Open communication with your parents about money may be more important than you think, especially now.

• So how much are our parents affected? Can they still recover their expenses long term, if they're in these heavily bond weighted portfolios? (03:11)
• They have a different perspective from us, they're a different generation. (05:37)
• 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. (07:20)

Quote for the episode: "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." (07:44)

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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.

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.

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.