Should You Go Aggressive or Conservative With Your Wealth Plan?

Should You Go Aggressive or Conservative with Your Wealth Plan?
Is the right answer to do both in an age-appropriate way? You may have asked for one or the other, but how do you know if you’ve really received what you’ve asked for? Is it possible that an aggressive plan is missing out on hot industries, such as artificial intelligence? Is it likely that your “conservative” plan, which is supposed to protect your principal, has lost money?

Watch my videoconference, or listen to my podcast on this topic. (Click on the blue-highlighted words to access on YouTube.com/NataliePace and NataliePace.Substack.com.)
 
Below are the topics we’ll tackle in this blog.
 
Is your conservative plan safe, or is it losing money?
 
The aggressive investor: do you let emotions get the better of you? 
 
What is an age-appropriate plan? 
 
Can you have performance and protection?
 
How do you know if your current plan is age-appropriate and properly diversified?
 
Some valuable assets that you might not be thinking of.
 
Family money that is making landlords rich. 
 
Have a 100-year vision, like rich people do.
 
Overweighting 20% safe in our sample pie charts.
 
Free web apps
 
 
 
And here is more information on each topic.
 
Is your conservative plan safe, or is it losing money?
An all-bond portfolio isn’t as safe as you might think. Neither are money market funds. Why? There is still heightened credit and duration risk in the bond market. In a normal world, interest rate cuts, which are expected to start in September, could bring most of the paper losses back to normal. However, we’re not in a normal world. We’re in a slow growth, overleveraged, Debt World.
 
If you are a fixed-income lover, it’s time to understand how to protect principal, while earning yield. We spend one full day on this topic at our Financial Freedom Retreats. We’ll host a Bond & What’s Safe Master Class, the Saturday after our Oct. 18-20, 2024 Financial Freedom Retreat. Learn more in my blog, “5% Return Without Those Pesky Paper Losses.”
 
$106 billion moved into money market funds in August (as of the 24th), according to Bloomberg. With the expectation of an interest rate cut, investors wanted to “lock in” the higher rate. However, money market funds move with the market. You don’t lock in anything with them. Additionally, money market funds are not FDIC-insured and can go down in value. These funds had to be rescued in the Great Recession and the pandemic. They are not as safe as investors might believe.
 
Given the afore-mentioned credit and duration risk, it’s a good idea to keep the terms short (under 5 years) and the creditworthiness high. Staggered maturity dates that allow us ongoing access to our money can be helpful as well. There may be opportunities in the next five years to take advantage of. Paper losses, long maturity dates and illiquidity will prevent us from being able to take advantage of them. It’s important to read the fine print of any investment, especially if we’re expecting it to protect our wealth. Join us at the retreat & master class to learn more.
 
The aggressive investor: do you let emotions get the better of you? 
When stocks are high and we’ve made a lot of money it’s easy to want to be aggressive and keep the party going. However, we’ve been in the longest secular bull market in history. Never confuse a bull market with a time-proven plan. Recessions are a normal part of the business cycle. The recessions in the 21st century drop far, fast. Between February 19 and March 23, 2020 stocks plunged 38% in the S&P 500. (We don’t normally print up over $4 trillion to avert a recession.) The best performers in 2023 (the Magnificent 7) were some of the worst in 2022.

So, an important question for “aggressive” investors to ask themselves is, “Am I willing to lose half of my wealth?” (Most Main Street investors lost almost 40% before we even knew we were in a global pandemic in 2020.) As we get closer to retirement, we can’t afford to ride the Wall Street rollercoaster. We don’t have the time horizon to make it up. And it could put us in a perilous position with regard to our home and our ability to pay our bills. A better strategy is always going to be to have an age-appropriate, diversified plan that is rebalanced regularly (capturing gains high).
 
What is an age-appropriate plan? 
It’s important to always keep a percentage equal to our age safe. Safe means that it is invested in fixed income assets that preserve our principal while providing us with a steady yield. (This is tricky, but doable, once we know how to avoid credit, duration and opportunity risk.) When we are younger, we have time to make up any volatility in stocks. However, as we get older, it’s very important for us to keep our wealth intact and not be subject to the wild fluctuations in price that are characteristic of 21st Century stocks.
 
How can you have performance and protection?
When we keep a percentage equal to our age safe, in assets that provide 4-5% yield while protecting our principal, that is a good defensive plan. Before the Dot Com and the Great Recessions, because assets were very expensive and growth was expected to be anemic, we were overweighting safe in our sample pie charts. Today we are again overweighting 20% additional safe. What that does is really protect us from a recession, should it occur. With 20% overweighted safe, a 50-year-old would only have 30% at risk of losses.
 
It is important to remember that economists are terrible at predicting recessions. As you can see in the charts below, by the time the headline screams that we are in a recession, investors have already lost 35% or more of their wealth.
​

Many people who were using our pie chart samples as their guide in the Great Recession earned gains instead of losing more than half of their wealth.
 

With regard to performance, most people have a boatload of large cap growth or value. Those are portfolio stabilizers. However, if we want to increase our performance, it’s important to add in hot industries and small caps. Small caps typically outperform large caps. If we wanted additional exposure to the Fantastic 5, we could do a hot slice of breakthrough technology. Other industries we might consider today would be cybersecurity, artificial intelligence, gold, silver, crypto, copper, or any other industry that you really believe is going to outperform.
 
If we’ve asked for a conservative plan, we might not have any exposure to growth stocks and the fantastic gains of 2023 and 2024. Without the Magnificent 7, the S&P 500 earned just 9.9% gains in 2023.
 

How do you know if your current plan is age-appropriate and properly diversified?
In my private coaching practice, many people will come to me with a plan that has 18-pages of holdings and say, “Look! I’m diversified.” When I put each of the holdings into a category based on size and style, what we see is that they have a boatload of large caps. Most plans don’t have enough safe (even if they are “conservative”) and are missing the diversification of small, mids and hot, and oftentimes, even growth.
 
If you ask your broker-salesman whether or not you’re safe and diversified, you might be assured that you are and that all of this is done in accordance with Modern Portfolio Theory. However, what is printed on your brokerage statements is what counts, and that might reveal a different story. Yes, it does require us understanding how to read those. However, that’s easier than you might realize. Our pie chart system makes it easy as a pie chart.
 
If you have never learned the life math that we all should’ve received in high school and college, this will be a game-changer for you in life. You can read about it and my bestselling books, learn and  implement it at our online financial freedom retreats, or get an unbiased 2nd opinion and a new wealth blueprint from me personally in my private coaching. Email [email protected] or call 310-430-2397 to learn more now.
 
Some valuable assets that you might not be thinking of.
That 2 to 4% mortgage loan. That home you own free and clear.
For most of us, it’s a great idea to pay off our home before we retire. However, if we live in a big home that is larger than we need in retirement, and particularly if we have an equity-rich property with a mortgage rate that is under 4%, those are valuable family assets. In today’s world, it really pays to consider at least three generations of the family, and have a wealth plan that works for the grandparents, parents and kids. I discuss this in the 6th edition of The ABCs of Money, which will be published in just a few days. We also talk about this in our Financial Freedom Retreat and Bond Master Class.
 
Family money that is making landlords rich. 
When each family member is living in a small apartment, particularly with today’s very expensive shelter inflation, we’re making landlords rich. This can be an opportunity for everyone to benefit if we start looking at wealth as that 3-generation plan. The family that comes together to reduce housing costs empowers individuals to invest in a much brighter tomorrow, whether it be by having a better career that will serve them for their entire lives, saving up for a down payment on their own home, contributing to their retirement accounts, getting an advanced degree, or some other wealth building strategy.
 
Have a 100-year vision, like rich people do.
When I meet with families who have kept wealth over centuries, one theme is prevalent: their wealth plan covers 100 years. When I’m asking us to think about our parents and our kids and have a plan that works across three generations, it’s simply modeled off what very wealthy people do.
 
Overweighting 20% safe in our sample pie charts
As I mentioned above, we are overweighting 20% additional safe in our sample pie charts. If you look at the chart below, you can see that equity prices are higher today than they were in the Great Depression. The only time that prices were higher was in the Dot Com Recession.

In the Dot Com Recession, the NASDAQ Composite Index plunged 78% from the highs of March 2000 to the low of October 2002. It took 15 years to recover.
 
There are some years where protecting our wealth is the most important thing we can do. At minimum, now would be the time to know exactly what we own and why, to be sure that we are age-appropriate and diversified.
 
Free web apps
We have some free web apps that can help you to personalize your own sample pie chart. Once you know what an age appropriate, diversified and personalized plan looks like, then it will help you see how close or far you are from that goal in your wealth plan. Email [email protected] with Free Web App Links in the subject line. You can also access them on the homepage at https://www.nataliepace.com/#/ with the Free Web Apps badge.
 
 
Bottom Line
Should you be aggressive or conservative right now? Why not both? Most of us think we’re one or the other, when we might not be. Wisdom and time-proven systems are the cure. Whether you get this information from reading about it in my bestselling book The ABCs of Money (get the 6th edition in a few days), or learn and implement it at the October 18-20, 2024 Financial Freedom Retreat, or receive an unbiased 2nd opinion from me privately in my coaching program, now is the time to fix the roof, while the sun is still shining. It’s human nature to wait until things get broken to fix them. However, securing our financial house before the economic storms arrive mean that we are in the best position to weather those very storms. Email [email protected] or call 310-430-2397 to learn more and register now.

Join us for our Online Oct. 18-20, 2024 Financial Freedom Retreat. Email [email protected] or call 310-430-2397 to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details. \

Join us for our Restormel Royal Immersive Adventure Retreat. March 7-14, 2025. Email [email protected] to learn more. Click for testimonials, pricing, hours & details. There is very limited availability. Register by August 15, 2024 to ensure that you get the exact room you want. (There may not be an opportunity to register after August 15, 2024.) This retreat includes an all-access pass to all of our online training for a full year for two, and three 50-minute private, prosperity coaching sessions. Much more affordable than you might think. Email [email protected] to learn more.

Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 5th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. 
​​​​​
Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​

---

Check out Natalie Pace's Substack podcast on Apple and Spotify.
Watch videoconferences and webinars on Youtube.

Other Blogs of Interest
5% Yield without those Pesky Paper Losses.
The Dow Drops 1400 Points.
Fast Fashion. Fossil Fuels. Plastic Clothing. Atacama Desert Waste Dumps. 
Can Crowdstrike Recover from its Colossal Catastrophe? Featuring a Cybersecurity Overview.
Fintechs and Brokerages that Fail are Not FDIC-Insured.
Stocks Keep Hitting New Highs. Are You Thinking "Capture Gains?"
Nvidia Volatility. Salesforce Drops. 
Election Years With Negative Yield Curves = ?.
5 Green Tips for Clean Beaches Week.
Nio Sales Expected to More Than Double in 2Q 2024.
So, You Think You Want to Be a B&B Owner...
Artificial Intelligence and Crypto Scam Alert by the SEC. 
Netflix Evicts Unpaid Viewers. Empty Theaters. 
Retiring Soon? Start Planning Now.
2024 Rebalancing IQ Test. 
Answers to the 2024 Rebalancing IQ Test. 
May is National Bike Month. Paris and Amsterdam are the Stars.
AI, Gold & Copper are on Fire. Sunpower Doubled. 
Sell in May and Go Away? What About the Election?
Vacations that Color Our World Forever.
The Magnificent 7 Drop to the Fantastic 5
9 Inflation, Budgeting, Debt Reduction and Investing Solutions.
China & Russia Double Their Gold Holdings. 
2024 Investment of the Year?
The Reddit IPO. Meme Stock or Snap Land?
Tesla's Factory in Germany Taken Offline by Activists.
Bitcoin Sets a New Record High. The Importance of Rebalancing. 
Beyond Meat's Shares Surge. Quaker Oats' Pesticide Problem.
Stocks are Flying High. Why Aren't Mine?
Cut Your Tax Bill in Half. 9 Tips.
Celebrity Jet CO2. Green Washing. The Facts. Some Solutions.
Copper: Essential to the Clean Energy Transition. 
Uh. Oh. More Bank Trouble.
Are Amazon, Square and Other Tech Companies Ripping Us Off?
Housing. Unaffordable. What Works? Case studies and creative solutions. 
Don't Reach for Yield. Closed-End Funds. 
2024 Investor IQ Test.
Answers to the 2024 Investor IQ Test.
Apple's Woes Drag Down the Dow. 
The Winners & Losers of 2023. Ozempic, Magnificent 7 & Beyond. 
2024 Crystal Ball. 
The Underperforming DJIA, Full of Fossil Fuels and Forever Chemicals.
A Spectacular Year for 3 of the Magnificent 7.
The Best ROI* (Almost 40%!) & 7 Life Hacks That Save Thousands.
Portugal Eliminates Tax Advantages for Ex-Pats.
Earn $50,000 or More in Interest. Safely. Finally. 
WeWork's Bankruptcy. Half-Empty Office Buildings. Problems in our Personal Wealth Plan.
Solutions for Unaffordable Housing.
Cruise Ships Give Freebies to Investors. Should You Take the Bait? Should You Take a Cruise?
Bonds. Banks. The Treacherous Landscape of Keeping Our Money Safe.
7 Rules of Investing
13 Lifestyle Choices to Reduce Waste, Pollution & CO2 & Save a Boatload of Dough.
China Bans Apple
11-Point Green Checklist for Schools.
Artificial Intelligence and Nvidia's Blockbuster Earnings Report
​Biotech in a Post-Pandemic World
10 Wealth Secrets of Billionaires and Royals.
What Happened to Cannabis? 
Bank of America has $100 Billion in Bond Losses (on Paper)
Lithium. Essential to EV Life.
Fiat. Crypto. Gold. BRICS. Real Estate. Alternative Investments.
BRICS Currency. Will the Dollar Become Extinct?
Are There Any Safe, Green Banks?
7 Ways to Stash Your Cash Now. Lessons from the Silicon Valley Bank Failure.
Which Countries Offer the Highest Yield for the Lowest Risk?
Why We Are Underweighting Banks and the Financial Industry.
​Save Thousands Annually With Smarter Energy Choices
Is Your FDIC-Insured Cash Really Safe? 
Money Market Funds, FDIC, SIPC: Are Any of Them Safe? 
My 24-Year-Old is Itching to Buy a Condo. Should I Help Him?
The 12-Step Guide to Successful Investing.
The Bank Bail-in Plan on Your Dime.

Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.