Voiceover Audio: Welcome to the Enjoy More 30s Family Finance podcast.

The only podcast dedicated to making life more enjoyable for young families by hitting on the financial topics that tend to weigh on us, stress us out, and distract our focus from simply enjoying life.

Joseph Okaly: Hello and welcome to the Enjoy More 30s Family Finance podcast, and our series REMIX for Rising Rates.

In 2022, there have been really significant declines across pretty much every major asset class through the end of October.

With rates rising significantly for the first time in a long time, it can be a very, very unnerving experience.

This series is going to attempt to help you with that though, going back and re-mixing a number of past episodes to help you emotionally navigate these turbulent times.

Each week, I'm going to be re-mixing a different episode bringing what I would say are timeless concepts into light into focus of the present day situation.

As always, before I begin, please share and like please leave reviews.

I'd love to reach and help as many young families out there just like you.

Today's episode is the How To Talk With Parents About Money REMIX.

Parents and money can be one of the most challenging scenarios, and we're probably closer to them than anyone else in the world.

However, many times money, that specific topic of money might as well be spelled T A B O O taboo.

And the biggest reason why this can be challenging is because it generally doesn't come up at all until a crisis hits, right?

Mom and dad can't make their own decisions now or maybe they don't know they shouldn't be making their own decisions.

Or maybe they just ran into some kind of an escalating expense or health situation, maybe that decline.

All of these things, though, can eventually hit children squarely in the face.

Obviously 100% on board for helping the people that you know raised us, took care of us, put food in our mouths, put us on track to where we are today.

But that doesn't mean the best time to start helping is when a crisis already hits.

With what has happened this year, some of us may be wondering just how close to a crisis our parents may be right?

With 2022 having rates rise more quickly than any other year, both the stock and the bond markets have been significantly hit.

For our parents, if they're invested conservatively in what we'd say is the traditional sense, they may be heavily heavily invested in bond funds.

At the end of this year, October of 2022, the bond index, which is the Bloomberg US Aggregate Bond Index, or that's the fancy title that I need to make sure to mention as well, was down over 15% on the year.

The S&P 500, or the stock market that you hear about on TV was down over just 17%.

So not too much of a difference.

Usually we see more of a disparity between stocks and bonds.

And that has just not happened this year.

So pretty much everyone invested in a traditional portfolio was hit substantially.

The difference though, is how will the bond market recover if interest rates keep rising?

Right?

We haven't heard that they're going to stop raising interest rates at this point.

So how much are our parents affected?

Can they still recover their expenses long term, if they're in these heavily bond weighted portfolios?

If they have a long term care need, will they still have assets to cover that expense now?

There can be some very legitimate questions out there that you may be wondering, maybe wanting to ask your parents.

Now if our parents are just kind of leaving their money old school, let's say in the bank, or in some CDs, that the money really isn't gaining anything, they're probably right about where they were.

But if they are invested in that conservative traditional portfolio, they might have 70% 80% or more in bond funds.

So overall, we may have questions, and they may likely be legitimate concerns, but before we run out and ask all these questions, ask our parents to open up the books to us, we might want to keep in mind that their perspectives may be very different than ours.

So how can we have that conversation in the best way?

In this original episode, I shared that my daughter Avery was four years old at the time of the recording and as any four year old, she asked a lot of questions.

And specifically questions about why this, why that.

She really hasn't stopped now that she's six, but nonetheless, why the sky is blue, maybe why can't we eat chocolate every day?

Why does green mean go and red means stop?

I thought that was a pretty good one in particular.

But you know, children have this completely different lens on the world.

And it's just so fascinating that they can look at things in a different light.

And at the same time, it also makes answering their questions sometimes somewhat difficult, because they have that different innocent perspective.

So like when I read David and Goliath to Avery, a story that you know, everybody knows David hits Goliath with a rock.

Avery asked, "Why did David hit him?" You know, this is supposed to be the crowning achievement where David triumphs over evil, and all Avery could see was that David got angry and hit somebody else with a rock.

"So aren't we not supposed to hit people, Daddy?" you know, those are the kinds of questions.

And that caught me off guard a little bit, you know, do I condone violence?

You know, if they deserve it, it's okay.

So you know, my answer was something to the effect of you shouldn't probably hit people Avery, right?

David was frustrated.

Yeah, I think they probably talked it out afterwards kind of thing.

So yeah, right, wrong or indifferent, that's where I went.

But for our parents, what we need to remember in light of this kind of a story is it's not just kids who have different perspectives, our parents came from a different generation as well.

They have a different perspective from us, they're a different generation.

They probably don't use Venmo.

They're probably not big on emojis.

You know, there are differences between us and our parents.

So the best way we found in bridging this gap is just starting a conversation.

Asking some simple questions to show that you care vs dictating them to just tell you everything.

So questions like, "Hey, Mom and Dad, you know, I'm just curious, do you use one bank?

Do you have a number of different banks that you use?" Or "hey, Mom and Dad, just curious?

Do you pay more more your bills online?

Do you send in checks?

You know, what do you feel like works the best for you?

Hey, Mom and Dad, just curious, you know, do you use your debit card mostly?

Do you have a number of credit cards you use again, you know what works best for you?

What are you most comfortable with?

If God forbid anything ever happened to you?

Do you have someplace that I should go to to look for documents?

Or some person I'm supposed to talk to?

Hey, mom, dad, you know, just curious, do you have medical coverage when at this stage when you're retired?

I get mine through work.

But do you still have coverage?

Do you know what it covers and what it doesn't?" And you know, maybe most importantly, where we are today, "Hey, Mom and Dad, you know, just curious, how did you know that you could retire?

How do you know how long your money is going to last, you know?

Do you have an advisor or somebody that does projections for you to help you with this?" And so this last one, again, is especially poignant for purposes of today.

You might add on here "if interest rates keep rising, mom and dad, did your advisor, did you ask your advisor how this might affect your portfolio?

Did you ask if there are other ways to manage risk in addition to bonds that you might be more familiar with?" Now without knowing their situation, I have absolutely no way of knowing what would be appropriate for your parents or for you or for anyone's time horizon or goals.

But there are more and more products coming out that approach risk in different ways.

You may come across terms such as buffered annuities or buffered ETFs for example.

Again, no idea if this would be appropriate for you for your parents, for any individual investor without knowing their full situation.

But it's just an example of products that manage risk in different ways without the use of bonds altogether and in the example of the buffered products.

Just like you should at least be asking your advisor if you have concerns about your own portfolio, your parents really should be doing the same.

So start a conversation, show you care.

Ask some simple questions to try to ensure that their continued well being is where it needs to be, despite what has happened so far in 2022.

Thanks for tuning in today and join us for next week's remix episode, The Stock Market Doesn't Care About Political Parties REMIX.

Midterms are now past us.

What does politics and midterms what does that mean when it comes to investments?

As always, please remember to review and share for others.

And if you need any help, don't hesitate in reaching out.

I probably have helped someone just like you.

Until next week.

Thanks for joining me today and I look forward to connecting with you again soon.

Voiceover Audio: The conversations on this show are Joe's opinions and provided for general information purposes only.

They do not constitute accounting, legal, tax or other professional advice for your specific situation.

You should always seek appropriate advice from a financial advisor, accountant, lawyer or other professional before acting upon any content or information found here first.

Joe is affiliated with New Horizons Wealth Management LLC, a branch office of TFS Securities, Inc., and TFS Advisory Services an SEC Registered Investment Advisor, Member FINRA/SIPC.