On The Agenda:

We hear a lot of half-truths in the financial world, not necessarily because people try to make misleading statements, but because sometimes a simple statement just doesn’t quite tell the whole story. We’ll share a few examples.

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Episode Show Notes:

On this episode of How Money Works, we’ll share some examples of half-truths in the financial world and explain why a simple statement doesn’t always tell the whole story.

“Don’t worry about those losses because the market always goes up in the long run.”

True, but do you have enough time to wait for the market to come back? If you’re 25 to 45, market corrections and downturns shouldn’t bother you as much as people who are 55 or 65 and are closer to retirement.

Since World War II, there have been 26 corrections, which means the stock market has declined greater than 10%. The average correction was 13.7% down and it only took about four months to recover.

There have been 12 bear markets in that same timeframe, where there is a decline on average 32.5% down, and the recovery has been about 14 months.

It really depends on how old you are. Retirement money needs to last you a long time, so you need to have a defensive strategy when things go the wrong way.

“The fees in your portfolio are less than 1%.”

Oftentimes there are hidden fees inside the portfolio, such as mutual fund expense ratios, commissions, trading costs. We don’t charge commissions or trading costs, it’s all wrapped in.

Mutual fund fees, some of those are very reasonable. If you’re using active management, the expenses will be higher. Morningstar is a good tool that provides investment research and evaluation if you have questions about your investments.

Listen to the full episode or use the timestamps below to jump to a certain section. Thanks for listening.

Important Points:

1:16 – Don’t worry about losses

6:52 – Fees in portfolio

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