The theme this week on the Retirement Quick Tips Podcast is: Why Your Stock Portfolio Is More Risky Than You Think.

Yesterday, I talked about how to determine how concentrated your portfolio is, if you have any red flags with too much invested in any one stock or any one industry. 

Today, I’m talking about how you can use that information to determine if any changes to your portfolio need to be made to reduce your risk. 

How much is too much in any one stock or industry? It’s an important question and one that I learned to implement when I was still cutting my teeth as a baby advisor. 

When you think about diversification, it means having the right amount of stocks, bonds, and cash, but within the stock allocation, diversification goes much deeper. You’ll want to have a good mix of large and small stocks, have international diversification, as well as diversification across different industries. 

So if you have too much invested in any one stock or industry, it introduces an added layer of risk, but it also prevents you from investing in other areas that are important for maintaining proper diversification. 

Back to the question of how much is too much in one stock or industry? There isn’t a one-size-fits all answer here, but generally, no more than 10% of your portfolio should be invested in any one stock and no more than 20% should be invested in any one industry. 

If your concentrations are higher than that, you’ll want to make a plan for reducing your stock and industry allocations so you can better diversify your portfolio and reduce your risk. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Why Your Stock Portfolio Is More Risky Than You Think

Today, I’m talking about how to find out how concentrated your portfolio is and how this concentration translates to higher portfolio risk as it relates to your individual situation. 

If you’re like most people, especially if a lot of your investments are held in a 401k, you have a mix of several different funds. You might have a large cap growth fund, an S&P 500 index fund, an international fund, and a couple small or mid cap funds. Or you may have everything invested in a target date retirement fund.

When you have a mix of different investments it can be difficult to find out how the combination of your entire portfolio is invested. How much is in just a handful of the largest tech companies? How much do you have invested in tech stocks? Or financials? Or consumer staples? 

What’s your largest holding overall? Is your portfolio more concentrated and more risky than you realize? 

Because I want you to be armed with information, and because I love my loyal listeners, I’m really excited about offering you a free portfolio analysis X ray report. 

Ok, here’s how you can get your free portfolio X Ray report. Send me an email to [email protected]. That’s [email protected]. In your email, list the name of the investment, preferably with it’s ticker symbol, and the $ amount you have invested in the fund. You can send me a list of up to 10 of your top holdings and I’ll send you a portfolio X ray report which will tell you exactly how your portfolio is invested and if there are any red flags with high concentrations. 

All I ask in return is that you leave an honest review of the podcast in Amazon or Apple, and you share the love by sharing this podcast with a friend who is getting close to retirement. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Why Your Stock Portfolio Is More Risky Than You Think

A recent article in the WSJ titled: “Gigantic Stocks Are a Reason to Worry” says: As Apple, Microsoft and Amazon cross the trillion-dollar mark, index investors should be concerned about concentrated portfolios”.

The article makes the argument that one important reason why you should worry is that “even passive investors are increasingly betting on just a handful of stocks vulnerable to a dud product or regulatory setback. Thinking of it in terms of buying an entire business is helpful: Would you rather own the iPhone maker or all of McDonald’s, Walmart, AT&T, Philip Morris, Berkshire Hathaway, Procter & Gamble, JPMorgan Chase, Starbucks, Boeing, Deere and American Express combined? A lot would have to go wrong all at once to torpedo that diversified group of blue-chip stocks.”

This means that the biggest winners also tend to become overvalued over time, as they can only stay at the top for so long and tend to start underperforming as their growth levels off and normalizes. 

Apple is a good example of this. The stock only crossed the $1 trillion valuation in 2018. When this happened, Apple was the first company ever to do it, but since then, it soared into $2 trillion territory in 2020, and took just another year and ½ to grow by another $1 trillion to become the first ever $3 trillion company. 

It took Apple 40 years to reach a $1 trillion valuation. It took only another 3 years to grow by another $2 trillion. Does that kind of growth sound sustainable to you? 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Why Your Stock Portfolio Is More Risky Than You Think

The S&P 500 is a common gauge for the stock market and chances are that a large cap mutual fund or index fund that you own is modeled after the S&P 500. You may think that the S&P 500 is pretty well diversified. In fact, as the name indicates, there are about 500 companies in the index. But your money is not split up evenly among those 500 companies, because the S&P 500 is a market weight index, meaning the largest companies make up the largest portion of the index and end up driving much of the performance - for better or for worse. 

But just how concentrated is the S&P 500? Just the 2 largest companies by market cap, make up nearly 13% of the weight of the index. Combined, the top 6 companies in the S&P 500 - Apple, Microsoft, Amazon, Tesla, Google & Facebook - all big tech stocks by the way, make up a quarter of the index weighting. Roughly 25% of your portfolio if you’re in a S&P 500 index fund is driven by the performance of just 6 stocks! 

Which brings us to an important question: How concentrated is your own portfolio? How much of your portfolio is invested in big tech names and is it something you should be concerned about or something you should adjust? 

If you send me a list of your top portfolio holdings with the dollar amounts invested in each, I’ll send you a portfolio X Ray analysis report that will show you how concentrated your portfolio really is. 

Just send me an email - [email protected] with a list of your top holdings, including $ amounts invested, and I’ll send you a free portfolio X Ray analysis. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Why Your Stock Portfolio Is More Risky Than You Think

On the very first stock market trading day of 2022, Apple stock became the first company ever to reach a valuation of $3 trillion. Apple’s value is greater than the entire GDP of India. If Apple was a sovereign nation, it would be the 5th largest in the world, just behind Germany and just ahead of the UK in GDP. 

If you’ve owned Apple stock, for any length of time you’re probably a happy camper. And I would be willing to bet that even if you don’t own the stock, you still own it because Apple is a major holding in most broad-based market index funds and mutual funds. 

The problem with this is, especially in index funds that are meant to mirror the performance of an index like the S&P 500, is that companies like Apple that keep growing like weeds, don’t get pulled out of the ground, or even cut back. 

As a result, Apple and the other tech darlings like it become a bigger and bigger slice of your portfolio over time. This creates significant risks in a portfolio with large concentrations in just a handful of mostly tech stocks. 

So even if you don’t own Apple stock, you probably still own a bunch of Apple stock and other large tech giants just like it. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

Welcome to a new week here on the Retirement Quick Tips podcast. I’m your host Ashley Micciche, co-owner of True North Retirement Advisors, an independent financial advisory practice managing $340 million in client assets. I’m a Chartered Retirement Planning Counselor, and I started this podcast because I love helping people just like you gain clarity and make a plan for the retirement you envision. 

The theme this week on the podcast is: Why Your Stock Portfolio Is More Risky Than You Think

When you’re invested in a diversified portfolio or a target date fund in your 401k, you probably think that you’re broadly invested across many different companies across many different industries. But you’d be wrong. In fact, there’s a really good chance that your portfolio has a much higher concentration in just a handful of mostly tech stocks. 

In fact, just 10 companies in the S&P 500 index make up over 30% of the weight of that index. And chances are that most of the large mutual funds and index funds you’re invested in have similar concentrations. 

So this week, I’m going to share with you how concentrated the stock market is right now, why this is a problem, and what steps you can take to reduce these concentrations and associated risks in your own portfolio. 

I hope what I have to share with you this week will help you make smart and thoughtful decisions with your retirement. And while I am careful to not lead you astray, personal finance is not an exact science. There is no one-size-fits-all solution for everyone, so I encourage you to disregard anything I say that may not be helpful for you, and to consult your own financial, tax, and legal advisors regarding your own individual situation. 

That’s it for today. Thanks for listening! My name is Ashley Micciche...and this is the Retirement Quick Tips podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

It’s Sunday, which means...it’s recap time here on the Retirement Quick Tips Podcast

This week the theme was: Stupid Stock Market Predictions

In case you missed any episodes, here’s what we covered this week:

• Dow @ 36,000
• The Internet will be as influential to the economy as the fax machine
• The great crash ahead (preceding one of the best 10 years for stocks in history)
• Enron: America’s Most Innovative Company
• The Y2K Apocalypse that never was

I shared with you lessons and takeaways that you can learn from these dead wrong predictions to help you make better decisions with your money. 

Tomorrow, come on back, because we’re starting a brand new theme: Your diversified portfolio is more concentrated (and more risky!) than you think

You probably don’t realize how much of your portfolio is invested in just a handful of big tech companies. Even if you think you have a diversified portfolio or your money is invested in a diversified target date fund in your 401k so this isn’t an issue for you, think again. 

If you look under the hood at the stocks in your favorite index funds and mutual funds, you might be a little surprised how unbalanced it’s become in just a few of the biggest stocks. That’s been a good thing for your returns, but it’s leading investors into a false sense of diversification and security, so next week I’ll share with you how you can better understand how your portfolio is really invested and whether or not you have too much of your portfolio in tech stocks. 

Thank you so much for listening this week! If this podcast is valuable for you (and hopefully it is otherwise you wouldn’t be listening), please share the show with a friend, a neighbor, your brother, or co-worker who is getting close to retirement. Just go to your favorite podcasting app, hit the share icon, then text or email the show link to them saying, “Hey, I thought you might enjoy this podcast…have a listen!.”

Thanks for sharing the love and spreading the word. I hope you have a blessed Sunday. My name is Ashley Micciche, this is the Retirement Quick Tips Podcast.

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Stupid Stock Market Predictions

Probably my favorite dire prediction of all time that never came true is Y2K. I remember being scared about Y2K. I was in high school at the time, and was spending the night at a friends house on NYE. I remember thinking that maybe I should go home because I was pretty worried about what would happen and the chaos that would ensue in the days and weeks after everything crashed. Computers would stop functioning. The stock market would crash. There would be a run on the banks. The world as we knew it would collapse.

There were lots of books written about Y2K, one of which was Time Bomb 2000, among many others. You couldn’t ignore the doomsday drumbeat at the time…as you may recall it wasn’t just books but all over the news, everyone was talking about what would happen when all the computers turned to double zero? 

All we could do was wait, and if you were the doomsday preparer type, you had your bunker built and ready to go, stocked with food and water to last until we emerged out the other side of the apocalypse. And then what happened? Absolutely nothing.

What’s the lesson here? Yet another doomsday scenario that was spectacularly wrong. What if you were convinced that this would be the end of the world. After all, everyone else seemed to be convinced that something bad was going to happen to Cinderella at midnight. 

If you were convinced it was true, you would sell all your stocks, buy guns, gold, and canned food, quit your job and use all of your free time and stock proceeds to build yourself an apocalypse shelter.

Is it good to be prepared for worst case scenarios? Yes. Within reason. I live in Oregon where a devastating earthquake could happen at any time. I keep running shoes in my office at work. I have food and water for several days and other emergency supplies, both at work and at home. But drastically changing my life to prepare for something that might actually never happen is not prudent, and it can be devastating when you apply these doomsday preparation principles to your finances. 

A wise person once told me: Invest based on probabilities, not possibilities. When you invest based on possibilities, anything is possible and you’ll fall for anything. When you make investment decisions based on probabilities, you’re much more likely to find the middle road and reduce the likelihood that you’ll make a bad decision. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Stupid Stock Market Predictions

If you glanced at today’s episode title, hopefully it gave you a little chuckle. Enron: America’s Most Innovative Company. 

Fortune magazine voted Enron “America’s Most Innovative Company” for six consecutive years, from 1996 to 2001. Yet, we all know that it was all just smoke & mirrors, because in that final year in 2001, everything blew up and Enron went from the most innovative company to the most legendary blowup and fraud. In August 2000, the stock was trading around $90 a share. Just over a year later, the stock was worthless. 

The saddest part of this fall from grace was that many Enron employees had the ability to buy Enron stock in their 401k, and most of them did. In fact, as reported by the New York Times, “At the end of the year 2000, the 401(k) plan had $2.1 billion in assets. More than half was invested in Enron company stock. Since then, the stock has lost 94 percent of its value.

At Portland General Electric, the Oregon utility acquired by Enron four years ago, some workers nearing retirement have lost hundreds of thousands of dollars. The utility has lined up grief counselors to help them work through their problems.”

I remember this all too well. I have clients who worked at Portland General Electirc and who themselves lost hundreds of thousands in Enron stock when it all blew up. It took many years and many lawsuits in order for Enron employees to recoup even just pennies on the dollar of what their 401ks were worth. 

The lesson here is that many people who work for large companies can trace much if not most of their wealth to the performance of the company stock, whether that be through the 401k, stock options, or restricted stock. Many employees of these large companies might have 50% or more of their net worth tied up in company stock. And if you were an Enron employee in the year 2000, you’d probably do the same…why wouldn’t you, since year after year, the company was thriving and had a bright future. Fortune doesn’t hand out the most innovative company award 6 years in a row for no good reason. 

But too many people ignore the risks of their concentrated stock. It’s essential that you diversify when you can and gradually reduce your exposure to any single stock, without letting your conviction or the reluctance to pay taxes cloud your good judgement.

Because even the most innovative company in the world can fizzle out to dust just like that…

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the Retirement Quick Tips Podcast is: Stupid Stock Market Predictions

Today’s stupid prediction is from Harry Dent and his book The Great Crash ahead. 

A lot was wrong with Harry’s book, but much of it made sense at the time based on what was happening in the world. 

“To Harry Dent, the injection of over $800 billion in stimulus funds into the economy represented so much debt and uncertainty that a market crash was inevitable.”

There was an article about this over at wealth management.com. The article says: “Few authors have been so bold in their predictions. Dent predicted that the Dow, hovering around 11,000 for most of 2011, would fall by three orders of magnitude by 2013 to between 3,000 and 3,800. Few predictions survive the collision with reality. In 2013, the Dow was up 26.5% to an average closing price of 15,009. Dent also forecast a deflation in prices and the bursting of the bubble in China. Both forecasts also turned out to be without merit.”

There are a couple of lessons that I take away from a prediction like this. First, I would never recommend reading a book like this. There are always ways to weave a story together into a prediction that makes sense. So let’s assume you read the book and believe it to be a fair and accurate prediction of what’s likely going to happen in the future?  If you took the advice, and sold your stock portfolio, you would have missed one of the best 10 years for stocks ever. 

The 2nd takeaway is this: Never take bold action on a doom and gloom scenario. I hear all kinds of good reasons why the stock market, our economy, our society, and our democracy will collapse. Some of these theories make a lot of sense and are backed by smart people who know what they’re talking about. But they can’t see the future, and the world has an interesting way of throwing curveballs.

In order to be a successful investor, you have to stick with quality investments over the long-haul and not throw in the towel on your investment portfolio or your financial plan. It’s a recipe for disaster every time, and it requires that you have faith and hope in the future and make prudent decisions.

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance