Download 10 Steps to Improve Investing Success:
Important Points:
- 00:00 – Intro
- Why Emotions Are Costing You Money
- What Happens When You Miss the Market’s Best Days
- What History Actually Tells Us About Investing
- The Case for Diversification Across Asset Classes and Countries
- How to Build an Investment Strategy You Can Actually Stick To
- The Right Order to Build Your Portfolio (Most People Get This Backwards)
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Transcript:
(NOTE: Transcriptions are an approximation and may not be entirely correct)
Joe: What if investing didn’t feel stressful, and market swings didn’t control your mood or your sleep or your confidence? Today, we’re gonna show you how to stop worrying about investing, not by guessing markets or chasing hot trends, but by building a system strong enough to handle uncertainty before it arrives.
Joe: Welcome to the show, everyone. Joe Anderson here, president of Pure Financial Advisors, and of course, I’m with the big man, Big Al Clopine, sitting right over there.
Al: Good morning.
Joe: Good morning, sir. How are you?
Al: I’m great. I’m ready for another show.
Joe: Yeah. We’re talking investing today. Little worries, maybe overconfidence. What are some strategies that people need to be thinking about?
Al: Can’t wait.
Joe: Today, we’re gonna show you how to design an investment approach that’s gonna reduce anxiety without sacrificing growth. Yes, you can have your cake and eat it, too. That’s today’s financial focus.
All right. Here we are, folks. Investing anxiety. 50% of Americans report being too nervous to invest in 2026. Half of the population does not want to invest because of anxiety. Let’s relieve that anxiety. Let’s bring in the big man.
Al: We’re worried about our investments, our investing. There’s a lot of things to worry about in volatile markets, and sometimes markets are volatile- Sometimes they’re not.
We’re gonna try to give you clarity on how this works and how you should think about it so that you have confidence to go forward. And Joe, I think when you think about retirement, to know how to invest and how to handle the good times and bad times is critical to a successful outcome.
Joe: Yeah. If you look at investing, I think there’s two emotions that people have. It’s the fear, and then maybe the greed.
Al: Yes.
Joe: Right? So when markets are good, I’m overconfident, and because I’m greedy, I wanna continue to make that. But then when markets go bad, I get really fearful. and then I start doing things that I probably shouldn’t do. So our job today is give you that clarity.
Why Emotions Are Costing You Money
All right, check this out, Big Al. Nearly half of investors check their performance out at least once a day. And I think the more that you look at your overall investments, I think the more mistakes potentially you can do, and here’s why: because of our emotions. Worries. if the market is down, let’s say the Dow is down a thousand points, and you kind of hear that in the headlines all over the place, right, we’re much more sensitive to losses than we are to gains.
Al: It’s true, and it’s kind of funny. A lot of psychologists have done studies, and they find no matter how they ask the question or how they do the study, yeah, there’s, about twice as much concern of, like, losing money as there is jubilation of making money.
Joe: Here’s another thing why emotions cannot be involved in your overall investment strategy.
This is 2024. A couple of years ago, we had the S&P 500 had a really good year. 25% return for the S&P 500. 25%. What did the average investor do that was investing in the S&P 500? 16 and a half. It’s like, how can this happen? How can an average investor that is invested roughly in the markets get 16 while the market does 25 itself?
Al: Yeah, and what’s funny, Joe, is we see that each and every year. And so here’s a couple things that happen, right? So the market has a little dip. It goes down. It becomes volatile. People get worried. “I better get out. I don’t wanna lose any more money.” And so what do they do? They sell when the market’s down. They’re selling low. But then at the same time, Joe, then when the market returns to its glory going up, then people buy. So they’re buying high and selling low.
What Happens When You Miss the Market’s Best Days
Joe: Here’s another example of this, of buying high and selling low, is looking, $10,000. This is a 30-year time period in the S&P 500. 30 years, fully invested. I don’t touch it. I have $224,000. Pretty good investment, S&P 500. All right. Let’s say I’m somewhat active in looking at my account. When the markets have those big dips, it’s like, “Oh, I think it’s gonna go even lower. I can’t take it anymore. I gotta get the heck out,” and I get out. But let’s just say you miss 10 days, Alan, from 30 years.
You only miss 10 of the best days in the overall market. That $10,000 investment- Is 102,000, half of what you would have had if you got those 10 days.
Al: the truth is, this is exactly what happens. Because the market crashes, people sell because they’re afraid it’s gonna go down more, and then the market zooms back, sometimes in a day, sometimes in a week, sometimes two weeks.
But it comes back quickly, Joe, and that, that’s the whole point.
Joe: Yeah. And you miss those 10 best days, you lost half of your return. So, or if you miss 20 best days, 60,000. You miss 30, I mean, that’s a day a year. In a 30-year time period, $38,000. That $10,000 investment went here. So the average investor, all of us, significantly under-produce the overall market itself of our timing activities, of us getting in and out of the overall markets based on our emotions.
We think that we can foretell the future. That, hey, when things go bad, they’re gonna continue to b- go bad, or when things are really good, hey, things are gonna continue to go well. The funny thing is, Al, is that the market already knows all the information that all of us knows, and probably a lot more than the average investor.
Al: So let’s talk about what really does happen. So the S&P 500 since 1950, okay, it’s gone down, had 30 corrections of 10% or more. So this is something that we expect, right? So you don’t freak out. You expect it, right? Just make sure that you know this is coming. Now, the average decline has been 14%, and it only lasts about four months, sometimes less, sometimes more.
Joe, we had the Great Recession in 2007, 2008, and that was horrible, but still, it was only about 18, 19, 20 months.
Joe: Sure. You know, and so here’s the behaviors that you have to control, right? You’re selling low, you’re buying high. You wanna do the exact opposite. You want to, or right, hey, I want to be buying low and selling high.
But it’s like, I don’t wanna buy losers. I wanna buy winners, so I wanna keep buying while, it’s high. That’s where people get into a little bit of trouble. Or delaying the re-entry. You get out, and it’s like, should I get in now? Should I get back in? maybe now,” right? And so it’s just, there’s no strategy.
You’re doing all of this based on emotion, and then we’re just reacting to the news, like we just talked about. It’s like the news, oh, the newscaster’s telling us this. I should trust that person, and so I’m gonna get out. These are the behaviors that you really have to be conscious of. And when you’re thinking about your overall portfolio, your money, and these things come up, just understand, am I doing the right thing?
Do I have the right discipline? Do I have a strategy? Is it based on my strategy, or is it based on my emotion?
Al: Yeah. And Joe, I- reacting to the news, that’s a really common one. And, I think, and politics is another thing too, and people assume that if a certain party is in power, the market’s gonna do better, and another party’s in power , it’s gonna be, do worse.
And the truth is, when you look back in history, it doesn’t really even matter which party’s in power. The market does roughly the same.
Joe: Hey, if you feel uneasy about investing, you’re not alone. And more importantly, that awareness is the first step of taking control. Hey, download our 10 Steps to Improve Your Investing Success guide.
It shows you why diversification matters, what really drives returns, how to avoid emotional decisions, and how to focus on what you can control. Up next, we’re gonna show you how history becomes your greatest source of investing strength. Clarity isn’t about what the markets did last week. It’s built by understanding what’s worked across decades. You don’t wanna miss this. Don’t go anywhere. We’ll be right back.
What History Actually Tells Us About Investing
Joe: Hey, welcome back, folks. We’re breaking down how to stop worrying about investing. Hey, we covered what drives anxiety. Now let’s replace uncertainty with perspective. Hey, download our 10 Steps to Improve Your Investing Success guide. Next, we’ll look at the historical patterns that can transform fear into clarity. But first, let’s see how you did on the true false question.
Al: Seven stocks make up over a third of the S&P 500’s value as of February 2026. True or false? as surprising as it sounds, it’s
Joe: actually true For those of you that don’t know what the Magnificent Seven is, you got Apple, Microsoft, Amazon, Alphabet or Google, Nvidia, Tesla, Meta or Facebook. They’re driving 34% of the overall return.
Al: Yeah, it’s amazing, and when those stocks go up and down, and a lot of times they sort of go up in tandem, and the impacts the market dramatically.
Joe: Yeah, but then when people look at this, it’s like, all right, maybe I should just have concentrated risk. I’m just gonna invest in these companies because of course they’re gonna continue to do well. Maybe. It’s a good… It’s logical, but having that concentrated risk, these are high flyers. They’re highly volatile. They do very well, and they also retract quite quickly as well. So, you know, having maybe a little bit more global approach is probably a little bit more prudent.
Al: All right, so let’s give you some clarity on the S&P 500.
So first of all, if you go back about 100 years, it’s about a 10% compounded return. That does not mean that’s what it’s gonna do in the future, but that’s what it’s done in the past. It’s been rather successful. And if you look at the S&P 500, it’s about 80% of the market cap of the tire- entire US s- stock market.
So it, it takes care of a lot of it. Now, if you think about investing in the S&P 500, for example, you’re getting 500 stocks, right? It’s a lot simpler than trying to pick what 50 stocks you want. So in a lot of cases, people do a lot better investing in a fund like this.
Joe: Yeah, but these are all stocks, so risk and re- reward are related.
So it depends on where you’re at in life and how, like, an S&P 500 type ETF or mutual fund would fit into your overall situation. But when we’re talking about the Mag Seven, this is seven stocks out of 500, roughly, you know, and we’re looking at, this is 80%. The S&P 500 covers 80% of the total US market. Now, when you’re thinking about distributions, for accumulation play as I’m saving money, this is a great vehicle, but when I start switching into retirement and I have to take those distributions, you’ll- you’ve got high volatility here because again, it’s 100% stocks.
So we had a almost a 40% drop in 2008. There’s a lack of income because the dividend yield on the ETF or index fund is 1.1 to 1.6%, so I’m really trying to find income. I would have to create, like, a synthetic dividend or sell shares to create more income versus trying to live off of the dividend. And then there’s no safety bu- buffer here.
So if you’re experiencing volatility as you’re taking distributions from your overall portfolio, that’s where we see a lot of retirees Fall into trouble, and then that’s when these emotions start kicking in, and they sell because they’re dropping the portfolio value while they’re taking dollars out, and they keep seeing that balance drop, drop, until they can’t take it.
Al: Yeah, it’s a very good point. So that’s why you wanna diversify. Particularly as you get closer to your retirement, you wanna have different asset classes because they perform differently.
The Case for Diversification Across Asset Classes and Countries
Joe: This is the last decade, 2000 through 2009. So we’ve been talking a lot about the S&P 500. Over that 10-year time period, the S&P was down 10%. It’s the first time we’ve seen that, 2000 through 2009. You guys remember, you know, pretty scary times. You know, 2000 through 2002 was the tech bubble, we had 9/11, and then you had the Great Recession. But over that same time period, if I was diversified into European stocks, or maybe I had some high-yield bonds or emerging markets or real estate investment, small companies, and then bonds, some safety, right?
All of it. Look at 84% Al, 83, 161%. So if I’m too focused on one area, I might miss out on all these returns here.
Al: And that can be easy to do, Joe, particularly if you look at the last decade that we’re in right now. S&P 500 has beat virtually everything else, and so people get a bit overconfident and complacent.
But the truth is, this will all revert back to the norm, and so you gotta make sure you’ve got a little bit of everything.
Joe: Yeah, and I think there’s also something that’s called a home bias. We live in the United States of America, the best country in the world, so we wanna just invest in US companies. But there’s international markets, right?
There’s roughly another 20,000 companies out there, you know, representing 35% of total global equity value. So sometimes people wanna be very home biased to stay in the US, but they’re missing a lot of opportunity here, you know, overseas.
Al: Yeah, and I think, and I think it’s okay to be somewhat home biased ’cause we know our own country, we trust our own country, and we like it.
But the point is, there are different companies a- across the world that are g- kind of going up and down at slightly different times than US companies.
Joe: Here’s a chart. So this is US equities outperforming, international companies outperforming. in the ’70s and ’80s, international companies significantly outperformed.
And then US made a good comeback, and then oh, I missed, here’s international companies. And then the ’90s through the 2000s, the US dominated the overall markets. And then we had, right, the, lost decade. This is where international stocks did well. And then now we b- had a really good run where the US companies are doing quite well, where internationals a- underperforming.
But we always see kind of reve- a reversion of the mean.
Al: Correct. There- That’s a, big term.
Joe: That, for me? That was huge.
Al: That was huge.
Joe: So being across several different asset classes and also several different countries is true diversification.
Al: Yeah, Joe, not only is there international stocks, but then there’s smaller ones, medium-sized ones, larger ones.
There is, countries like Brazil and India that are developing, and you can have plenty of good opportunities there. That’s called emerging markets. So you wanna make sure you have a little bit of everything.
Joe: Hey, download our 10 Steps to Improve Investment Success. It explains why spreading your money out matters, what really makes investments grow, how to avoid emotional decisions, and how to focus on the things that you can control, like cost or taxes and staying disciplined.
Hey, when we come back, it’s all about gaining confidence in your investing, so you don’t wanna miss this. Don’t go anywhere. Show’s called Your Money, Your Wealth.
How to Build an Investment Strategy You Can Actually Stick To
Joe: Hey, welcome back to the show, folks. Show’s called Your Money, Your Wealth. Joe Anderson and Big Al here talking about investments, anxiety, confidence, strategy. Download our 10 Steps to Improve Investment Success. When you stop trying to eliminate volatility and start designing independence from it, guess what? Everything changes. Let’s see how you did on that true/false question.
Al: Lump sum investing historically beats dollar cost averaging roughly 60% of the time. Lump sum is you’ve got this big pile of money, you invest it in the market all at once. Dollar cost averaging, you take that same pile of money, but you invest a little bit each month until it’s all invested. So Joe, is that a true statement?
Joe: 70% of the time, lump sum investing is better, ’cause the market is up 70% of the time. Right. So you have a 30% shot. So, story. You have, you get an inheritance, $100,000 of cash that comes to you. It’s like, “All right, do I invest that whole $100,000 into the market today, or do I slowly get the money into the market?
Because I don’t know, is the market too high? Oh, the market’s at all-time highs. Oh, the market is a little choppy. I don’t know if I should get in right now.” So some people, they just would rather drip the dollars in. Maybe it’s $1,000 a week or maybe it’s $500 a week, whatever that your preference is.
Other people are like, “Hey, this $100,000 is meant for my retirement. I need to have it grow higher than cash or CDs, so I would like to get this invested,” and they get it invested right away. 68% of the time, the lump sum investing is better than the dollar cost averaging because 70% of the time the market’s up versus 30% of the time the market’s down.
Al: Yeah, I think that’s well said, but you also have to consider your ability to handle it if the market drops significantly all at one time. So that’s the risk of a lump sum. Maybe you beat that 30% of the time where it drops and you’re very uncomfortable. But in general, you’re gonna maximize your returns by doing lump sum investing.
Dollar cost averaging, this is actually what most of us do without realizing it. We have a little money he- withheld out, out of our paycheck every month or twice a month, whatever it may be, and we’re investing in the market slowly. That’s considered dollar cost averaging. There’s nothing wrong with that.
It’s just that lump sum beats dollar cost averaging over the long term generally.
Joe: Yeah, I think confidence plays a key c- component in our overall ability to be a successful investor. You have to be confident, not necessarily in the markets, but you have to be confident in your strategy, and you have to have a disciplined strategy of what you’re trying to do. What that means, if markets go up or markets go down, you’re not making moves based on emotion. You have a- strategy of what you wanna do as you’re investing. How much money that you wanna have in US stocks versus international stocks. How much money do I wanna have in growth and value? How much money do I wanna have in bonds?
I don’t wanna do this, is when the markets go bad, I’m going to take my US stocks and throw them into bonds, right? ‘Cause then what am I doing? I’m selling at the wrong time, when I wanna be buying when markets go down. When markets go down, you should be taking these dollars and probably buying more stocks. But that’s a different, a disciplined strategy that needs confidence.
Al: It does need confidence, and I think that’s really well said. So first of all, of course, you gotta do a little planning to figure out what your investment allocation should be. But make sure you’ve got a lot of safe money, particularly if y- you’re in retirement and you’re withdrawing those funds to live off of.
You gotta have money in safety to be able to pay your expenses during those times.
Joe: I think you have to look at, what is your risk tolerance versus risk capacity, right? So what actual rate of return do you need to generate on the dollars that you have to accomplish your goals, versus what is my freak-out measure?
You know, so what is my tolerance for risk? I don’t like any risk, and you know what? That’s fine if it takes me a little bit longer for me to accomplish my goals, as long as I can sleep at night. Or the other way to look at it is, all right, I need a 6% rate of return. I know that I have to have some risk in the overall portfolio to accomplish my goals, so I’m okay with having that risk.
But if I’m okay with having that risk, then you wanna make sure, okay, I wanna limit the monitoring. I don’t wanna look at this daily or monthly or, daily or even hourly, that some people do. You just gotta automate this. Get the strategy in place, and then you adjust over time. Not all the time.
Al: You know, as you get closer to retirement, then you want, wanna make sure you’ve got plenty of short-term reserves, ’cause you’re gonna use that money, you’re gonna spend that money for your expenses during downturns.
It’s not a bad idea to have some inter- intermediate assets that can then replenish that cash or bonds, that safe money, and then make sure you have some longer-term investments that maybe are gonna be more volatile, but maybe will do better over the long term. You wanna have some of each. But I think maybe a, o- one way to think about this, Joe, is, when you are in retirement, maybe you should have two, three, four, five years in safe money, just in case we have a big downturn.
Joe: Sure. This is my spending I have to take $10,000 out of the account a year. I wanna make sure that I have, you know, five years of that $10,000, or if it’s 10,000 a month or, whatever that your goals are. I can spend this. I don’t care what the market does over the next three, five, 10 years. This is gonna depend again on my risk tolerance.
I have enough safety dollars that I can ride out any storm. And then these dollars just kinda backfill this, and this is gonna be volatile. It’s gonna go all over the place, but this is your long-term money. It’s all right. That can ride out. And then you’re constantly kinda filling this cycle up. I’m spending this, but these are making certain rates of return here that I can continue to fill up these different, areas so I don’t have to look at this pool of money and saying, “Wow, I gotta sell.
I gotta get out. I gotta get out.” Don’t worry about it. You have enough safety here to cover your living expenses.
The Right Order to Build Your Portfolio (Most People Get This Backwards)
Al: Yeah. And Joe, when you think about a portfolio, a lot of people figure out, what should I invest in first, without really going through the steps required. What you really should do is take a look at your goals.
What rate of return do you actually need to make your, retirement work or saving for a house or whatever your goals are. Figure that out first. Figure out your withdrawal method. How much do you need to withdraw from your portfolio? Is it realistic? Then please take a look at your taxes. Try to save as much as you can in taxes to stretch your dollars.
Then you can construct your portfolio to accommodate your goals and withdrawal strategy. That’s the proper order. Most people, Joe, go the other way.
Joe: Yep, they start here. “Hey, what stock should I buy? Oh, I like Nvidia, the Mag Seven, let’s get in that,” or, “Maybe I, just stick with the simple S&P 500 fund.” No, you have to look at your goals.
How much money are you taking from the portfolio? What’s the demand for the portfolio? Why tax is ahead of this is because that’s an additional withdrawal from the portfolio to pay the IRS. So I have my goals. I wanna spend $100,000 a year. All right, so what percentage of that is the overall portfolio do I need?
Am I on track? Do I need more money? Do I have to push this thing out? But then how much tax am I gonna pay on that $100,000? So that’s gonna increase the overall withdrawal. So I have to do a little bit of math, more planning first, and then from there and only there can I start looking at, how much money do I wanna have in stocks versus bonds, individual stocks versus ETFs?
Should I buy Nvidia? Should I buy Apple, Netflix? All of that comes last. Start here instead of here.
Al: And so once you’ve achieved a certain level of confidence, then you can be proactive instead of reactive. Very important. You’ll have emotional discipline. You won’t be buying and selling at the wrong times because you’ll be diversified, and most importantly, you’ll have the right investments that will align with your goals
Joe: All right.
Hey, when investments are diversified, withdrawals are intentional, and taxes are strategically coordinated, something pretty powerful happens. The market doesn’t change, but you do. Download our 10 Steps to Improve Investment Success guide because investing confidence isn’t about predicting the future.
It’s about building a plan strong enough to thrive in it. All right. That’s it for us. Hopefully you enjoyed the show. For Big Al Clopine, I’m Joe Anderson. We will see you next time.
IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.
• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER® certification is by the CFP Board of Standards, Inc. To attain the right to use the CFP® mark, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. 30 hours of continuing education is required every 2 years to maintain the certification.
AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.
CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.
