Power Up Wealth podcast – Episode 105 – The Best is Yet to Come: Navigating Financial Storms
James Derrick 0:00
Are you worried about chaos in the world and its impact on your money? I’m James Derrick, President of Smedley Financial Services, and today we will be talking with expert and guest Mikal Aune about how to navigate both global turmoil and financial uncertainty.
Shane Thomas 0:19
Welcome to the SFS Power Up Wealth podcast where we provide impactful insight and expert opinions on timeless financial principles and timely investment topics, preparing you to make smarter decisions with your money.
James Derrick 0:35
Thank you for joining me today, Mikal.
Mikal Aune 0:37
Glad to be here, James.
James Derrick 0:38
Mikal is the Executive Vice President of Smedley Financial Services. He has a Certified Financial Planning designation and an MBA. Mikal you recently wrote about uncertain times and how we can get so caught up in the negatives that we can be blinded in making good decisions.
Mikal Aune 0:56
Yes, it’s pretty easy, because there seems to be a lot of negatives that are happening right now. We see wars that are going on in other lands. You talk about political assassinations, even talk about fires in different places, and earthquakes and hurricanes. And there’s always something out there that is happening that is negative. And so it’s like, you know, I hear this from clients all the time. Well, how do you deal with that? Because, you know, how does that impact me personally, and how does that impact my finances? And how do you prepare for both of those scenarios?
James Derrick 1:26
It creates a certain level of fear. We said uncertainty, and then that gives you a sense of paralysis, like, well, what do we do now? From from an investment point of view, if I put on that hat for a moment, I mean, we hear about tariffs and unemployment and the Federal Reserve and interest rates and housing prices, and you know what’s going to happen?
Mikal Aune 1:46
And there’s the R word out there that there may be a recession. So there’s all these things that are out there that are worries and concerns.
James Derrick 1:52
Or the B word a bubble, which you also hear about a lot lately.
Mikal Aune 1:56
Lately, it’s been happening, but there’s a lot of things to worry about. So how do you know which things to worry about and which things to ignore? How does that change how you live your life, and how does that change how you invest your money?
James Derrick 2:07
And?
Mikal Aune 2:08
Those are both good questions, right?
James Derrick 2:10
I mean, when you’re sitting down with somebody, how do you plan?
Mikal Aune 2:14
One we have to understand like, where are you coming from personally, what are the things that are important to you in life? If you can understand your values and your goals that drives what you do in life. And I understand, like, I’m a natural optimist, you know and I realized that there has to be some realism that’s in there. So it’s funny, like I talk to people, they’re like, I’m not a pessimist, I’m a realist. And like, what’s the difference between a pessimist and realist?
James Derrick 2:36
A very fine line.
Mikal Aune 2:37
Right? It’s a fine line. And they’re like, well, okay, the pessimist sees the dark tunnel. The optimist sees the light at the end of the tunnel. The realist sees the train coming.
James Derrick 2:48
Love it.
Mikal Aune 2:49
So you have to be aware of the things that are out there. So even though I’m a natural optimist, I’m trying to pay attention to what are all the cracks that are forming in the economy, so that I can advise somebody correctly. But if you go back to your own personal life, you can say, all right, what is my plan for my life? And do these things that are happening change my plan? And if they don’t really change your plan, it’s like, okay, yeah, you can worry about them. You can pay attention to them and know that they’re there, but don’t let that dictate whether you’re happy or not in your life, because there’s tragedies and other difficult things that are happening.
James Derrick 3:19
Yeah, I gave a presentation at the women’s conference we had back in the spring. I tried to show a little bit of the chaos that was going on in the world, and how it was really hard to tell like, what’s going on or what’s going to happen. Nobody really knows. And then I brought up the words, focus on what you know. Focus on what you know. And I find that’s great advice, not just for investing, which is the context I was using it for, but it’s also just great advice for life, because if you put your focus in the politics or the commotion in the world, it may be fascinating, but I doubt that it leads to much happiness. And so where you choose to really put your mental energy makes a big difference for your happiness.
Mikal Aune 4:01
Yes, it does. I think that happiness has everything to do with the focus in your life versus the circumstances in your life, because we’re all going to have good circumstances. We’re all going to have bad circumstances. But if you have the right focus in your life, like you said, then you can still find happiness in your life. You can still find perspective. You can still find a way to plan for the future and to still say, hey, despite crazy things that are happening, we can still plan and we can still make good things happen for the long run.
James Derrick 4:26
Now, when it comes to people’s finances, I mean, bad things do happen sometimes. I mean the markets go down.
Mikal Aune 4:32
Yes. And I think some of it is to realize that there is a natural ebb and flow to life. Life doesn’t just move on this straight plane where you go from right to left, right, and it’s just a straight line. That’s not how life moves. Right. There’s times that are good and times that are bad, and there’s just kind of a natural ebb and flow to life that you just feel as you go along. We only think about that in financial terms, because that’s kind of how the market moves too. It’ll go up and then it’ll go down a little bit and go up and go down a little bit. The overall trend is up. And especially if you look at big long-term charts to go back through the Great Depression. Like we still grow so much over the long run that the long term is so optimistic. Are there things that we worry about in the short-term? Sure, there always are. Are we going to have a recession? Yes, we will. That’s just a natural ebb and flow of life. You typically have a recession every seven years. The recession usually only lasts for 11 months. So it’s not like the recessions are really that big, but they can hurt. One saying is that a recession is when your neighbor loses a job, but depression is when you lose a job. So people worry about recessions because if you’re the one losing a job, it really hurts. As a general high level recessions is just a natural ebb and flow of life.
James Derrick 5:18
You can miss out on a lot of opportunity if you’re from an investing point of view, if you’re constantly worried about the next recession, because nobody knows when it’s going to come or what the market’s going to do. At this point in time, the US government is shut down. And I mean, who would have thought that the stock market would so far be just fine through all of this?
Mikal Aune 5:59
When the Fed started raising interest rates really fast in 2022 we’re like, oh, man, this could lead to a recession and just, you know, just a crash. Right away, we didn’t pull out. We still stayed invested. And so here 2023 we could have seen a recession. We didn’t. 2024 we could have, and we didn’t. 2025 we could have, and we didn’t. There’s always a chance that there could be a recession. But if you just sit on the sideline waiting for the recession to happen, you miss out on a lot of growth.
James Derrick 6:28
When we were talking before we started, you also made the point that a drop could also be a very positive thing for investors.
Mikal Aune 6:35
Especially for workers. If you’re working, you almost want there to be a drop, because if you’re putting money in a 401(k), on a consistent basis. So let’s say you’re doing this every single month. You actually want to be invested aggressively, and you want there to be a drop in the market. Because if I’m putting in 1000 bucks a month, well, I’m still putting the same $1,000, but if the market’s going down, I’m actually buying more and more shares as the market continues to go down, and then as the market comes back, I have more shares that can grow faster.
James Derrick 7:02
Yeah so the volatility is actually your friend.
Mikal Aune 7:04
It is your friend, and when we call that dollar cost averaging. So if you ever want to look it up, look up dollar cost averaging, you can see how it really benefits you in your younger years. The flip side is retirees are the flip side of that, though they have to be much more protected, because that same concept works against them if I’m taking money out as a distribution, now it really hurts me if the market’s going down, and I cannot be that aggressive. And so that’s where the perspective, the focus, the planning comes in. For our young people we’re like you have time on your side. Be aggressive. Make sure you’re contributing on a monthly basis. Take advantage of dollar cost averaging, make the money grow. You still want to diversify. It’s not like you want to go out and just throw all your money in companies that are dealing with AI because you see the AI boom blowing up right in a good way, at least temporarily. You don’t want to invest everything in Bitcoin, because who knows what could happen with that. You still take a diversified approach, and the diversification is going to help you. If there is a recession or there is a downturn in the market, which is just a natural part of life. For retirees, they can’t do that, but they shouldn’t also just take all their money and stick it in CDs. Some people are so worried that they’re like, I’ll just pull it out when I retire at age 65 and stick it in CDs. And you’re like, what about inflation? If my my CD is earning 3% and inflation’s 9% like it was for a little while. How does my money keep up? And it can’t. We take an approach that we call a lifetime income plan, that’s the buckets of money, where you’re sticking money in different buckets based on time frames when you’re going to use it, where you have some money conservative, some money moderate and some money aggressive. The conservative account is going to protect you against downturns, where the moderate is still somewhat protected, but can still give you growth to keep up with inflation, and the aggressive account is going to keep up with inflation. So people that were using that before the 2008 downturn, they felt like they could still live. They could still take distributions because the conservative account wasn’t down that much. They could still take money out. They could still live, and they had time for the moderate and aggressive accounts to recover.
James Derrick 8:57
Yeah, I like to think of it as as you’re planning for a downturn as a possibility, but because you plan to for it, you don’t have to worry as much about it.
Mikal Aune 9:05
Yes, so creating the plan for your personal life, creating your plan for your financial life, that helps to give you security, and it helps to make sure that you can get through any downturn, whether it be financial or personal. Life has a way of throwing you curveballs, and life doesn’t go exactly according to plan. So some people like, why even have a plan if it doesn’t go according to plan? It’s like, you know what? The plan helps to give you that focus. And so if things turn out differently than you plan, okay, well, we can make a new plan. We can make adjustments to it and say, this is how we’re going to get through but continue to have that plan gives you the focus. I think it gives you some hope, something to look forward to be like, okay, if things aren’t great now, they can be better in the future.
James Derrick 9:45
Yeah, I think that is critically important and important to have faith and hope in the entire economy. After all, you have hundreds of millions of Americans, for example, going to work every single day, working hard, inventing new ways of doing things, and better ways of doing things, and so there’s a constant amount of innovation. And so things are actually better than we think. It’s not always getting reported, because we love to hear the bad news. It’s just part of human nature. But it’s so great to just remember that things are continually getting better and better because so many people are working hard to make it that way.
Mikal Aune 10:22
I think that’s one of the things that that I’m the most optimistic about the future is because we as American people are great. We have a great nation. We work together. So there’s catastrophes that happen, and you see communities rallying around to help those people. You see the bad inhumanity on the news. And then you see some other things happening, where he’s like, I see the good in humanity coming out. And so that’s what gives me faith and hope for the future, is just because we, as an American people, are great. We’ve been through hard times. We’re going to have more hard times, and we’re going to get through those hard times together.
James Derrick 10:55
Mikal, thank you for coming in and sharing the message of hope with us.
Mikal Aune 10:59
Glad to be here.
Shane Thomas 11:05
Thank you for joining the Power Up Wealth podcast. Smedley Financial is located at 102 S 200 E Ste 100 in Salt Lake City, UT 84111. Call us today at 800-748-4788. You can also find us on the web at Smedleyfinancial.com, Facebook, Instagram, Twitter, and LinkedIn. The views expressed are Smedley Financials and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Investment advisory services offered through Smedley Financial Services, Inc.® Osaic Wealth is separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.
The Best is Yet to Come! — Mikal Aune
