The Doctor of Risk Management: Stop Loss, Volatility, Stock Picking, And More

This week we interview Richard Smith who has spent the last 16 years leveling the playing field for individual investors. We discuss some risk management secrets of professional hedge fund managers: how they manage risk in their portfolios, reduce volatility & protect wealth via stop loss strategies. This is a great episode for novice and professional investors alike. Join us to learn how to invest with less risk.

stop loss richard smith


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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Richard Smith

Dr. Richard Smith is the Founder of RiskSmith. With his background in mathematical theories of uncertainty combined with his own personal investing and trading experience, Richard has an acute sense of the critical role that risk and money management play in successfully navigating the financial markets. Richard is leveling the playing field for the individual investor.


When Dr. Richard Smith discovered that many of the world’s top private investment advisors and wealthiest traders had been using a mathematical formula to determine when to buy and sell stocks with incredible results, he decided to try it out. After running the numbers on his previous trades, the results were clear: no matter if the market went up or down, the investment formula he discovered would have earned him more money while taking less risk.


Applying this algorithm to an entire investment portfolio by hand was difficult, so Dr. Smith built one of the first online financial technology platforms in 2004 to help himself and others make more money and take less risk. Over the years the platform grew and additional algorithms were developed that alerted users to the precise time to buy or sell their stocks while helping manage their overall investment portfolio.

Richard had learned how to take the emotion out of investing, and the results were astounding! He formed a company around his new technologies and TradeSmith was born. TradeSmith soon grew to over 30,000 users who trusted a staggering 20 BILLION DOLLARS to his technology, and Richard became known as “the doctor of uncertainty.”


Richard is also CEO and Chairman of The Foundation for the Study of Cycles, an international research and educational institution for the interdisciplinary study of recurring patterns in all aspects throughout the world.

Richard's Online Presence:



Today's Panelists

Debbie Todd – Financial Literacy For Kids

Ever wondered why financial literacy for kids is not taught in school?

Me too...

We discuss why this is the case and how to make your kids financially literate. There are a number of techniques that are important to use in teaching kids about finance and not all of these methods are obvious.

financial literacy for kids debbie todd cpa

Financial Literacy For Kids: Money, Maslow and Magic…

By Debbie Todd, CPA

Do you believe the saying that “money makes the world go around” is real?  If you have doubts or haven’t thought much about it, simply spend a few minutes talking to a neighbor, friend or family member you love who is struggling with their money. 

What does their world look like - right now?  
Financial literacy

Are they going around happy?  Are they thriving and making a positive impact on the world? Or are they stressed, fighting with each other and getting continually backed into a corner of bad purchasing and borrowing decisions that will only make matters worse?  And how does that day-to-day money stress spill over into their relations with their significant others, their kids and others?  With you?

Let’s face it.  It costs a lot more to live today than it did 40, 20 or even just 10 years ago.   That makes it harder.

Whether its a viral pandemic, a natural disaster, an economic recession, death or divorce or even more insidiously, just having an “earn and spend more” mentality, these events or circumstances sure bring the value of simple and smart financial literacy to the forefront.  

Maslow’s hierarchy of needs comes to mind…and there are far too many amazing people getting and staying stuck at the bottom.

So now, let’s play a little and ask the question, “how much would life change if I (or my friend) could improve just ONE area of their money life?”  (Say saving $10 a paycheck). 

Then let’s really get into the fun…what if they improved TWO areas?  (Add setting up a budget for six months).  

What if they learned THREE smart money tools?  (Paying off a credit card or setting up an emergency fund.) Now what would life on Maslow’s hierarchy of needs scale look like?  For them?  For their family?  For you?  For the world?

It just takes one step, then another…but getting started is often the hardest part.

Why is that perhaps?

We believe it is three-fold: 

  1. Fear/shame 

  2. Lack of education over time (not taught in schools for nearly 20 years)

  3. Not knowing where to start making changes – while having a trusted mentor to guide missteps

In my experience as a CPA and community financial educator for over two decades, one of the biggest regrets I hear from people is they wish they had learned better money skills earlier.   Then they would be equipped to educate their kids and grandkids about money matters. So much preventable pain and sadness. 

Yeah, this is truly generational pain – and legacy trauma.  With sadness, its also true that folks more easily tell me they have had an affair or had a run in with the law before they’ll be honest with me about the real state of their finances.  

Larry, a military vet, an avid ballplayer and accomplished international training director for tech giant Oracle, knows all about starting things, and helping you reach success – in a way that is simple, yet extremely effective.  

He is the “logistics of money actions and tactics” man on the team.  Larry doesn’t throw any curve balls and calls it like he sees it.  

His goal for you:  

To win the game and find financial peace by helping you knock money problems out of the park!

financial literacy for kids


BUT…wishing it away won’t make it go away.  So now what do we do about it?  

One of our core beliefs is that lasting money wellness starts at the family level.  Why is this?  Think of when you decided to eat healthier…

When the rest of your family keeps bringing home chips, pizza, sodas and s’mores, how good does your salad look?  Well, the same concept holds true with getting your money house healthy and in shape.

Parents and grandparents are trying to trim costs and get ahead while the kids & grandkids are watching boatloads of shows and advertisements – to do what?  Get you to spend money on stuff.   There goes the budget…again and again.

This is where it gets FUN – yes, really!

When the entire family learns simple and effective money skills – AT THE SAME TIME, in their age group, and in their best learning language – MAGIC HAPPENS. 

Being smart about money does NOT have to be boring and drudgery – but it sure works better when those closest to you are supportive too.  Let’s go back to the eating healthier example.  

If everyone in the house agrees to limit junk food (even just a little bit), isn’t it easier to stay on track?  Meal times can be more enjoyable – and soon, everyone is feeling better about how they look and how they feel.  In many cases, it leads to even more healthy habits.  

When families commit to a healthier “financial eating plan,” everyone has ownership and can see their contribution to the their family financial strength.  Both short-term and long-term.   As debt drops, so does stress, worry, anger and the feeling of worthlessness.  As savings increases, so does confidence, peace, hope and family value.  

As money goals become a reality, all family members feel a sense of pride, accomplishment and confidence in taking the next step toward LIFELONG money wellness.  It’s MAGIC and it’s so DOABLE. 

You might be thinking right now – yeah, but this is a BIG issue and has been a problem for DECADES.  That’s true.  Again, wishing it away won’t make it go away.  So let’s talk about smart steps anyone can take TODAY to say goodbye to generational poverty and financial illiteracy.  

In our latest community-wide program offering, three families were successful in getting their money house in order and they were able to become first-time homeowners! Successfully using our tools and changing their mental “money confidence,” their dreams became REALITY - within a matter of months.

We believe true financial wellness starts at home with the whole family.  When Dollars and Good Sense – Family Fun Money Games™ happens, everyone in the house from age 3 to 103 can play, contribute and your kids and grandkids can grow to be Smart Money Commanders™ for LIFE! 

Imagine the money wellness gift you can give your kids – for the next 60 or 70 years of their life!  That is true legacy-building that can change the world.  In fact, this is a KEY aspect of what it WILL take to make our world better and safer – after all, our kids and grandkids ARE our future! 

financial literacy questions


We believe for a family to have financial success - they need simple tools, supported by experts who care about the ENTIRE family’s money wellness success.  This will drive success for today, tomorrow and the next 20+ years.

So, can you see how money really does make the world go around?  After all, financially healthy families are the heartbeat of healthy communities, of healthy states, healthy countries – and yes, vital to a healthy world. 

Debbie Todd

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Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Debbie Todd, CPA

As the eldest child of a humble, yet proud and dedicated military family, Debbie grew up learning first-hand the value of not having enough, of making your money stretch…as well as understanding how quickly impulsive choices can get you trapped on the never ending cycle of the money madness roller-coaster!  


The first child in her blue-collar family to finish college in her early 30s while raising children of her own, Debbie knows it really is possible to change your circumstances and realize your dreams…one dedicated step and one focused decision at a time.  

With over 20 years as a licensed CPA in public accounting as well as nearly 14 years in public finance in the utility and healthcare sectors, Debbie was running the Treasury Department of a $2 billion a year academic medical center when the 2008 financial meltdown hit. 


While successfully navigating her team through “the Great Recession”, Debbie found an increasing number of families who were simply being devastated financially.  Her heart turned to channeling her money passion to holistically help families learn and grow in their core financial knowledge.


The single most common regret Debbie has heard clients and friends say is that they wished they had learned better money skills themselves so they could teach their kids and grandkids. She also believes that “tomorrow’s philanthropists and world-changers are sitting in booster seats today.”


It is the perfect backdrop for teaching practical, FUN and financially sound money habits.  If you can ENJOY “getting your money smarts hat on” as well, then so much the better, right?  


Imagine how simple and smart money choices can transform you and your child’s ENTIRE life…for 50 to 70 years!  That’s truly peace of mind.  It’s an investment that builds a legacy of hope and impact.  It’s amazing how just a few simple, FUN and effective tools can make this your reality. 


After all, it takes financially healthy families to build financially (and socially) healthy communities, states, countries and, ultimately, a financially (and socially) healthy world

Debbie's Online Presence:



Today's Panelists

How To Deal With An Economic Crisis (COVID 19)

How are you acting during this health and economic crisis?

Are you being reactive, proactive, or are you leading others to help your community?

Are you financially resilient?

statistically 10% or less people are leading and 80% are being reactive. learn why and what you can do in times of crisis to thrive and come out of the crisis more resilient.

economic crisis


Subscribe & Download

Never miss out on a new episode! Subscribe using your favorite podcast app.

Listen on
Apple Podcasts​​​​
Follow us on
Spotify
Follow us on
Stitcher Radio

Sign up to be one of our Money Tree Ultimate Insiders. You will have instant access to new episodes, automatically have access to our monthly giveaways, and the potential to be a guest panelist on our show


Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.



Today's Panelists

Investing Legends: Steven Bregman – Value Investing In Uncertain Market Conditions

Markets around the world are overpriced. Value stocks have under-performed for over 10 years. If you are a value investor, where do you invest?

This is one of my favorite interviews. This week we  interview Investing Legend, Steven Bregman. He explains how he looks at the markets from a value lens, why value investing is important to overall market health, the danger of low interest rates, why you should worry about the indexation of markets, and the bond ETF bubble. We cover a lot in this episode, but if you are serious about investing, this episode is pure gold.

Value Investing

Value Investing - One Historical Extreme Among Many

Interest rates are now the lowest in the recorded history of mankind. Here is a sampling from across the scope of global history to give you a sense of what ‘normal’ rates are.

o   Over the course of 600 years through 100 BC, the ancient Greeks generally charged between about 6% and 12% for loans secured against real estate or to cities.[1]

o   During the 1300s, in Venice, long-term loans to States were generally in the 5% to 8% range.

o   In 1799, after Napoleon gained power, France issued 5% bonds.

o   In the 1860s, during the Civil War, U.S. Treasuries were largely in the 4 ½% to 5 ½% range.

o   During the entire 20th Century, there were only 3 separate years – all during the 1940s – when U.S. 10-year Treasuries declined below 2%. This reflected the government’s extraordinary mobilization of the economy for World War II. To understand the extremity of that environment, every American citizen was issued ration books, with coupons that were required for buying necessities ranging from gasoline to butter. Infractions were punishable by fines up to $10,000 – in 1940s dollars! That would be roughly $300,000 today.

[1] A History of Interest Rates, Sidney Homer, Rutgers University Press, New Brunswick, NJ. 1963.


Bonus Insight into YCharts Stock Screening Tools

Value Stocks Travel Industry
Value Stock Screen

 

The Path to Indexation Dominance of Modern Investing

The 2008/2009 Financial Crisis catalyzed an accelerated movement toward indexation:  no one wanted security specific or manager specific risk. They wanted a basket of securities.  The accumulation of over a decade of $100 billion+ annual flows into ETFs looks a little like this:

  • At March 2009, there were fewer than 100 ETFs in the U.S., today there are over 2,000.  This occurred even as the number of listed stocks in the U.S. declined by about 25%.
  • The ETF industry in March 2009 had total assets of $485 billion, today it’s $4 trillion. Just a single ETF, the SPDR S&P 500, now has over $300 billion. 

An ocean of buying power has been directed at an ever-smaller sub-set of mega-companies with sufficient share trading liquidity to serve index funds’ needs.  Last year, Indexed equities passed that critical 50% border: they are now well above 50% of all equities – the majority of the pool – and have been the marginal trade for a decade. They were supposed to be passive, just along for the ride, but it appears they have hijacked the clearing price mechanism.  If the clearing price mechanism of the marketplace is broken, how does one know what the fair or natural price is, what the ‘market price’ is?

==================

 

A Window into the Value of the Industrial Strength Trading Liquidity of Mega-Cap Companies

Microsoft is in 212 different ETFs.  This small sample might shed some light on why.  It’s in:

    • The Technology Select Sector SPDR Fd, as a 20.2% position.
    • Vanguard Growth ETF, 9.3%
    • JP Morgan US Value Factor ETF, 2.3%
    • iShares USA Momentum Factor, 5.4%
    • iShares Minimum Volatility USA, 6.1%
    • Invesco Dividend Achievers ETF, 4.5%

So, Microsoft is simultaneously a growth stock and a value stock.  It’s both a momentum stock and a low volatility stock. It’s also a dividend stock and, of course, a technology stock. The point is, there is an insufficient population of super large companies to go around.  If one of them really has industrial strength trading liquidity, and if a fund organizer is starting a new ETF, it will be shoehorned into that ETF if they can possibly swing it. 

Here are a few more Microsoft ETFs:

  • iShares USA ESG Select ETF (Environmental, Social, Governance), 5.5%
  • US Vegan Climate ETF, 5.3%
  • Impact YWCA Women’s Empowerment ETF, 5.4%

=================

 

ETF Truth in Labeling (or Flying Blind)

Someone who wanted diversified exposure to Spain would probably have bought the iShares Spain ETF (EWP), a popular asset allocation building block with $940 million of AUM.

Just two problems:

  1. The top 5 holdings account for over 50% of the ETF’s value, and the top 10 for over 70%.  So, it’s super concentrated, not diversified. Security-specific diversification is a basic tenet of passive investing, so that a disaster in any one or few stocks will not meaningfully harm the fund’s results. Rest assured, any active manager found to be that concentrated would immediately be dismissed by a consultant for taking excessive risk.  But an index can’t be dismissed; it merely represents ‘the market’, after all.
  2. These top 10 holdings get over 70% of their revenues from OUTSIDE of Spain!  Buy Spain, and get NOT Spain.

This is another reflection of the requirement by ETFs for large, liquid companies:  EWP can’t afford to traffic in modest-sized local companies that truly reflect the character of the local economy.  All but one of the top 10 are global multi-national companies. Buying Banco Santander is not so very different than buying Citibank in the U.S., and buying Amadeus, the airline reservation infrastructure system, is not so very different than buying Sabre in the U.S. 

Historical Risk

 

Compare & Contrast:  Indexed Bond Funds vs. a non-Index-Centric Bond Fund

Bond Market Bubble


 

iShares Invest. Grade Corporate Bond ETF (LQD)

BlackRock MuniHoldings Quality Fund (MUS)

Inception date

2002

1998

Assets

35 Billion

0.3 Billion

Yield to Maturity

2.6%

5.7%

Distribution Yield

2.6%

4.1%

Yield after Fed Taxes

2.0%

4.2%

Average Maturity

13 Years

25 Years

Average Bond Price

115

116

Credit Quality

 

 

AAA

2%

15%

AA

8%

36%

A

39%

30%

BBB

48%

14%

Leverage

0%

37%

Discount to NAV

0%

-9.0%

10 Year Annualized Return

5.93% (taxable)

5.97% (tax-exempt)

Closed End fund search tool: www.CEFconnect.com

Basically, the laws of supply and demand have never been healthier. If every institution determines to buy bonds through the index funds that traffic in the same large-tranche securities, they will be priced higher:  a 2% after-tax yield. If every institution ignores non-index-suitable bonds, even if in a fund format (but a non-standard format), they will be priced lower; in this case 4% after tax yield, plus the possibility of appreciation.

Footnotes:

[1] A History of Interest Rates, Sidney Homer, Rutgers University Press, New Brunswick, NJ. 1963.

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YCharts - Smart Investment Decisions Made Simple

We here at Money Tree Podcast use YCharts to uncover new investing opportunities, analyze trends and monitor our progress. YCharts is a powerful financial data platform designed for Individual Investors, Financial Advisors and Asset Managers. Their platform makes our lives easier. What can be better than that.

We struck a deal for our listeners where you get 20% off your access to YCharts if you sign up in the next month


Today's Guest:  Steven Bregman

Steven Bregman - President, Co-Founder of Horizon Kinetics LLC

Steven is the President of Horizon Kinetics and is a co-founder of the Firm. He is a senior member of the Firm’s research team, a member of the Investment Committee and the Board, and supervises all research reports produced by the Firm. As one of the largest independent research firms, Horizon focuses on structurally inefficient market sectors, including domestic spin-offs, global spin-offs (The Spin-Off Report and Global Spin-Off Report), distressed debt (Contrarian Fixed Income) and short sale candidates (Devil’s Advocate), among others. Horizon Kinetics has also taken an interest in creating functionally improved indexes, such as the Spin-Off Indexes and the Wealth Indexes (which incorporate the owner-operator return variable). Steve is also the President and CFO of FRMO Corp., a publicly traded company with interests in Horizon Kinetics. He received a BA from Hunter College, and his CFA® Charter in 1989. Steve has authored a variety of papers, notably “Spin-offs Revisited: A Review of a Structural Pricing Anomaly” (1996) and “Equity Strategies and Inflation” (2012).

Steven's Online Presence:


Today's Panelists

Market Update – Our Panelists Opinions on Coronavirus, Supply Chain Disruptions and Oil Price Drop

Back by popular demand, Kirk Chisholm, Megan Gorman and Barbara Friedberg discuss a market update for today March 12, 2020.

Today we are discussing the coronavirus, the big oil price drop and the supply chain disruption… and most importantly, what to do with your portfolio now.

Listen to three experts tell you how to manage your investments during this market turmoil… And we do it without scaring you.

oil price drop

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Listen onApple Podcasts​​​​Follow us onSpotifyFollow us onStitcher Radio

Sign up to be one of our Money Tree Ultimate Insiders. You will have instant access to new episodes, automatically have access to our monthly giveaways, and the potential to be a guest panelist on our show

Looking for a better way to invest?

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.

Today’s Panelists

Market Monday: How to Protect Yourself In This Market, The Coronavirus, Lebanon Debt Default, and Fed Manipulation – March 8 2020

Welcome to our first Market Monday where we discuss what happened last week, what to expect next week and to help put the market into perspective. Last week was a crazy one… just like the week before. Will this continue?

We talk about how to look at the market with an unbiased lens, how to not lost your mind while others are losing theirs, the bond market, the Lebanon bond default, the spike in the VIX and what it means, the coronavirus (COVID-19), economic conditions, black swan events, fed manipulation and more…

market mondaycoronavirus ytd returns

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Never miss out on a new episode! Subscribe using your favorite podcast app.

Listen onApple Podcasts​​​​Follow us onSpotifyFollow us onStitcher Radio

Sign up to be one of our Money Tree Ultimate Insiders. You will have instant access to new episodes, automatically have access to our monthly giveaways, and the potential to be a guest panelist on our show

Looking for a better way to invest?

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.

Today’s Panelists

Listener Questions: Asset Allocation Methods, Evaluating REITs, Emergency Funds, Personal Budgets, and more

Top Listener Questions from our favorite listeners. 

Where should I invest my emergency fund? Do I need a formal Budget? How do I evaluate REITs? What is the best asset allocation for me?

Listen to these questions and more...

Insert your tweetable quote/phrase here

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Never miss out on a new episode! Subscribe using your favorite podcast app.

Listen on
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Stitcher Radio

Sign up to be one of our Money Tree Ultimate Insiders. You will have instant access to new episodes, automatically have access to our monthly giveaways, and the potential to be a guest panelist on our show


Looking for a better way to invest? 

Consider Betterment.

It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Panelists

Financial Advisor Research Survey – How Do You Want To Communicate With Your Financial Advisor?

Want to know how most financial advisors communicate with their clients?

This recent survey from Sean Brown at Ycharts discusses the current state of communications with clients and their financial advisors. How are you looking to communicate with your advisor?

financial advisor research


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Listen on
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financial advisor research 1
financial advisor research 2
financial advisor research 3
financial advisor research 4


YCharts - Smart Investment Decisions Made Simple

We here at Money Tree Podcast use YCharts to uncover new investing opportunities, analyze trends and monitor our progress. YCharts is a powerful financial data platform designed for Individual Investors, Financial Advisors and Asset Managers. Their platform makes our lives easier. What can be better than that.

We struck a deal for our listeners where you get 20% off your access to YCharts if you sign up in the next month


Today's Guest:  Sean Brown

  • Proud father of 2 (13 year old son, Quinn; 11 year-old daughter, Emerson) and husband to Lisa. And their family dog is Lou.

  • Notre Dame & Stanford grad

  • College football and Chicago Cubs fan

  • President and CEO at YCharts (Swiss Army Knife of investment research and client communications)

  • Has been an executive at several startups, private equity backed firms, and public companies. Predominant focus on financial services and software.

  • He’s passionate in his belief that investors should be able to leverage great investment data and tools anywhere, and any time and they should also have access to outstanding human support to ensure their success

Sean's Online Presence:


Today's Panelists

Money Conversations: How To Talk About Money With Elderly Parents

What is more awkward that talking to your parents about money?

If you are like me, not much.

Its a close call between talking to them about money or about the birds and the bees.

This week we discuss how to talk to your parents about money with Cameron Huddleston. She talks about why this is such an important topic, how you can make the conversation a lot less weird, and what can happen if you don't have this awkward conversation.

5 Reasons to End Your Fear of Talking to Your Parents About Their Finances

By Cameron Huddleston

Talking to your parents about their finances might seem like one of the most awkward conversations you can have. It ranks right up there with the birds and the bees talk your parents gave you when you were a child. In fact, you still might cringe every time you think about that awkward conversation.

But talking about money with your parents might seem even more taboo than talking about sex. A survey by personal finance website GOBankingRates found that 10% of respondents said they’d be more comfortable talking to their parents about their romantic life than their parents’ finances. And 9% said they’d rather talk to their parents about their parents’ romantic life than their finances.

Trust me – talking to your parents about their finances isn’t nearly as difficult as it seems. It’s certainly not as weird as talking to them about their love life. (Seriously, I can’t understand why anyone would rather talk to their parents about that.)

But if you are afraid of having family financial talks, it’s time to get past those fears. Why? As the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances, I can tell you that the consequences of not having these conversations can be a lot scarier than the conversations themselves. Here are five reasons why you should stop being afraid to talk to your parents about their finances and should start the conversation as soon as possible.

Reason 1: The Conversation Won’t Be as Awkward as You Think

A friend of mine told me that he recently talked to his parents about their finances after his mom had a health scare. He wanted to make sure their finances were in order to deal with situations like that and to find out whether they had important legal documents such as a will, a power of attorney to make financial decisions for them if they no longer could and an advance health care directive that spelled out what sort of end-of-life care they did or did not want.

My friend said that the first conversation with his parents was the toughest – but it really wasn’t that hard. He just thought it was going to be awkward, which made starting the conversation difficult for him. Once my friend and his parents started talking, though, he realized that his fears were overblown.

If you let your parents know that you want to talk to them about their finances because you’re looking out for their best interests, they likely won’t get upset with you. Some parents might balk initially. But most will open up and start having these conversations with you.

Reason 2: Your Parents Might Not Have Their Financial Act Together

You might think you don’t even need to talk to your parents about their finances because you assume that they have their act together. They worked hard and seem to be getting by just fine. So why rock the boat by sticking your nose some place it doesn’t belong?

Unfortunately, your parents might not be as on top of their finances as you think. A 2019 survey by the Insured Retirement Institute found that 45% of baby boomers surveyed did not have any retirement savings. An earlier IRI survey found that only a quarter of boomers think they have enough money for health care expenses in retirement. And many don’t have a plan for paying for long-term care – which more than half of adults 65 and older will need at some point.

If your parents are among those statistics, they might turn to you for support as they age. You need to know whether they will need your help sooner rather than later so you can be prepared financially – or emotionally if you have to tell them you can’t afford to help them. You’ll also have time to encourage your parents to take steps to be better prepared (such as downsizing before they retire) and to meet with professionals such as a financial planner, accountant and long-term care insurance agent to help them plan.

Reason 3: Your Parents Might Not Have Essential Legal Documents

There’s also a good chance your parents don’t have the legal documents they need. A Gallup poll found that nearly half of adults ages 50 to 64 don’t have a will, and more than one-third of adults 65 and older don’t have a will. If you die without a will, your state laws will dictate who gets what. So if your parents want to have a say in who gets what they leave behind (even if it’s not much), they need to put it in writing in a will. Otherwise, family members could end up in court fighting over who gets what.

Even more important than a will are power of attorney and living will documents – which surveys have found that at least half of boomers don’t have. A power of attorney is someone you legally appoint to make financial decisions for you if you can’t. A living will (also called an advance health care directive) lets you spell out what sort of end-of-life medical care you do or do not want and name someone to make health care decisions for you if you can’t.

You have to be mentally competent to sign any of these legal documents. If something were to happen to your parents and they hadn’t named you their power of attorney or health care proxy and you needed to make financial or health care decisions for them, you’d have to spend thousands of dollars and several months in court proving they were incompetent so you could be appointed to act for them.

Reason 4: Your Parents Probably Won’t Initiate the Conversation

Some parents are eager to talk with their adult children about their finances. Some even give their kids updated spreadsheets of all of their accounts and passwords annually. But these parents are a minority.

Most won’t open up to their kids about their finances for several reasons. Fortunately, an Ameriprise survey found that the most common reason that older adults haven’t talked with their kids about their finances is because they simply haven’t gotten around to having the conversation.

Just because your parents haven’t talked to you about their finances doesn’t mean they don’t expect you to be involved with their finances as they age. In fact, it’s quite the opposite.

A survey by Fidelity Investments found that an overwhelming majority of parents expect one of their children to help manage their finances in retirement, be their caregiver and be the executor of their estate when they die. Yet, a large percentage of children expected to fill these roles didn’t know of their parents’ expectations.

Wouldn’t you rather know if your parents expected you to be involved in their financial lives before you actually had to step in and help?

Reason 5: This Conversation Can’t Be Avoided

I didn’t have detailed conversations with my mom about her finances before she was diagnosed with Alzheimer’s disease at the age of 65. Fortunately, I did get her to meet with an attorney while she still was competent enough to sign a will, power of attorney and living will. But I had to figure out the details of her finances as she was forgetting things. And I had to discuss long-term care with her as she needed it.

My situation with my mom is not unique. With people living longer, there’s a greater chance that your parents will have to rely on you or other family members for care-giving or financial support as they age. And the truth is, you will have to have conversations with your parents one way or another. It’s better to do it when they’re healthy and mentally competent. Then you can talk about what ifs and make a plan for emergencies rather than wait until an emergency happens when emotions are running high and there are fewer options to deal with the situation. As I said, as awkward as talking to your parents about their finances might seem, the consequences of not having the conversation can be much worse.

Cameron Huddleston is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. She also is an award-winning journalist who has been writing about personal finance for more than 17 years. You can learn more about her at CameronHuddleston.com.

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Today's Guest:  Cameron Huddleston

Cameron Huddleston is an award-winning journalist with more than 17 years of experience writing about personal finance. Her work has appeared in Kiplinger’s Personal Finance, Business Insider, Chicago Tribune, Fortune, MSN, Yahoo, USA Today and many more print and online publications. She currently is the Life + Money columnist for GOBankingRates.


U.S. News & World Report named me her of the top personal finance experts to follow on Twitter, and AOL Daily Finance named me one of the top 20 personal finance influencers to follow on Twitter. She has appeared on CNBC, MSNBC, CNN and “Fox & Friends” and has been a guest on ABC News Radio, Wall Street Journal Radio, NPR and other radio shows nationwide. She also has been interviewed and quoted as an expert in The New York Times, Chicago Tribune, Forbes, MarketWatch and more.

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My Worst Investments Ever and The Stories from Personal Finance Professionals

A Very Special episode this week... Live from Bankok and Live from Washington DC... We discuss our worst investments ever. Want to learn from the mistakes of others? Good. It is a lot smarter than making them yourselves. This week we discuss some Titanic investing failures and the top 6 mistakes to avoid at all costs.

worst investments
list of worst investments


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It doesn’t cost much to start, and you get access to a portfolio built around your risk tolerance and your goals. Using Modern Portfolio Theory, pioneered by a Nobel laureate, Betterment can help you build wealth without getting caught up in the noise of the market.


Today's Guest:  Andrew Stotz

In 1992 Dr. Andrew Stotz, CFA moved from a management career at Pepsi-Cola in California to teach finance in Thailand, he has never stopped teaching since then. However, in 1993 he fell in love with the job of being a financial analyst for which he was eventually voted #1. He transitioned into the job of head of research to cap a 20-year career at various investment banks. During that time, he co-founded CoffeeWORKS, Thailand’s leading B2B specialty coffee roaster and served as president of CFA Society Thailand. He now runs A. Stotz Investment Research, which services institutions and high net worth investors. In 2017 he launched the ValuationMasterClass.com to teach everything he learned to aspiring analysts. In 2018 he started MyWorstInvestmentEver.com podcast to help future generations reduce their investment risks by learning through the stories of others. Andrew lives in Bangkok with his 81-year-old mother, who will attest that he remains an analyst at heart!

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