Bingo! You Probably Own More Than the Market | Series 7.7

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Welcome to the Enjoy More 30s Family Finance

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podcast. The only podcast dedicated to making life more

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enjoyable for young families by hitting on the financial topics

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that tend to weigh on us stress, us out, and distract our focus

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from simply enjoying life.

Joseph Okaly: 00:00:16

Hello, and welcome once again to the next episode

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of this Raising Your Investment Mindset series. This series, if

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you don't remember is what we're trying to do to help you reframe

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to some degree, kind of how you may view the scary unknown out

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there that is investments. So it's not about stock picking or

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anything like that. It's about helping you better utilize

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investments, in a more constructive way, better reach

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your goals, and make life more enjoyable as a result.

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So as always, if you like what you're hearing, please make sure

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to subscribe, follow us on Apple podcasts, wherever you may

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listen. Clicking the stars, leaving the reviews, it really

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really helps us reach literally millions of other young families

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out there that are just like you.

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Now last week, if you remember, we discussed how saving a little

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bit more is almost always possible. And just how hugely,

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hugely significant that little extra bit can be and how much

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farther it could take us down the road for what we're trying

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to accomplish. So if you haven't listened to that yet, I would

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definitely recommend to do that soon.

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Today's episode though, is titled Bingo! You Probably Own

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More Than the Market, where we're going to discuss what

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exactly "the market" is, and how in all likelihood your portfolio

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expands probably beyond what they're talking about every day

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on TV. The goal then for today's episode, so the if you can say

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this at the end of the episode, then you have succeeded

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statement is "I better understand what they mean when

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they say 'the market', and how that actually relates to my

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investments." So "I better understand what they mean when

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they say 'the market', and how that actually relates to my

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investments." You are hunched over in your seat, you're

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watching your card, your hands are sweaty, you have just a

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focused intensity. The chair, it's not comfortable, but you're

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so close that you wiggle around in your seat. Just one more, and

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you've got it. All of a sudden you hear that word we're all

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aspiring to hear the sound of victory, the sound of impending

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joy. Bingo arises across the room, your heart sinks, no! And

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just like that, it all slips away. Now I'm sorry to inspire

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probably what are some very, very painful flashbacks from

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your bingo days. But Bingo is actually a great parallel for

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what we're about to talk about with "the market". When you play

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bingo, you all have a card, and you are all playing the same

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game. But your combinations of numbers are different than what

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anyone else has out there. Those announcements for each next

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number, they may be part of what you have and they may have

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nothing to do with your card at all. So it may make up a more

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important position on your card that you have and it may not.

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When you hear about the market on TV, most people's reaction is

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either "Oh no", when it does, you know something bad when it

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goes down or "Great! Yes", when it goes up. However, they are

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not talking about your specific investment. They're not saying

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"Hey, John Smith, this is how your investments did today."

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What they're talking about is what they call the S&P 500,

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which is likely not the only thing that you own. The S&P 500

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is what they call "the market" when they talk about it on TV.

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So when they say "the market" did this, or "the market" did

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that. They're just talking about the S&P 500, which is something

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they call an index. It is supposed to represent the

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largest 500 companies in the US together in one index, organized

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by how large they are. So it's called market capitalization.

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But it's really just a fancy way of saying how much the company

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is worth based on its outstanding stock value. So when

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they talk about "the market", it's just the S&P 500, which is

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just a representation of again, the 500 largest companies in the

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US.

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So just like with bingo, we need to make sure that we look down

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at our card and see how that may actually relate to what we have.

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For starters, most people do not even own 100% stocks. They

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usually have some stocks and some bonds. So let's say that

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you own 50% stock in only the S&P 500 and 50% in bonds. If the

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stock market goes down 10%, you're now 50/50 portfolio so

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50% stocks/50% bonds, would only go down 5% since half of that

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was in bonds. Now let's take that a step further. That

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assumes that the bonds had no return that day, what happens

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most of the time or much of the time is if stocks go down, bonds

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tend to go up. Because when stocks are sold, and people get

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the money from selling the stock, they need to put it

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somewhere, right? It has to go somewhere else, it doesn't just

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disappear into the world. And many times that means that that

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money that they get from stocks are put into bonds. So if bonds

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went up 5%, and that same example, so the S&P 500, or "the

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market" went down, 10% bonds went up 5%, then your cumulative

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return was only down 2 1/2%. So what you see on TV, "down 10%,

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"the market" went down 10%." If you look down at your card, in

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this example, your account only went down 2 1/2%. We could break

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this down, in fact, much further because out of your stock piece,

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maybe it isn't all in the S&P 500 maybe part of the equity or

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the stock pieces in real estate funds, maybe foreign funds,

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maybe small cap funds, small company funds, which are all

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different than the S&P 500. They all may be moving differently to

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what the "market" was doing that day. So as you can see what they

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talk about on TV, just like the number they announce on that

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bingo card, most times it does not correlate to your actual

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accounts, especially if you are properly diversified.

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So that leads us to the end of our episode today. So let's

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circle back around to what the goal statement for today was. If

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you can now say "I better understand what they mean when

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they say 'the market' and how that may actually relate to my

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investments", then you've succeeded in the goal for today.

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So not too long of an episode today. Basically, just look down

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at your bingo card that is your investment account. And make

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sure before you get upset, before you get worried that it

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is actually matching what's on your card.

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Thanks as always for tuning in today. Join us for next week's

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episode, Emotionally Abnormal, Statistically Normal and Healthy

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Cookies, where we're going to cover just how much investments

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can go up or down over the short term, and still being normal

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from a statistical point of view, despite feeling very

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abnormal, of course, from an emotional point of view, and of

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course how you know, healthy cookies fit into all that mix

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that whole equation.

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Overall, if you're able to implement what we cover today,

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like I always say, great, fantastic, wonderful. You have

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less to worry about than before you can focus more on enjoying

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life. Fantastic, right? If you are wanting help with these

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things, though, or if you have questions you need help in

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clarifying, check out that Ask Joe section on the show's

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website. EnjoyMore30s.com. EnjoyMore30s.com and you can

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also connect with me directly by visiting my wealth management

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firm's site New Horizons Wealth Management at nhwmllc.com. Until

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next week, thanks for joining me today and I look forward to

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connecting with you again soon.

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The conversations on this show are

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Joe's opinions and provided for general information purposes

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only. They do not constitute accounting, legal, tax, or other

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professional advice for your specific situation. You should

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always seek appropriate advice from a financial advisor,

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accountant, lawyer, or other professional before acting upon

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any content or information found here first. Joe is affiliated

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with New Horizons Wealth Management LLC, a branch office

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of TFS Securities, Inc., and TFS Advisory Services an SEC

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Registered Investment Advisor Member FINRA/SIPC.