The Biggest DIY Investing Mistakes

DIY investing can be a powerful way to build wealth—but even experienced investors can make costly portfolio mistakes. Brian and Bo break down 7 common investing mistakes, including overlapping index funds and ETFs, poor asset location between Roth IRAs, 401(k)s and brokerage accounts, taking the wrong amount of investment risk, forgotten retirement accounts, outdated beneficiaries and trying to time the stock market. You’ll learn how diversification, tax-efficient investing, portfolio rebalancing, dollar-cost averaging and smarter retirement planning can help you build a more intentional investment strategy—and how to recognize when your financial life may be getting too complex to manage alone. ⁠⁠⁠⁠Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Speaker 00

  The action's on the court and as the official beer sponsor of the NBA, Michelob Ultra is getting fans closer to the game with a chance to win courtside seats, merch and more. Visit michelobultra.com/courtside to enter. Michelob Ultra Courtside 26 to 27. No purchase necessary. Open to US residents 21+ Begins on October 1st, 2026 and ends on June 30th, 2027. Multiple entry periods. See official rules at michelobultra.com/courtside for free entry, entry deadlines, prizes and details.

• 0:30Speaker 01

  Are your ad campaigns lighting up the dashboard? But not the pipeline. That's bull spend and marketers are calling it out in dashboard confessions.

• 0:39Speaker 00

  My boss asked for results, so I opened my dashboard for the only positive sounding metric I had. Impressions.

• 0:47Speaker 01

  Cut the bull spend. See revenue, not just reach. LinkedIn delivers the highest return on ad spend of major ad networks. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 1:00Brian Preston?

  If you're a do it yourself investor, this episode is for you.

• 1:04Speaker 03

  Brian, I am so excited because today we're going to talk about some of the biggest mistakes that we've seen do it yourself investors make and how to fix those mistakes so they don't end up derailing your entire wealth building journey.

• 1:16Brian Preston?

  I'm Brian, he's Bo and this is the Money Guy Show where two financial advisors help you figure out how to save and invest for your future. And with that, let's dive and jump right in.

• 1:32Speaker 03

  Brian, the origin of this episode is we get a bad rap where people all the time assume that we are anti or against do it yourself portfolio managers, financial professionals, and that's just not the case. We actually think that there is a place for do it yourself. There's a lot of folks out there that are fantastic do it yourself advisors.

• 1:53Brian Preston?

  You know, I'll take us all the way back to 2006. That's the year that we started podcasting. The whole purpose was I felt guilty that we had minimums, you know, that we couldn't work with people. And a lot of people just needed help with, how do you start opening up a Roth IRA? How do you make sure that you're paying off your credit cards? That you're budgeting? You have emergency reserves? I was like, man, there, somebody needs to tell people how to do money better because there really is a better way to do money. That is the heart of why we created the show. So we're all about you being empowered and becoming the best version of yourself. Cause guess what? Yes, if you do this well, complexity is going to find you. So we want to load you up so you can be your best version, even as a do it yourself.

• 2:38Speaker 03

  And it's interesting with all the technological advancements that we've seen, two thirds of workers right now, 64% of folks say that they're not currently working with a financial professional, rather they're able to find different sources, different mechanisms to get their financial information. If you look at this, this was a study done by the Employee Benefit Research Institute that said, okay, where do people get information from for retirement planning? Like, how do they inform and educate themselves if they don't do this professionally? It's interesting. A lot of folks get their advice from family and friends. A number of people do it from like online resources or personal research. There are some that work with financial professionals, but there's also people who

• 3:23Speaker 03

  depend on their employer's HR department. There are some people who strictly just watch financial commentators and media producers. And then as one of the metrics that I think has grown certainly over the last couple of years, and I think will probably continue to grow is artificial intelligence is now becoming a, a real tool that can be used to answer financial questions.

• 3:45Brian Preston?

  But even if you're using things like the growing trend of using artificial intelligence, you're going to need to have knowledge because as we've seen using artificial intelligence, even in our practice, there's all kind of echoes or phantoms or ghosts or things that just show up in the system. You're like, where did that come from? So today we're going to cover the seven mistakes we see do it yourselfers make.

• 4:08Speaker 03

  Yeah. What we're going to do is we walk through each of these seven common mistakes that we've seen over decades of working as advisors. We're going to walk you through not only what the mistake is, we want to explain to you why in fact is it a mistake? And then we even want to show you how to fix it. What are the things that you should be aware of? And you can do sort of a self audit. Okay. If this is true, if this exists in my financial life, what are the things I can do to change it and prove it and not make that mistake moving forward?

• 4:34Brian Preston?

  So with that, let's jump right into number one. And I see this one way too often. Too many overlapping funds. Now, look, I've shared with you guys that I had a family member at one of the holidays come up to me and asked me if I had to look at their 401k. And I looked at the 401k and I was like, what did you use to choose the funds that went into your 401k? And they said, I'm keeping the gender out on purpose. They said, every fund that had growth in, I chose.

• 5:05Speaker 03

  I got the growth one and the growth one and the growth one and the growth one.

• 5:09Brian Preston?

  So I was like, well, yes, growth is a great objective, but that's not a great choice because you see a lot of funds that have growth in the title will have a lot of overlapping holdings, meaning that the top holding in this fund is going to be the same top holding in this fund. That can create a problem.

• 5:29Speaker 03

  Yeah. You know that we are spouse and we talk all the time about diversification and why it can benefit you. A lot of people think if I just have a number of different holdings by default, that's going to mean I'm diversified. And that's not necessarily the case. Even if you have a bunch of different mutual funds and a bunch of different ETFs. And here's a real easy example. Let's assume that you have investment A and in investment A, you have five companies in this fund. You've got Acme, Cyberdyne, Wayne Enterprises, Stark Industries and Dunder Mifflin. That's investment A.

• 5:58Brian Preston?

  That's a great portfolio.

• 5:59Speaker 03

  You decide that you want to diversify and you're going to add in some of investment B. Well, when you actually get into the underlying holdings, investment B holds Acme and Cyberdyne and Wayne Enterprises and Stark Industries and Waylon Utani. And so when you actually look at these two funds combined, even though you thought you were diversifying, there's actually an 80% overlap between these investments based on the underlying holdings. And we see this inside of do it yourself or portfolios all the time. We see the number of holdings they have. When you actually dive into what they're truly exposed to, it's really a whole bunch of the exact same thing with no real diversification at all.

• 6:40Brian Preston?

  So here's what the solution is, is streamline your funds. Actually know what you own. The good news is a lot of the custodians out there, the big providers that are holding your Roth IRAs, that are holding your after tax brokerage accounts, they will provide a tool to where you can type in all the ticker symbols and then compare and contrast how much overlap is going into this. Go do that exercise so that you're not just ending up with a super concentrated portfolio that you think is diversified.

• 7:09Speaker 03

  And then just as a quick little note, beware of funds out there that are really just closet index funds masked as something else. If you see that the top holdings in your mutual fund that you're investing look the exact same as the top holdings in the investment in the S and P 500, but let the, yet the internal operating expense of yours is 10 times that of the S and P 500, perhaps you'd be better off buying the low cost index fund. You'd be amazed, just doing a little bit of work on the front end can save you substantially over the long term.

• 7:40Brian Preston?

  It's almost like the saying, instead of trying to beat the market, just be the market and save the money on those internal expenses.

• 7:46Speaker 03

  All right, Brian, let's talk about do it yourself investing. Mistake number two, and this is one we see all the time. It's not using or not understanding the right accounts to use inside of your portfolio construction.

• 7:58Brian Preston?

  Yeah, guys, you, you hear us all the way, you know, if you think about fundamentally, the financial order of operations, which is completely free to you. If you go to moneyguy.com/resources, taxes play a big part in why we choose what we choose. And so if you think about Roth accounts are tax free, your 401ks, especially your employer in the past, those have been tax deferred. And then your after tax accounts are considered, you know, those are your brokerage accounts. They have their own way of being taxed. Well, you've got to figure out how to navigate this so that you come out on the other end and keep as much money as that possible while playing the tax game.

• 8:33Speaker 03

  Yeah. We talk all the time about asset allocation, how you diversify and spread out your assets. But we also want to think about asset location, what types of investments do I hold in what type of accounts? Because it can have a material impact. Think about this case study. Let's assume that you have Ivan, the investor and Ivan, the investor has two investments that he's going to hold. He's going to have an index fund that's going to make 12% annually per year. It's going to go up in value 12% per year. But then he also has a bond fund that's going to pay a 5% dividend out to him at the end of every year. Well, let's also assume that Ivan has two different investment accounts that he can have. He has a 401k and he has a brokerage account, $100,000 in each. So Ivan has some

• 9:16Speaker 03

  decisions to make in terms of how he structures his portfolio.

• 9:19Brian Preston?

  Well, this is, this is where the education comes in. Index funds are especially equity index funds, very tax efficient. They don't, you have the dividends, but dividends right now are, are pretty low as a percentage of the total value. It's probably less than 3%. And then you just, as long as you're not selling or turning that portfolio over, that's pretty much the only taxability. And dividends, we know have a tax favorite status, especially in after tax accounts. Bonds, meanwhile, they are taxed at ordinary income tax rates, meaning it's not a favored tax rate. It's, it's your full, whatever your marginal tax rate, both federal and state purposes. So you can quickly see. If you're not paying attention to the taxation or structure,

• 10:04Brian Preston?

  it's going to have a difference in your performance.

• 10:05Speaker 03

  So let's look at these two portfolios that Ivan can build. In option one, portfolio one, he can hold his index fund inside of his 401k and he can hold his bond fund inside of his brokerage account. Well, after one year of investing, his index fund would be worth $112,000. It went up by 12%. But his bond fund, because it was in a taxable account, because it paid that 5% dividend and because that dividend is subject to ordinary income taxes, he's only going to end up with about $3,400 of that $5,000 dividend. So if you look at his total return for the year, it's only about 7.7%. Had he focused on asset location and instead held his bond fund inside the 401k,

• 10:49Speaker 03

  his index fund inside the brokerage account, now he would have a full 8.5% rate of return because he did not lose any of the return on the fixed income investment, the bond fund, to tax drag. Just by shifting which account holds which type of investments, he was able to increase his rate of return by almost a full percentage point.

• 11:10Brian Preston?

  Now, look, I do want to clarify. Earlier I said index funds are very tax efficient because there's no cost unless you trade, except for the dividends. Well, in this example, we just didn't even put the dividend in there. That's just going to be gravy or whipped cream and a cherry on this Sunday that we're building. So you can see how why this is so powerful. If you put the index fund in the brokerage account, because you haven't sold it, you get to keep all of that appreciation. Meanwhile, the bond had a very steep tax headwind because it's taxed every year at ordinary income tax rates. That's the difference. That's why one is 8.5% and the other one is 7.7%. The choices of tax location that you put in the accounts

• 11:53Brian Preston?

  is what made that yield or difference in performance.

• 11:56Speaker 03

  So what's the solution here? Well, we want you to actually think through your asset location. When I think about the different types of investments that I'm going to hold, I also want to think about what are the different buckets that I have available inside of my portfolio? Because each one of those buckets behaves differently. So the investments we ought to hold in each should look different.

• 12:16Brian Preston?

  Yeah, so if we actually laid out, and I've covered this earlier, the tax-free account, this is your Roth. Let's go ahead and face it. This is going to be your favorite child. We love it. There's a reason that this is number five in the order of operations. Now, look, too, we love the free money that's going to come up in that, but we love tax-free growth. So let's load it and stick it to the man as much as we legally can, put in growth assets on that. If you think about tax-deferred, this is going to be, as we showed in the example, your boring assets that are not tax-favored, you probably want to put in that traditional type account because they're going to grow tax-deferred, meaning you don't pay any income taxes while they're in that 401k in the traditional sense. But then when you pull it out, you're going to pay ordinary income tax rates.

• 13:01Brian Preston?

  You know what makes a lot of sense? Put things that are already taxed at ordinary income tax rates, like your bonds or very conservative assets. These are tax inefficient holdings. And then that after-tax account, this is where you can put in, as we showed in the example, you can use efficient index funds. You can use things and also liquidity, but you want to think in terms of, because capital gains, tax-favored rate. Dividends, tax-favored rate. Think about that when you're trying to figure out what to put in which account type.

• 13:34Speaker 03

  So we're going through seven investing mistakes we see common do-it-yourself investors make. And this next one, I think, is something that all investors are likely susceptible to. And it's not managing or not having a realistic view of risk. And we generally see this in a few different flavors because all of us as investors are often motivated by fear and greed. Those are the two emotions that take hold of us. And very often, when we analyze someone's portfolio, that's to take a look, we'll see that they're likely being way too aggressive. They take on too much risk or perhaps they forget to adjust their risk as they age, as their financial circumstances change. And when they do that, they leave themselves vulnerable

• 14:18Speaker 03

  to market volatility, likely at the very time when they ought to be dialing down the risk.

• 14:23Brian Preston?

  Yeah, I'll just make a quick statement is that just because you have a high risk tolerance, meaning that you think, hey, I'm a cowboy. I can handle whatever risk comes my way. As you get older, you just might not have the time to recover. That's what sadly you learn, the lesson of what's the difference between risk capacity, meaning time to recover, versus risk tolerance. Just because you're a cowboy, that cowboy just didn't have enough for the market to do what it needed to do. So don't go too aggressive.

• 14:52Speaker 03

  So oftentimes, it's the greed that leads us into that too aggressive posture. But the other emotion plays as well. Oftentimes, our fear will cause us to be far too conservative. We end up playing it safe and not actually allowing our money to do what it can do to reach its full potential inside of our portfolio because we're afraid of potential market losses.

• 15:14Brian Preston?

  We had a question we answered last week's Q and A show where we had a young lady in her twenties who had shared she had, she'd maxed out a Roth IRA, but she'd bought all bonds. I don't know where she got that guidance, but that is definitely too conservative for somebody in their twenties. And I know a lot of you, when you're starting out, if you don't know how money works, you know, what is perceived as safe in the short term, like bonds, like cash, can actually be really risky in the long term because it's going to get eaten up by inflation. It's just not going to perform and keep up and build your army of dollar bills like you like. In the long term, what's perceived in the short term is very risky, might actually be the backbone of your future financial success.

• 15:59Brian Preston?

  So don't sleep on this delicate balance between being too aggressive, too conservative. That's why I don't like it. I'll never forget when I was helping out, when I was on the school board back in Georgia and there was the account that most people defaulted to. When I was, got in there and I was talking to some teachers, they were like, the representative that came out to the school was telling a lot of the teachers to go into the stable reserve fund. And I was like, why would they do that? And I actually asked an industry insider and they're like, well, because people like that the money's guaranteed. And then they never, when the markets are getting beat up, they never call and question. And then you're not there 20 years down the road when they realize how they got hammered on just what this could be.

• 16:43Brian Preston?

  And that broke my heart for all these teachers that were being sold a bad product for this thing. So that's why we try to educate the do-it-yourselfer, understand this delicate balance between aggressive and conservative. There is a right way to do money.

• 16:58Speaker 03

  And then recognize that it shifts through time because oftentimes you can be too aggressive or you can be too conservative. But sometimes you can just not pay attention. You can be far too hands off. And while it might have been okay for your portfolio to be very, very aggressive when you were younger, if it's now 10, 15, 20 years in the future and you've never adjusted that, you never thought about rebalancing, you never thought about readjusting your risk, there's a really good chance that you could be totally out of whack. So how do you rectify this? What's the solution? Well, at least on an annual basis, we want you to look at, should I rebalance my portfolio? Should I think about recalibrating the investments inside of my portfolio to better match where I am

• 17:42Speaker 03

  from both the risk tolerance and risk capacity standpoint today? Now, rebalances shouldn't look super aggressive. They should not be knee-jerk. You shouldn't be 80/20 this year and 20/80 next year. You're likely doing it wrong if that's the way you're navigating it. Instead, you should try to mirror mimic what a lot of target retirement funds do. There should be a glide path that you move along that slowly adjusts through time, that as you get closer to your financial destination, as you get closer to financial independence or closer to retirement, you begin to get less and less aggressive, more and more conservative, more assets readily available so that when the markets are out there freaking out, when we go through that inevitable two downturns in every decade,

• 18:27Speaker 03

  you're not terrified, you're not frightened because you know you have a allocation that's appropriate for where you are in your financial life.

• 18:36Brian Preston?

  You know, but when we, when we meet people and we find out that they have big things going on in their life, whether it's, you know, they're getting married or they just had a baby or something, we ask questions like, do you have wills? Do you have life insurance? But another overlooked thing that fits right into the same conversation is mistake number four is forgetting to update your beneficiaries. You know, a lot of you are going to have, you know, and it's a reason, it's foundational in the financial order of operations, your employer plan. If you think about the first account for millionaires, it crosses into seven figures. For the majority of Americans out there, it's your 401k. So these are going to be big accounts. It's also going to be the one that the pump is primed. Your employer's going to give you 50 cents on the dollar

• 19:20Brian Preston?

  or dollar for dollar matches on these things. So they're going to grow quite quickly. If you have big life changes and you're not updating the beneficiaries, you're missing out.

• 19:29Speaker 03

  Yeah, it's a terrifying statistic that only 36%, it's only one out of three parents have designated beneficiaries, not only on their retirement accounts, but also their life insurance policies. If you're someone out there who's getting married or having kids or their circumstances changing, you want to make sure that these accounts that were specifically designed and constructed to pass outside the probate process, to process outside of the will, you want to make sure that those are reflected to accurately reflect your wishes. Because we never know when that proverbial bus is going to hit us on a Tuesday afternoon. So you want to make sure these accounts are updated so that your dollars will pass to the people you want them to and the way that you want them to.

• 20:14Brian Preston?

  Well, and also, don't forget, because beneficiaries on these accounts, they get tax favorite status in a lot of ways. If you, you know, if you inherit an IRA, you get 10 years of grace on the taxability. And if, think about, like, I have a child that is developmentally delayed. They have written in to where this becomes a stretch IRA. That only happens if you structure the beneficiary correctly on those retirement accounts. So if you want the tax favorite stuff that comes out of these accounts, that the government in the tax policy have written it in to get this favorite status, make sure you're updating those beneficiaries to reflect that.

• 20:53Speaker 03

  Yeah, that's the solution. We want you, again, maybe it's annually, maybe it's every couple of years. You ought to review the beneficiaries on your accounts and you ought to think through.

• 21:06Speaker 00

  The action's on the court and as the official beer sponsor of the NBA, Michelob Ultra is getting fans closer to the game with a chance to win courtside seats, merch and more. Visit michelobultra.com/courtside to enter. Michelob Ultra Courtside, 26 to 27. No purchase necessary. Open to U.S. residents 21+ plus. Begins on October 1st, 2026 and ends on June 30th, 2027. Multiple entry periods. See official rules at michelobultra.com/courtside for free entry, entry deadlines, prizes and details.

• 21:34Speaker 01

  Are your ad campaigns lighting up the dashboard? But not the pipeline. That's bull spend and marketers are calling it out in. Dashboard confessions.

• 21:43Speaker 04

  My boss asked for results, so I opened my dashboard for the only positive sounding metric I had. Impressions.

• 21:51Speaker 01

  Cut the bull spend. See revenue, not just reach. LinkedIn delivers the highest return on ad spend of major ad networks. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 22:04Speaker 03

  Every time you have a significant life event, if you go through a marriage or you go through a divorce, if you have children through birth, or if you adopt, or if your spouse passes away, or if one of your family members pass away, or you retire, or something in your life changes, it's always a good idea to review all the beneficiaries on not only your life insurance policies, but also in all your retirement accounts. And it's not even a bad idea. If you're someone who's in the habit of doing an annual net worth statement, which you should be doing, you should list those beneficiaries on the footnotes so that it's a reminder to you every year, when I open up my annual net worth, I'm also going to go review those beneficiaries to make sure they still align with and match my ultimate wishes.

• 22:44Brian Preston?

  Now that leads to our do it yourself mistake number five. You know, we are fortunate, Beau, that we get to record Making a Millionaire. And one of the things that we do when we do that is we help, you know, these, these people who come on our show kind of go through an inventory and create a net worth statement. It is shocking how many times we have come across accounts that they have like, oh, I forgot about that account. And that's losing track of your investments is a sad, sad thing. I want to give you a stat here that'll give you some context and perspective here. According to Capitalize, there are roughly 31.9 million lost 401k accounts.

• 23:23Brian Preston?

  Americans have $2.1 trillion, that's trillion with a T, in forgotten retirement savings. Guys, it is already hard to retire, but if you're just leaving money behind, first of all, there's a potential, if your account is not big enough that your employer is forced to keep it, they could just distribute this money out, creating not only taxable situation, but a penalty situation. This is bad stuff. Be an active participant in your financial life.

• 23:53Speaker 03

  The average American actually changes jobs 12 times on average in their career with a median tenure of just under about four years. So it's really easy to lose track of these accounts. If you have 12 different employers that you've worked with and they have 12 different 401ks, when you begin to look at your balance sheet or look at your financial life, it almost looks like a patchwork quilt of days gone by. So there's a real easy process. You can go to the Department of Labor's Retirement Savings Lost and Found Database to check and see right now if you have 401ks that might be sitting out there. Maybe you're someone who, when you were younger, you got really motivated and you were excited

• 24:34Speaker 03

  to go open up a Roth IRA or open up a traditional IRA. And maybe you funded it, but then life happened and you got married and you moved on. And now it's five, seven, 10 years in the future and you're rethinking about your financial life and you open new accounts. And all of a sudden, you have a bunch of different IRAs or a bunch of different taxable accounts and a bunch of different custodians all over the place. When you have your entire financial life spread out so much, it's really, really easy to lose track of it. So one of the things you ought to consider is, is there a way for me to consolidate accounts? Is there a way for me to bring together all those after-tax brokerage accounts? Is there a way for me to consolidate pre-tax IRAs into other pre-tax IRAs, Roth IRAs into

• 25:17Speaker 03

  other Roth IRAs? Those are relatively easy, but the one I think most people don't do, the one I think that most people leave behind, because truthfully, it's probably the most arduous because it's not often as easy as just going to a website and downloading paperwork. It is those old employer retirement accounts.

• 25:33Brian Preston?

  Yeah. Cause I mean, that's why I would, I would encourage you to really make these decisions right after you change jobs. Consider as part of your, as you move into your next phase of life or next career or job opportunity, don't leave those assets behind. We, you know, if you go to moneyguy.com/resources, we actually have a great decision matrix to help you kind of analyze. Do you just need to leave it at your existing employer, roll it to the new employer, or even just roll it into an IRA? Just be an active participant so you don't fall into the trap of having abandoned assets or assets that are not even updated. That's the other thing that we, we don't even have this kind of in the show notes. How often do we get a prospect that their 401k investment

• 26:16Brian Preston?

  wise reflects what was going on in that decade that they worked there and never got updated, never got brought in to modernize to reflect into the total portfolio of the assets?

• 26:26Speaker 03

  Your dollars are just so, so powerful. You don't want to leave any of them idly standing by. You want them to be actively working towards your great, big, beautiful tomorrow. All right, Brian, we're talking about these common investing mistakes we see do it yourselfers make. And this next one, I'm surprised it wasn't the top of the list because this is the one that everyone would guess. And even though we all know it, and even though it's become so familiar that we've almost gotten callous to it, people still try to do it. People still try and fail. And that mistake is trying to time the market.

• 27:00Brian Preston?

  Now, do you think it's trying to time the market or it's just crying uncle? Because it's back to earlier in the show, we were talking about the relationship of fear and greed. And I feel like this is not one that is, is a gaming. It's more of when do you emotionally get to the point that you say, you know what? I didn't know that I could lose this much money this fast. And people look for the exits. It's not one of these deliberate things. It's usually people reacting. And that's why a lot of our education, our content is to educate you. Cause I always worry about, because we talk about the powers of compounding growth a ton on this show, but it only works if you stay the course.

• 27:43Brian Preston?

  If you let the first downturn where the first bear market that you're going to lose 20% of your assets rattle you to the point that you head for the exits, guys, that is a disaster. And we have the stats to prove it.

• 27:55Speaker 03

  Yeah. If you actually think about the numbers, consider an investor who was going to invest $10,000 in the S and P 500, starting in 1987, and was going to stay invested all the way till the end of 2025. So we're talking about a roughly 40-year investment horizon here, an entire working life cycle. That $10,000 just left invested untouched in the market would have turned into $616,000. But if that investor would have just gotten nervous in one year, maybe it was in 1987, maybe it was during the 2000s, maybe it was during the great recession and just decided to sit out just one year, and they happened to miss

• 28:36Speaker 03

  the best year, the recovery year following those scary times, that $10,000 have only turned into about 448,000. If they missed the best three consecutive years, that $10,000 turns into only 273,000. If they missed the five best years in that 40-year timeline, that $10,000, instead of turning into $616,000, would have only turned into $175,000. Trying to time the market and getting it wrong or exiting too soon or missing out on the upside can be unbelievably costly to your long-term financial independence.

• 29:13Brian Preston?

  I love this chart, but also I don't think it gives complete context because I think nobody chooses to be out of the market that next year or three years or five years. What, what really, this is what, the way I've seen this happen. You're in a bad market and you're like, I just need the pain to stop. Take it like 2008. I had a client that she was the only client I lost and she was, she called me and it was like November of 2008. She's like, I just can't take, I've got this, I've got this. Cause it's never, things don't happen just one at a time. They happen in like, she had a sick, she had a sick relative. You had the stock market getting that its teeth kicked in. We're dealing with, you know, there was a whole election process. It was just, it was, it seemed like everything and

• 29:57Brian Preston?

  anything was going on. She calls me up, she's got to get the heck out of this thing. So you get, you relieve the pain, you pull, hit, hit the parachute and you get out. And then, you know, the market starts recovering and you've now missed a year when it had that huge recovery and you're like, well, crap, now I missed a year. And then you, you, you close your eyes, another three, and now three years is gone. You're like, well, I've got to wait for the next bear market because I know there's going to be two every decade. That's how you end up getting yourself in this situation is that you, you, you headed it for the exits. You couldn't find really, then the thing recovers and now you're getting, not only did you feel the pain going down, but you're feeling the pain as everybody else is recovering. It is painful, guys, because, and that's what I often remind people, the

• 30:42Brian Preston?

  solution to this is take the emotions completely out of it. I, you know, if I had my way. Understand asset allocation and diversification because once you get the mix right, you can then shift to what I always say, always be buying, baby. Because if you just have a consistent where you're buying through the process, not only does it get you, power you through this, so you can get all the compounding growth, but it also, the financial mutant portion of your brain gets activated to where when the market is down, you're like, it's okay, I'm getting a 20% discount. And then as those shares stack on top of each other, you come out on the other side that much healthier and better for it.

• 31:22Speaker 03

  That mechanism helps remove the emotion from the equation. Let's take the worst investing period in modern stock market history, the Great Depression. Over a 25-year period, the market was basically flat. It finished $2 higher 24 years, 25 years in the future than it did 25 years prior. So if you would have been an investor there, you wouldn't have made any money if you just bought on day one and held it until the end of year 25. However, had you been an investor that would have been dollar-cost averaging every single year?

• 31:57Brian Preston?

  Dollar-cost averaging sounds so unsexy. ABB, you're buying, always be buying through that entire period of the Great Depression. That feels different than dollar-cost averaging.

• 32:06Speaker 03

  Yep. If you'd have been doing that, rather than being flat over that 25-year period, you actually would have annualized almost 12% a year. So if you can remove the emotion, stay consistent, stay the course, and let your dollars do what they do, even in uncertain times, even in trying times, even in scary times, you can come out on the other side better off for it if you can always be buying.

• 32:35Brian Preston?

  And look, we're showing you the Great Depression, but then you notice the chart continued on. I think it's pretty exciting in the fact that we're, I truly believe in this law of accelerating returns, meaning that there is so much innovation going on, that the things that will happen the next 10 years will be what something that took us 30 to 40 years in the past, because it is actually speeding up. And we're figuring out ways to make more productivity, more money, and more things out of the resources we have. The chart shows it. Look at what has happened. Yes, we made it through the Great Depression, but this thing, even with volatility, is stacking upon stacking. Don't try to outsmart the market. Don't try to beat the market. Just be the market. And I

• 33:17Brian Preston?

  think you'll, and especially, you know, embracing always be buying, you're going to be better for it.

• 33:22Speaker 03

  Now, this whole show, Brian, we walk through common mistakes that we've seen do-it-yourself investors make. But we still think there's a lot of folks that are do-it-yourself investors that should stay do-it-yourself investors. There are a lot of people who that's what makes sense, and they can continue doing that. But one of the mistakes that we do see, and this is realistically a mistake, is that for some folks, they reach the point where they decide, hey, I'm just going to stay DIY, I'm going to do it this way. And they don't recognize, they've likely hit that critical threshold, that stage of their financial life where it might make sense to ask for help.

• 33:59Brian Preston?

  And look, a lot of you are watching this content, and you're like, that's not me. That's not you. We're perfectly fine with it. So I think, we want to go ahead and put some prompts in here, so you would recognize, when is this mysterious thing that Brian keeps talking about, is that complexity will find you. That is a legitimate thing. Your tax situation, or you have, you know, your estate situation, your retirement, your education plan, there will come a point where things are just overwhelming to a large part of it. That's one of the wake-up calls. Bo, what are some of the other chances or choices when it might make sense to consider taking the next level?

• 34:33Speaker 03

  Yeah, there's generally one of three things, or a combination of three. One is exactly what you said, complexity just shows up, and you don't know what you don't know. The second is, we just get busy, and life happens, and all of a sudden, the stuff that's supposed to be top of mind for us begins falling to the backburners. We don't update our beneficiaries. We're not rebalancing our portfolio. We're not thinking about asset allocation. Those things fall to the backburner. Or, we've just had so much success, the gravity of our decisions has now moved from the point to where we used to have $10 decisions that would affect us, now we have $100,000 decisions. If one of those describes you, or maybe a combination of those describe you, the correct solution for you at this stage, at

• 35:15Speaker 03

  this point, might be to consider hiring a financial professional.

• 35:19Brian Preston?

  But, you know, look, and we have a whole become a client page, that you can go, we'll leave the porch light on for you. But I still want to bring it back full circle. If none of that reflects upon you, and you're just not at that point, please take advantage of all of our free stuff. Because it makes me so happy that we have been planting seeds of success since 2006, where literally, if you go to moneyguy.com/resources, I think you'll see the heart, that we really do want you to be the best version. That's why when we create this content, we want to load you up, build the success. I'm so confident in the system, that I know that that complexity is right around the corner. And there's no ask of you, except for just go be the best version of yourself. I'm your host, Brian, joined by Mr. Bo, Money Guy team, out.

• 36:05Speaker 05

  The Money Guy Show is hosted by Brian Preston and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss.

• 36:45Speaker 06

  Hey, Bo's here. When your next track starts, listen for the decisions that the artist makes. The vocal pushed right up front. The bass that waits half a beat. That sample from a 70s underground gem. Every choice deliberate. With Bo's, you'll hear it all. Your music deserves Bo's.

• 37:11Speaker 07

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