Lessons From March Madness

Welcome to Mr. Stillman's opus about something I would join her for a little while here in John, you know, there are some things that we can learn about retirement planning from the NCAA tournament, which we all get excited about every year and have you already started filling out your brackets for the NCAA tournament. Well here's the thing. I stopped filling out brackets a few years ago, it just takes the fun out of it for me.

I couldn't stand having the root against myself. I got I remember vividly one year. This was probably 14 or 15 years ago in Vermont was a 13 season Syracuse was a four seed, and I really so this is when Tom Brennan coached Vermont.

I love that guy is hilarious. Great press conferences really good basketball coach for all men. I'd really like for Vermont to be Syracuse and I think they will think they will, and I wanted to fill it into my bracket and I didn't and then they beat him Vermont beat Syracuse and I was so mad that I hadn't fill that out in my bracket that I couldn't even enjoy the upset, frustrated with yourself and that's what I said you know what I'm done filling out brackets.

It takes the fun out of the upsets for me if if that upset messes up my bracket.

It takes the fun and I want to just be able to enjoy the tournament sounded brackets in Reno for the longest time. Always consider myself to and I know a little bit about basketball and follow the college season pretty closely. I haven't done as much this year as I have in the past you know I go into the brackets and I go through those brackets not pick most things based on logic. You know not only color the uniforms which some people do it and then by the end of that first weekend. I'm just completely blown out of it on my chances of winning anything or or or doing really well or just totally out the window and there's actually a retirement planning tie-in here.

I know why were talking about that I know because if you think about when you finish your bracket you agonize over picking presuming aware what you thought out the you feel pretty confident and argue with people on the left and having your very confident in your bracket, but then by the end of the first weekend yeah it's all in shambles. It's in complete disarray.

By the end of the second round and in a lot of ways. Retirement planning is not that different in that we have to have a plan mapped out. We want to know what we expect to happen and what other things were going to do when those things happen, but the reality of life happens and you have to be able to adapt as those things occur that you didn't anticipate. Whether it's a healthcare issue whether it's a job change.

He didn't see coming with yet retirement buyout offer and you say oh well, maybe this is something I should take.

Or maybe it's something where you get laid off and you have to go find a new career.

Whatever it is, things are going to happen in life and you have to be able to adapt to it, which is why he just mapped out your retirement plan like you do your bracket and then you don't have the ability to change and adapt what is going to sit there and complain about how your plan is in shambles just like you complain about your bracket beam in shambles. But the reality is we want to put a plan together that allows you to make changes as you go so that you can react to what's happening around you, whether it's changes in your own life or changes in the investment world that you didn't expect so, but I tell a lot of people is that you not really paying me to make a plan for your payment to change the plan because it constantly has to be fluid based on what's going on in life less one way why the NCAA tournament is different from retirement planning because in retirement planning. You can make those changes. You can reassess along the way but in the NCAA bracket ontology is a small loan it's done. Once you screwed up a menu. You have a couple of upsets in those early rounds. It screws up the whole bracket it and so retirement planning is actually you have a better chance of getting things right. As long as you have a plan so upsets me.

That's a really big deal. How would you compare that to things that happen in life that you're not prepared for.

Also upsets. Everybody loves that upset right everybody loves it when the 13 C knocks off before the inevitable 12 beats the five or one time in history when the 16 beats the one everybody loves the upset. Unless your who the team that got upset unless you're Virginia who gets beat by 16 seed will suddenly this otherwise fantastic season you bad has now been completely ruined in the blink of an and you always sort have to feel bad for the. The one or two seeds that lose early because you as exciting as it is for the the lesser team that's a really good season.

Down the drain.

If you're wanted to see but doesn't make it to the Sweet 16. So the upsets are a lot of fun for most people. But if you're on the other side that upset isn't fun and all I completely ruined your year same thing. The financial world right because everything that happens has winners and losers, and you might think that something happening in the investment world or in the financial world is great or terrible but likely there somebody else who thinks exactly the opposite market crash might be bad for most people that's really good news for short-sellers or in a rising interest rates probably hurt you if you're invested in a lot of bond funds.

A lot of fixed income type of investments in your portfolio, but for somebody who keeps a lot of money in the bank and savings accounts or money market that rising interest rate helps them out there a change in tax laws as we just saw a year ago might be very helpful to some people might hurt other people. So you can't let anybody tell you that any particular outcome in the financial realm is inherently good or bad. The same would be true for investments. No particular investment or particular tool or strategy is inherently good or bad.

It all depends on what team you're on and you have to find the things that fit you and your team will I can't tell you how many times I picked North Carolina to win it all and I'm doing that this year as well not really filling out a bracket bent, but I'm really hoping and thinking that Carolyn is going to win the whole darn thing but picking your own team sometimes can get you in trouble. How does that work with retirement planning well so that's an emotional choice right to pick your team and you try to assign logic to it.

You try to come up with all the reasons why well were peaking at the right time yellow to win this yummy classic example. Back in the days when I was still doing brackets.

I remember one year in high school I was convinced I'd let you know we had a fairly underwhelming season. We were three seed and said you know what we can get it together to make a run and I think we can pull this off as the three seed RR one seed wasn't that strong. That year and said what we can we can win it this year. Even though early three seed and we lost Weaver state in the first round so here my national champion is gone on Friday night right so I would liken that to people who put too much of their money in the company stock of the place.

They work because you feel like you have. I will say insider information because I sound like insider trading, which is legal but when you're close to it is like being a fan of a team and you know everything about that team and because you're so close to that team. Your judgment is a little bit clouded allows you to make decisions that you would otherwise make as a truly objective observer will same thing with your company stock you worked there you believe in the company you believe in the direction it's going. And very often what we sees people load up too much on company stock. Just because they're so close to it and there emotionally rooting for that company. Again, if you were truly objective observer looking at from the outside you wouldn't be quite so heavily allocated and that one company okay how about if you are one who makes lots of risky pics and the fact that going into the tournament. You choose the number 13 seemed to be the number four seed in and all that sort of thing and you're actually anticipating and expecting some big upsets, that can get you in trouble to Janita. It's great when they pan out.

If you pick that 14 over the three-year whoever but if you went through your bracket and you picked all of the 15 seeds to beat the twos and all of the 14 seeds to be the threes obviously is not going to pan out like that very food you're going get a lot more games wrong when you got right and so if you try to pick and upset like that you will pick one or two and try to get that lightning strike thing right. But if you miss that one will. It hasn't ruined your bracket. You still have a lot of other one seeds alive and so with investing kind of the same thing.

It's fine to take a couple risks here and there but you don't want all of your investments to be super high risk because you're just not gonna hit a home run on all those and you can't go all in on risk if you're retiring sooner if you need the money for something in a relatively short period of time so may be your only in your 40s, but your saving money for a down payment on a house in its far enough out that you don't want to save money just in the bank you will have some better growth than that.

So you're willing to take some risk. What we don't want to go super high risk because we don't want that money to get cut in half.

Right before you needed for that down payment on your house or maybe you're 60 and you retiring in four years. Same thing.

We don't want too much risk with that money we don't want to be making all these risky choices. Picking the 15 seeds to beat the two seeds in your portfolio if you will. We don't want that and then you end up in a situation where that money that you need to create income in retirement just isn't there because you took too big of a hit at the wrong time. So don't get too risky with your bracket.

Also, don't get too risky with your investments. Some risk is fine, but you wanted to be calculated and organized. Thanks for your thoughts on that. John and I just want to know I'm not a betting man, but if I were I would be going out right now and when thousands and thousands of dollars on my NCAA tournament brackets. Yeah, my predictions will all come true and based on investing advice based on investing advice and your good common sense and what I can write you listening to Mr. Stillman's opus find them online@rosewoodwealthmanagement.com Carolyn once towards doing business as Rosewood will is a registered investment advisor in the state of North Carolina. The material presented is intended to be general information and should not be construed by any consumer is the rendering of personalized investment advice