Shiny Object Syndrome
by SGL Financial
Our 2 Cents – Episode #236
Shiny Object Syndrome
Cheers to the holiday season! Today on Our 2 Cents, we dish out some quick hits and dive into the topic of “shiny object syndrome.” Listen in now!
- Gabriel’s Quick Hits:
- Could this luxury handbag fund your retirement?
- Are tariffs coming for your Christmas tree?
- A multi-billion-dollar pledge from Michael and Susan Dell is set to impact 25 million U.S. children—here’s how.
- Not All That Glitters Is Gold:
- What is “shiny object syndrome?”
- Here are financial gimmicks investors should steer clear of.
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Podcast Transcript
Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, Building Wealth for Life. Steve Lewit is the President of SGL Financial and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news, trends, strategies, and more.
Gabriel Lewit: Well, welcome everybody to Our 2 Cents. Welcome to a cold December morning here. You’ve got Steve Lewit who looks huddled by his heater.
Steve Lewit: In my new flannels. Not pajamas, by the way.
Gabriel Lewit: Is that flannel? Doesn’t look like flannel.
Steve Lewit: Yeah, feel it. Yeah, feel it. It’s flannel.
Gabriel Lewit: Okay.
Steve Lewit: Yeah.
Gabriel Lewit: I thought Flannel always had that pattern or is it just me?
Steve Lewit: No, no, no. You can get flannel that’s…
Gabriel Lewit: Patternless flannel.
Steve Lewit: Patternless flannel. Yeah. It’s a very hot item fashion wise. So I’m wearing my … I bought my fashion flannels.
Gabriel Lewit: Okay, well.
Steve Lewit: Stuff I haven’t worn in 103 years.
Gabriel Lewit: As long as you’re warm, that’s what matters.
Steve Lewit: I am warm.
Gabriel Lewit: Well, we are hoping you all are staying warm out there as well. It’s, I think, two degrees this morning when I woke up and high of 18 today, so it’s not going to get very warm. So I think it’s safe to say winter is officially here.
Steve Lewit: Yeah, it is. And the winter is … It’s colder than last year.
Gabriel Lewit: Yes.
Steve Lewit: I feel like winter started earlier this year.
Gabriel Lewit: I do too, yes. Last year, I feel like it barely snowed the entire year, and we got more snow this year in the last weekend of November than we did, I think, all year last year. Someone told me we actually broke a record.
Steve Lewit: Yeah, I was just going to mention that. I read that too, that this recent snowfall was a record-breaking snowfall.
Gabriel Lewit: Yeah. So how about that, right?
Steve Lewit: How about that?
Gabriel Lewit: Well, we hope you had a wonderful Thanksgiving as well. And today we’ve got a good show lined up for you. We’re going to talk about a couple of, I’d say smaller things, but there’s some interesting factoids in them and I think you’ll find them hopefully interesting as well. And then we’re going to talk about in the spirit of the holiday season, essentially some shiny objects syndrome.
Steve Lewit: Shiny objects.
Gabriel Lewit: Okay. And how does that relate to your financial planning? So buckle on up. We’re going to head on for the ride.
Steve Lewit: Oh, my.
Gabriel Lewit: Go ahead and jump right in.
Steve Lewit: Is it going to be a rollercoaster or what kind of ride are we planning this morning?
Gabriel Lewit: Even when you drive safely through a parking lot, you’re supposed to have your seatbelt on.
Steve Lewit: Definitely.
Gabriel Lewit: So, you should be buckling up.
Steve Lewit: Okay.
Gabriel Lewit: Even if it’s a generally mild ride.
Steve Lewit: Well, folks, buckle up and get ready for, I don’t know what.
Gabriel Lewit: I think a generally smooth ride for our show today.
Steve Lewit: Get ready for a smooth ride.
Gabriel Lewit: Exactly. All right. Well, to start things off, you might be thinking about your holiday shopping. What you may not have thought about is that, well, if it was on your list, a Birkin or luxury handbag is essentially actually considered a retirement strategy for some people. Did you know this?
Steve Lewit: I don’t even know what a Birkin luxury handbag is.
Gabriel Lewit: You don’t know what a Birkin is?
Steve Lewit: A banking on Birkin. What is a Birkin?
Gabriel Lewit: Well, a Birkin bag is a type of fancy luxury handbag.
Steve Lewit: Well, how much is this?
Gabriel Lewit: Typically, for women, so you probably wouldn’t have one.
Steve Lewit: Well, okay. But how much does this cost me, or her?
Gabriel Lewit: Well, a Birkin bag. What does a Birkin bag go for? Let’s see. You could get one for 65,000 up to 200,000.
Steve Lewit: No.
Gabriel Lewit: You could get another one for 160,000. You could get a Himalaya Birkin for 150,000. Or you could get Jane Birkin’s original Birkin bag for 10.1 million.
Steve Lewit: Nice. Nice. Let me see where that sits on my list.
Gabriel Lewit: Yes. Yeah. So the question here is, if you could afford $150,000 on a handbag.
Steve Lewit: Do you see what this looks like?
Gabriel Lewit: Yeah, it looks like a bag.
Steve Lewit: It looks like a handbag.
Gabriel Lewit: Looks like a handbag, yep.
Steve Lewit: I could have bought that at Kohl’s.
Gabriel Lewit: Well, guess what here? Okay. Some people, TIAA did a study and a research report where they pulled people and one out of 10 people answered that they thought buying a Birkin bag would be a good retirement investment. Turns out that some luxury handbags actually have outpaced the returns of the stock market over the last few decades.
Steve Lewit: Well, yes. And there are meme coins and there are artifacts. Yeah, I guess.
Gabriel Lewit: Yeah. So one of the Hermes Birkin and the Hermes Kelly bags rose annually about 14% between 1980 and 2015, but others of course did not.
Steve Lewit: Well, look, look, there are collectors all over the world that will pave to collect something. There’s a collection for everything. So I can imagine that you bought, this is a specialty bag and it appreciates this because somebody out there that’s in the fashion business or design business says, “Okay, this is something we want to preserve for the future, and it’s going to be worth a lot of money.”
Gabriel Lewit: Yeah. So all said and done, you probably couldn’t use this bag if you bought it. You’d probably have to store it somewhere very safe and hermetically sealed or something like that.
Steve Lewit: Yeah, well, imagine putting your Birkin bag on the floor and there’s a little puddle of coffee there.
Gabriel Lewit: Yeah, you can’t do that.
Steve Lewit: Can’t do that.
Gabriel Lewit: Okay. But bottom line is it would be what I would consider a concentrated risk speculative investment with not a great shot of beating the market.
Steve Lewit: No. Yeah, very concentrated risk. You cannot diversify Birkin bags.
Gabriel Lewit: Yeah. So all said and done, yes. Despite what you might hear in surveys or if somebody on TikTok tells you go buy a Birkin bag to fund your retirement, I would say don’t do it.
Steve Lewit: Yeah. Guys, beware if your better half or your partner mentions the word Birkin, the last word is not Birkenstocks, it’s Birkin bags. You remember what Birkenstocks are?
Gabriel Lewit: I do, yes. Showing your age because you didn’t know what a Birkin was.
Steve Lewit: I immediately thought of Birkenstocks. I thought they were connected, and I am showing my age, but okay. I’m speechless.
Gabriel Lewit: Now you know.
Steve Lewit: Now I know. I feel in the know.
Gabriel Lewit: Okay.
Steve Lewit: And I’m going to forget that in a minute.
Gabriel Lewit: Well, yeah, most people aren’t buying 12,000 up to $150,000 handbags typically.
Steve Lewit: Typically.
Gabriel Lewit: So, you probably aren’t really having that on your radar.
Steve Lewit: Yeah.
Gabriel Lewit: Okay. Now what else might be on your radar? It could be a new Christmas tree.
Steve Lewit: Definitely.
Gabriel Lewit: All right. And what you might be in for this year is some sticker shock when buying your new Christmas tree. Now, I’m not talking about the ones that grow on the ground.
Steve Lewit: No, these aren’t real trees, folks.
Gabriel Lewit: Okay. I’m talking about the ones that you get from a store that typically has the lights attached to it. And it turns out that these are going to likely cost you anywhere from 10 to 20% more this year due to tariffs because unfortunately, most of these trees are prepared or built, if you will, overseas, some in China, some in other countries.
Steve Lewit: I think a lot in China.
Gabriel Lewit: Because they are very labor-intensive, which I don’t know if you ever thought about this, but how do those lights get on that fake Christmas tree?
Steve Lewit: Yeah. Somebody has to stand there and weave them in.
Gabriel Lewit: And they do.
Steve Lewit: And they do. It takes hours to do that.
Gabriel Lewit: I mean, on every single branch, fake branch of that tree, there’s lights and somebody does that.
Steve Lewit: And they’re pretty remarkable, some of them.
Gabriel Lewit: Yeah. Although we bought a new one two years ago and two thirds of the top of the tree has not lit. And I’m not sure why, and it’s very frustrating because it was supposed to be one of those newer things. Back in the old days, when one light was off and the whole strand of lights, right, then all the other lights didn’t work.
Steve Lewit: Yes.
Gabriel Lewit: Like that’s not supposed to happen on a modern day tree.
Steve Lewit: Definitely not.
Gabriel Lewit: So, it’s kind of frustrating. So I might be stuck having to go out here is what perked my interest on this to buy a new tree, and it looks like it’s going to be quite a bit more money.
Steve Lewit: Well, I’ll tell you what. I’ll chip in with you as part of your Christmas present.
Gabriel Lewit: I don’t need you to help me buy the tree. I was just saying…
Steve Lewit: I know. No, it’s a gift. It’s like a gift from the heart. So you’re supposed to say, thank you, Dad, that’s great.
Gabriel Lewit: Yeah. Now what’s interesting is Mac Harman, the founder and CEO of Artificial Tree vendor Balsam Hill, estimated that if he were to manufacture Christmas trees in the US, the price of an … I guess if someone’s buying his $800 tree would skyrocket to around $3,000.
Steve Lewit: $800 for a fake Christmas tree.
Gabriel Lewit: It must be a high-end tree because I don’t think the ones that we bought were.
Steve Lewit: Yeah, is that the cost? I mean, is that like … Gabby, can you look up price points of fake Christmas trees?
Gabriel Lewit: Well, this one, I see one $1,200 at Target. Wow.
Steve Lewit: Whoa. Whoa.
Gabriel Lewit: It’s a pricey one. Yeah.
Steve Lewit: Does it come with a Birkin bag?
Gabriel Lewit: Dangling from the tree.
Steve Lewit: Dangling from the… That’d be great like a little…
Gabriel Lewit: Well, as I said, you might have some sticker shock from your…
Steve Lewit: Birkin bag ornament. I’m going to go into business. Maybe that’ll become a collectible.
Gabriel Lewit: Yeah. So anywhos, well, just in case you were wondering, I thought that was interesting and be prepared for a higher price on your Christmas tree.
Steve Lewit: Gabriel, do you remember, this is on a total aside folks, but do you remember or do you still have, your mother had the greatest collection of ornaments ever, ever? And we used to spend a full day pulling them out of wrapping and putting them on the Christmas tree.
Gabriel Lewit: Well, we do have them. They’re all in a bin, and they are very eclectic.
Steve Lewit: Eclectic.
Gabriel Lewit: If I might say.
Steve Lewit: They’re gorgeous though. Yeah.
Gabriel Lewit: Well, it depends on what kind of tree you want.
Steve Lewit: Yeah. So you don’t use them. You want a modern tree.
Gabriel Lewit: We selectively have selected a couple of them from the ornament bin, but I would say the vast majority of them is if you put them all on the tree, which I do remember from being a kid, and I didn’t realize it as a kid. I thought it did look really cool, but now I look at it’s like, it’s a little bit hodgepodgey. A little hodgepodgey.
Steve Lewit: Definitely, yeah.
Gabriel Lewit: Okay. A little eclectic, not your typical shiny ornaments and tinsel.
Steve Lewit: No, no.
Gabriel Lewit: And all that stuff.
Steve Lewit: Yeah.
Gabriel Lewit: It’s okay. There’s some interesting … There’s definitely very, they’re very crafty.
Steve Lewit: I will bet that those have appreciated more than the stock market.
Gabriel Lewit: I don’t know. Is there a market for old used ornaments?
Steve Lewit: I’ll bet there is. I’m not sure. There has to be … Not old used, but these are collector items.
Gabriel Lewit: Well, they’re old, and they were used.
Steve Lewit: But they’re very exotic.
Gabriel Lewit: So, I don’t know about that. Well, anyways, last tidbit for you. Well, kind of a tidbit, and then we’re going to turn it into a bit of a short segment here, is there was news that Michael and Susan Dell, the owners of the Dell computers …
Steve Lewit: Our good friends.
Gabriel Lewit: Yes, our good friends, Michael and Susan.
Steve Lewit: Yes.
Gabriel Lewit: They’re going to donate.
Steve Lewit: Darn.
Gabriel Lewit: $6.25 billion.
Steve Lewit: Is that it?
Gabriel Lewit: That’s it.
Steve Lewit: That’s it?
Gabriel Lewit: Now they do happen to be worth…
Steve Lewit: Only 6.2 billion.
Gabriel Lewit: They do happen to be worth 148 billion.
Steve Lewit: They’re so stingy.
Gabriel Lewit: So, they’re giving a little bit less than 10% of their net worth.
Steve Lewit: Which is amazing. Actually that’s…
Gabriel Lewit: $6.25 billion.
Steve Lewit: It’s a huge number.
Gabriel Lewit: Okay. And what they are giving it to is somewhat related to the news this year that there are going to be new Trump accounts.
Steve Lewit: Yes.
Gabriel Lewit: For babies. So babies born during Trump’s second term, essentially qualify for a $3,000.
Steve Lewit: Yes.
Gabriel Lewit: And I actually had a neighbor that didn’t know this, and I brought it up the other day, and I mentioned it to him. And he had a baby that was born, and he was going to go and look it up and get his $3,000.
Steve Lewit: You sign up in 2026 is the signup.
Gabriel Lewit: Yeah. So essentially, but he was very excited to know he’d get a $3,000.
Steve Lewit: Sure. Why not?
Gabriel Lewit: Now we’ll talk a little bit more about those. We’ve talked about them in the past, what they’ll be used for. But basically Michael and Susan Dell, they’re donating 6.25 billion, as I said, but this will be for children ages 10 and younger who were born before the qualifying date of the Trump accounts, but instead of getting $1,000, approximately 25 million kids will get $250.
Steve Lewit: Yeah. So if they don’t qualify for the Trump account, then they may qualify for the 250 bucks.
Gabriel Lewit: Most likely if they’re ages 10 and younger. So I have three children.
Steve Lewit: Yes.
Gabriel Lewit: This perked my ears up, right? And you listeners may have kids maybe, or you might have grandkids, and they may be between the ages of two and 10, let’s say roughly, where they may not have qualified for this new Trump account, but they will potentially now qualify for $250 each, which might still be called Trump accounts. That’s unclear yet what they’ll be called.
Steve Lewit: And the same rules, I believe.
Gabriel Lewit: And the same rules and everything else, yes. And signups are going to be coming up next year. But for example, for me, I’ve got three kids, so that’d be $750 deposit for the kids.
Steve Lewit: To buy a new tree.
Gabriel Lewit: You can’t use it for that. No.
Steve Lewit: Darn it.
Gabriel Lewit: All right. So essentially what you’ve got to do is Trump accounts, right? You’ve got to use it for essentially things after you turn 18 in a limited number of them, one being potentially college. Okay. So qualified expenses would be education like college.
Steve Lewit: Or?
Gabriel Lewit: Professional training.
Steve Lewit: Yes. Or?
Gabriel Lewit: Home ownership.
Steve Lewit: Or?
Gabriel Lewit: Entrepreneurship to start a business.
Steve Lewit: Yeah. It’s really broad.
Gabriel Lewit: Well, that’s not super broad.
Steve Lewit: Well, but it’s got a lot of different options. Or you can keep it in there as an IRA and use that to grow until you’re as a retirement account.
Gabriel Lewit: Yes. I don’t think it’ll be quite like an IRA, but yes, you could continue to keep it in there and let it grow. The exact future tax ramifications for that is a little beyond the scope here if you use it for… Oh, it does say here actually, sorry, yes. When the children, the accounts will automatically convert to a traditional IRA.
Steve Lewit: He questions. Did you hear how he questioned?
Gabriel Lewit: Well, traditional IRAs…
Steve Lewit: Folks, did you hear how he questioned my wisdom?
Gabriel Lewit: Well, that’s different because traditional IRAs you can’t use for home ownership, I don’t believe.
Steve Lewit: So, you can use it, but if you leave it in, let’s say you don’t use it for anything, you just leave it there. It just grows as an IRA, then you can’t use it until you’re 59 and a half.
Gabriel Lewit: Yeah. So there are some interesting things here with this. And I wrote down here, what is this really worth? Okay. Somewhere I wrote it down, but let me see if I can find that really quick. I’m at risk of knocking over my coffee, so I’ve got to be careful here. Okay. Yes, I wrote it down. So let’s use this fancy rule called the rule of 7.2, which is saying if your investments earn 7.2%, they would double every 10 years.
Steve Lewit: Yes.
Gabriel Lewit: Okay. So hopefully long-term, they’d earn higher than that, but this is a handy rule. So if you inherit at zero years old, $250, or actually you would get the thousand for the Trump accounts. So let’s say your child is 10, then they have $250. When they’re 20, they will have $500.
Steve Lewit: Yes.
Gabriel Lewit: When they’re 30, they will have 1,000.
Steve Lewit: Yes.
Gabriel Lewit: Okay. Let’s say they want to buy a house at 30 years old. $1,000 in 30 years or 20 years from now, probably not going to be worth all that much.
Steve Lewit: Probably 250. Maybe.
Gabriel Lewit: Okay. So keep that in mind. It’s not nothing, but it’s not necessarily this huge windfall. But the idea is to get people thinking about saving and investing, giving a little bit of a headstart to those that can of course use it. And if you have that available to receive, why not get it and get your kid off on the right track?
Steve Lewit: Yeah. And I think that’s the point. It’s not supposed to make somebody wealthy, but it’s supposed to be like, “Hey, here’s a little gift that’s a head start. Start thinking about this.” And I like the idea.
Gabriel Lewit: Yeah. Now Trump account for similar math, right? If you get $1,000 when you’re born, in 10 years, that would be worth 2,000. In 20 years when you go to college, that’d be worth 4,000.
Steve Lewit: Yeah, it’s okay.
Gabriel Lewit: Okay. So that’s not bad. And then 10 years after that, if you didn’t use it for college, it’d be worth 8,000.
Steve Lewit: Okay.
Gabriel Lewit: So, 8,000 is not a bad number to help with the down payment on a house or whatever it might be.
Steve Lewit: It better than nothing.
Gabriel Lewit: Better than nothing. Yes.
Steve Lewit: Correct. So I tell you, it’s like getting the match at your 401k. Take the match. It’s free money.
Gabriel Lewit: Now, what I wanted to do is, not so much today, but on a future show, Producer Gabby, this got me thinking, is talking about ways of investing money for your kids or grandkids that can be really, really tax advantaged and help starting at a very young age other than this Trump account. We could talk about some of the alternatives there. So that might be a good spinoff for a future episode here for us.
Steve Lewit: Yeah. I think it’s very important.
Gabriel Lewit: And I won’t spoil the thunder.
Steve Lewit: No, do not thunder away.
Gabriel Lewit: All right. So well, if you have any questions on any of those topics, how to sign up for the Trump accounts. If you have questions on Christmas shopping or where to buy a better tree.
Steve Lewit: I was curious.
Gabriel Lewit: I probably can’t help you with that one.
Steve Lewit: I was curious where I buy a Birkin.
Gabriel Lewit: Well, you go to the Birkin store or website, I think.
Steve Lewit: The Birkin store. I bet there is a website. Buy it here, right?
Gabriel Lewit: Yep. So that’s probably where you buy things are at the store.
Steve Lewit: Okay. I’m all ears. I can’t wait to get to my computer.
Gabriel Lewit: I’m sure you can’t. Maybe you’ll get the cross body bag right there, Steve, for the men.
Steve Lewit: Absolutely.
Gabriel Lewit: I could not see you.
Steve Lewit: How about a Birkin pouch for men?
Gabriel Lewit: I don’t know. I don’t know about that.
Steve Lewit: I’m not a poucher either.
Gabriel Lewit: Okay. Yeah. Nobody likes the, what’s it called? The Fanny Pack?
Steve Lewit: Fanny Pack. Man bag.
Gabriel Lewit: Well, man bag is different than the fanny pack, but I don’t think either look great.
Steve Lewit: No.
Gabriel Lewit: No.
Steve Lewit: Not a fan.
Gabriel Lewit: So, let’s shift gears here. We’re going to talk about shiny object syndrome. We hinted at this, okay? So when you’re investing money, when you’re thinking about different options, right? What to do, where to get things from, what’s going to be a good choice for you, it can be subject to marketing. And marketing is designed to make things look very special and shiny. Okay? And so shiny object syndrome is this idea of chasing after things that are shiny because they look good on the surface, but they may not necessarily be the best decisions for you. There could be little gimmicks. There could be things there to be aware of or to watch out for. That’s the goal here, which of course can happen to anybody with Christmas shopping or holiday shopping, but it can also, of course, happen with your finances.
Steve Lewit: Yeah, absolutely. What’s the goal of marketing? The goal of marketing is to sell you something, to tweak your desire so that you say to yourself, “I really have to have this for whatever reason.” And you go out and buy it. It’s just an instant reaction to something that tweaked your emotional drive to be happier.
Gabriel Lewit: Yes, exactly. And so, one thing here is essentially a very quick one, just be wary of what I’ll call sales brochures, right? When things have fancy, really pretty looking brochures, that sometimes if you really take a look at them, they don’t say a whole lot. They got big pictures.
Steve Lewit: But they have great pictures.
Gabriel Lewit: Smiling people.
Steve Lewit: Happy, yeah.
Gabriel Lewit: A good layout. They say…
Steve Lewit: On the beach in some exotic place. I’m ready.
Gabriel Lewit: They talk about how great everything’s going to be. And then usually buried in the back is a bunch of fine print. Okay. So you want to be cautious of sales brochures. Don’t just look at the front pages and all the big pictures and all the bold headlines. You want to really get into the weeds on various investments and strategies and make sure you fully understand them. “Read the fine print.”
Steve Lewit: Look, a sales brochure does two things. It does pass along some information about the product, but it’s also built to tweak your emotional drive to buy it. So when you read a brochure, if you can filter out the data from the sell, that would be a very healthy way to approach it.
Gabriel Lewit: Yeah. Now, I remember one of the last times I was going to get a car, a new car, this one guy at one place I went to, he would not let me leave without a brochure. Take the brochure. No, flip it. Look at all the pictures. He was really excited about it.
Steve Lewit: Can you see yourself in the car?
Gabriel Lewit: This brochure, right. And maybe there’s something to that. Maybe he tracked and for every client he gave a brochure to, he upped his odds. Because it did sit there, and there’s pretty pictures in there. And I was like, “Oh, that’s a nice looking car.”
Steve Lewit: You thumb through and it’s like, “Oh, that’s nice. Oh, look at that.”
Gabriel Lewit: So yeah, that’s something to keep in mind with regards to brochures. All right. Next thing up is anytime you’re looking at something that has hypothetical projections.
Steve Lewit: Oh, this is a big one.
Gabriel Lewit: Yeah. I saw a plan. I know you and I talked about this once with a client where they came in, and it showed them with all this money left over. And we looked into it, and they were using a 10% rate of return on all the investments.
Steve Lewit: Straight, every year.
Gabriel Lewit: Straight rate of return.
Steve Lewit: Straight, which is impossible.
Gabriel Lewit: Yes. And I also saw one with a client, same exact thing. It was with a life insurance, what’s called Inforce Illustration, which is this type of projection of how a life insurance policy would perform, the cash value. And it was also using 10% each and every year, even when withdrawals were coming out. And so what’s the problem with those types of returns on a straight line basis, Steve? Even if you could say S&P 500’s average 10% per year for the last, for historically speaking, X number of years, what’s the challenge with using just a pure 10% rate of return going forward?
Steve Lewit: Well, if you’re never going to touch the money, in other words, if that money is just going to sit there and the S&P has returned, let’s say eight or 9% over a 20-year period, you could say, okay, we’re going to earn eight or 9%.
Gabriel Lewit: Well, you said eight or nine. We were talking 10.
Steve Lewit: Oh, 10. Well, it’s a high end of the S&P, but whatever you put there, first of all, is it a realistic return? 10% is top of the … It’s a very positive projection. What we like to do is I like, and Gabriel likes, our planning concentrates on the worst case scenario, not the best case scenario, because it’s the worst case scenario that can really get you into trouble.
Gabriel Lewit: And let’s say we use that 10% analogy or example here, not analogy, apologies here, for a second, right? You’ve got just over the last 25 years, what people don’t realize is the S&P’s average are a little over 8%.
Steve Lewit: That’s it.
Gabriel Lewit: Okay. Now the last 10 years, it’s averaged quite a bit higher than that. It’s all depending on the exact timeframe. So when you use just a straight line 10% return, sometimes you might get hooked onto a number, “Oh, I’m going to have this much in a certain year.” Now, if you go out 30 years from now, probably you could be close to that number potentially, assuming as you said, no withdrawals, but any point along the way, it’s unlikely to be that exact 10%. For example, the S&P that’s averaged 8% over the last 25 years went through a 10-year period where it averaged zero.
Steve Lewit: Zero, yep.
Gabriel Lewit: Okay. So that may vary. The goal here is to just be aware illustrations and projections are useful and we use them.
Steve Lewit: It’s really hard for you guys because… I had a client in and I did a projection using those worst 10 years, Gabriel, because we throw those in as a worst case scenario. You retire today and the next 10 years are the worst 10 years in history, will you plan work? And he said to me Steve, your plan seems so… And it was a compliment. It’s so accurate and you’ve got all this data. How come I’ve gone to different advisors and one of them tells me I’m going to have six million left, the other one’s saying I’m going to run out of money. Why does that happen?
And that’s a great question. Why does that happen? All based on the assumptions and how they’re putting that together. So the devil is in the details. And as an economist, I can tell you, you can do anything with numbers that you want to do.
Gabriel Lewit: Yeah. No, you definitely could.
Steve Lewit: You can make anything look anything the way, which is why we go to the baseline and say, this is the worst-case scenario. So everything comes out square, so to speak.
Gabriel Lewit: Yeah. Well, another shiny object would be what we’ll call the flavor of the month type investment.
Steve Lewit: Yes.
Gabriel Lewit: It’s funny, in the last … Producer Gabby, if you could put up gold returns. GLD is one, gold returns. What’s happening? Just rewind about a month ago and gold was all over the news. People were lining up around the blocks to get it and buy bars. You were hearing it all over the place. And it was what I would call a flavor of the month type investment, okay? Where it’s gotten really hot and then everybody wants to flock to it. But the thing is, not that gold is a terrible long-term investment. It’s not. It’s a decent long-term investment, but anything that just has this ultra hype around it can be risky. And then of course there was a drop in gold prices, and I think that rattled some people. And that’s what it takes, right? People get all hyped up about something, and then some of the actual reality can come down to earth on those things.
And that’s just something you want to be aware of, right? Try not to chase after what we’ll call flavor of the month investments. They do pop up from time to time. It’s hard to predict what the next one will be, but you’ll know it when you see it.
Steve Lewit: Well, you get ads. I get ads all the time about special this. So I can get you a 12% dividend on a Bitcoins hyper thing. It’s like, how do they think of this stuff and what is the reality of it?
Gabriel Lewit: Yeah.
Steve Lewit: But there’s stuff all over the place that you can hook into.
Gabriel Lewit: Well, yeah. I mean, gold, some, depending on the exact gold fund you’re in, could be up 60% over the last year. But historically, okay, you can see here where you got the returns approximately up here between 1980 and 2023, gold average 4.4%. 43-year period.
Steve Lewit: That’s a long time.
Gabriel Lewit: And just because it’s gone up 60% now, and we talked about that, it can have its very long drought periods, right? So be cautious with those flavor of the month investments and stick to a sound solid retirement plan would be the best advice for you here. What other shiny object can you think of here, Steve? I’ve got a couple. Wanted to see if you had one that maybe jumped out to you that you wanted to talk about.
Steve Lewit: Yeah. I think sometimes people get hooked on professional designations. I love when I see business cards for advisors and it’s like, I’m a CFP and I’m a CAU and I’m an MA and this and I’m that and that. And I say, “Well, that’s great. You’re a great student, but what do you know about financial planning?” Yeah. So credentials do not translate into ability or expertise in actually doing a retirement plan or a financial plan. A lot of that has to do with experience, with training, on planning, not just studying well and answering a lot of questions. And I remember when I got my license, my investment advisor license, I didn’t know what… It’s like I don’t know anything. I learned a lot of stuff, but I really didn’t know what I was doing.
Gabriel Lewit: This may not be the best analogy but imagine you got a credential for passing bootcamp in the army. So okay, you pass bootcamp, and you get a shiny credential, right? Certified soldier, bootcamper, right, whatever.
Steve Lewit: Yeah.
Gabriel Lewit: Well, you’ve still never, ever been in battle, right? And as anybody that’s a veteran would tell you, the actual wars and the battles are just dramatically different than the training and the classroom education you get about what battle is like.
Steve Lewit: Yeah. So if I were interviewing advisors, I would say, yeah, credentials are nice, but tell me about your experience. Who do you focus working with? Some advisors work with very young people, people that are early in their financial lives. Others like us specialize in retirement planning, but it’s like going to a generalist surgeon, but if you have a shoulder problem, you don’t want to go to a generalist, you want to go to a shoulder surgeon.
Gabriel Lewit: Yeah. And I would say it’s not that credentials are bad. Obviously, having them is a good thing.
Steve Lewit: Yeah, it’s nice. It shows a certain level of education.
Gabriel Lewit: But you should be always looking for more than just that, right? Are they also walking the walk and talking, not just talking the talk with their credentials, really digging in, as you said, would be very important there. Conversely, is also true just because someone may not have a credential doesn’t mean that they aren’t very, very well experienced. So you could look at that both ways too.
Steve Lewit: Absolutely.
Gabriel Lewit: Interestingly enough. So what’s the shiny object? Just a bunch of letters after a name or on a website or on a business card. That can’t be enough to make a decision. You want to talk with people, get a better firsthand experience there. I was going to pick up this one, which I feel like we’ve talked about at some point in one of our 250 plus shows we’ve done, but celebrity endorsements.
Steve Lewit: I love them. That celebrity really knows this product.
Gabriel Lewit: I love when I see stuff like Kia, the official sponsor of the NBA, right? It’s like no NBA players driving away from the game in his Kia typically. So Well, it’s interesting, right? So we as humans, we hear some famous celebrity endorse something on a TV commercial and all of a sudden, why does that make us want to buy it? Because we think that that person is buying it or that they really believe in it, and we trust their opinions and experiences. But many times it’s smoke and mirrors because that person’s doing it why? Because they got a paycheck to do it.
Steve Lewit: Of course. Of course.
Gabriel Lewit: Now there are some celebrities that will only endorse things that they actually believe in.
Steve Lewit: Yeah. And that is so.
Gabriel Lewit: There are some that have that moral compass. Others are say, oh, you’re going to pay me enough money. Of course, I’ll pitch the whatever it is.
Steve Lewit: I’ll pitch Arby’s. I’ll never eat there. I’ll put an Arby’s in my house. No, you won’t put an Arby’s in your house.
Gabriel Lewit: Yeah. And same with investments. I forget the guy, but there was some, it’s like Tom Selleck or something. I don’t know. There was some guy that was…
Steve Lewit: The reverse mortgage.
Gabriel Lewit: Was it reverse mortgages?
Steve Lewit: Reverse mortgages. Hi, I want to talk to you about something that’s very important.
Gabriel Lewit: Well, they found obviously a lot of success with that because people would buy them because, oh, so-and-so tells me they’re good.
Steve Lewit: It’s Tom Selleck. Oh, my God. He’s so handsome. Oh, my God. One more I want to squeeze in here that I think is important, Gabriel, is testimonials and references. What’s your take on that? Well, first of all, as advisors, we’re not allowed to give references.
Gabriel Lewit: Well, references is different than per se a testimonial. Right. But yeah, references would be having a client call another potential client. Those are not allowed in our business for privacy laws. But yeah, testimonials, sometimes you see on an advertisement, sometimes even in the shiny brochures, right? These big testimonials about how great everything is.
Steve Lewit: Yeah. Martha from Wichita said.
Gabriel Lewit: And then it does say, if it’s disclosing it below that, this is a paid endorsement.
Steve Lewit: Yes.
Gabriel Lewit: So, if someone’s paying for an endorsement, is it likely that it’s a bad endorsement? No. And again, that doesn’t mean that the company isn’t actually a great company. It very well might be. It just means try to look beyond. I guess that’s my point on these things. Try to look beyond the shiny objects, the shiny wrapper, and really do your due diligence on things when you research them. Don’t just look at the shiny thing and say, “Oh, that looks great.” Dig under the surface.
Steve Lewit: Or if you see a bad testimonial, someone says something negative about a company. Well, maybe one person had a bad experience.
Gabriel Lewit: If it’s one or two, that’s one thing. If the vast majority of them are negative.
Steve Lewit: That’s a different story.
Gabriel Lewit: You probably want to run for the hills.
Steve Lewit: Exactly.
Gabriel Lewit: Because yeah, I mean, if you have a thousand clients, are you going to have one that might be unhappy? Possibly. I mean, if you have 999 happy ones, that’s going to be, I think, the more important part when you’re running a business. Yeah.
All right folks. Well, we hope that this was a helpful walkthrough a variety of interesting topics today. As you’re doing your Christmas shopping, whether it’s finance or not, avoid the shiny wrapper syndrome. In other words, yeah, the thing looks really pretty, but it’s made with really junk parts. You don’t want to buy that toy for your kids if it’s got lead paint or something.
Steve Lewit: No, don’t do that.
Gabriel Lewit: Skip that one.
Steve Lewit: Don’t do that.
Gabriel Lewit: Even if the wrapping looks great. On the finance front, we can help you with anything here. Please give us a call anytime, 847-499-3330. We’re here to help in any way we can. We can always set up a complimentary visit and talk through all your financial planning and retirement planning goals.
Steve Lewit: Well said. Well said. So a lot of joy in the air right now.
Gabriel Lewit: It’s great time of the year. We hope you stay warm, stay well, and we will talk to you on the next show.
Steve Lewit: You stay well everybody. Enjoy.
Gabriel Lewit: Bye-bye.
Steve Lewit: Bye.
Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at 847-499-3330 or visit us on the web at sglfinancial.com and be sure to subscribe to join us on next week’s episode.
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