I’ll tell you a way that it’s not going to work no matter what strategy you implement. And that’s you buying some type of an expensive investment that’s not going to work that you’re set up to not succeed. Wall Street, brokers, advisers, they can get very rich selling you product. Don’t get caught in that. Whether you’re young or old.

Joshua Winterswyk: Yeah. I agree with that.

Matthew Theal: A famous book called Where Are the Customers’ Yachts?, written in like the 1920s about exactly what you’re talking about, Brent.

Brent Pasqua: Yep. Yeah. You got to be careful. All right. Let’s get into the RPA Recommends. Matt, why don’t you hit us off with a what do you have today?

Matthew Theal: Oh man, I don’t really have anything that great again. I’ve been spending most of my money buying clothes because we’re back here at the office a couple of days a week. And I had a little waist expansion, like I said earlier on the show. So I’ve been putting my money into some clothes.

Joshua Winterswyk: Wait, are you saying work from home’s over?

Matthew Theal: For me, it is. It doesn’t have to be for everybody else, but I’ve been enjoying coming to the office and seeing Brent. I bought some new shirts and some new clothes. I was really mad. I was trying to buy the Bonobos sale over Memorial weekend, but literally everything on there was sold out in my size, which was very frustrating.

Brent Pasqua: And what is Bonobos?

Matthew Theal: Bonobos is a clothing company owned by Walmart. A men’s clothing company. And I think it’s just direct to consumer. So you go to the store and you get fitted and then you buy your stuff online.

Brent Pasqua: Now, one thing you did buy you your house. And I think you talked about yet is you bought Nest, right? And how is that working for your house?

Matthew Theal: Nest is good. I like it. I think with all of these cameras, they could be developed a lot more and the technology is going to keep changing. It’s good. It’s not great. It’s an expensive product, definitely on the higher end. I would say probably most people would get away with just the cheaper ones from the Ring. But as the technology is developed, it’s going to get much better. I just don’t think it’s there yet.

Brent Pasqua: I think my Nest is great. I have everything tied in. I think it’s awesome.

Joshua Winterswyk: I have some nest products too. I like them too. I just feel like that space isn’t mastered yet. There’s not a company out there that just… Complete with Wifi routers, cameras, security, that’s really mastered that whole space. That would be nice. If a company can do that.

Matthew Theal: You know who messed up? Talking about companies, ADT. ADT should have paid through the roof for Nest.

Joshua Winterswyk: Yeah.

Matthew Theal: Now they have a partnership together. With Google.

Joshua Winterswyk: That makes the most sense.

Matthew Theal: But I looked into it because we have ADT as our alarm and it’s like, “Ah, it’s just easier to buy it from Nest than go through ADT.”

Brent Pasqua: Yeah. Yeah. What do you have for us today?

Joshua Winterswyk: I was trying to think of what I recommend. Oh, you know what, actually me and my wife had just finished the Selena series on Netflix. So they had the first season a couple of months ago… I don’t know if it was a couple of months ago, might’ve been longer. And the second actual season came out and we had just finished that. So anyone not familiar that the Mexican-American singer, Selena, there was a movie they did on her awhile ago that J-Lo starred in. But they kind of redid the series or Netflix redid the series. And it was pretty good. We grew up watching that Selena movie and we always liked that… Me and my wife, but it was cool to see someone redo her story. So if you’re looking for a pretty good series I recommend that.

Brent Pasqua: I’m going to go with one that I think I’ve talked about in a previous show, but I think it’s been a while. And in case you had missed this, it’ been a topic of conversation all morning. That’s with the energy drink space right now. It just seems like that space is becoming a gazillion dollars. And one company that’s taking in that space is a company that we’re all investors in and that’s Celsius, we all own stock. But if you’re into energy drinks and you want a healthier version, I wouldn’t be going and buying Red Bull or Bang or Monster, I would go for a little bit more healthier caffeine. And you could do that with Celsius. We’re actually planning our vacation for the summer. And I think the reason the stock’s going up so much today is because I put my order in for vacation.

Joshua Winterswyk: I’m glad he’s finally talking about his favorite drink.

Matthew Theal: Yeah. That’s a good one, Brent. It’s made with green tea, right? Is that the green tea ingredients? And that’s how they make it a little healthier and less sugar and everything?

Brent Pasqua: Yeah. It’s natural caffeine, it tastes good, it’s got all-natural products in it and it gives you that kind of caffeine boost in the afternoon if you’re having that mid-day sluggishness.

Joshua Winterswyk: Yeah. It’s pretty good. And it definitely, looking at the ingredients, a lot healthier than a lot of those other ones.

Brent Pasqua: So they do cans and then they do the powder packets. We love the powder packets. So, when we’re packing for a vacation, we could throw powder packets in the suitcase and it’s not going to weigh it down.

Joshua Winterswyk: Yeah. Very cool.

Brent Pasqua: All right. So any other final thoughts?

Matthew Theal: No, I don’t have any, this was a good show though. I enjoyed it.

Brent Pasqua: All right. If you do get a lump sum of money, call advisor, fee-only, do not call a broker, be smart with it because it could change your life.

As advisors we love helping people, that’s why we do it. If you’d like to schedule an appointment with any of us, please go to RPAwealth.com and schedule a complimentary consultation. And you could also download our ebook from our website. If you’d like the show notes, please go to retirementplanplaybook.com.

Thanks for listening as always.

Joshua Winterswyk: Thank you.

Matthew Theal: Thank you.

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