Splurge-Worthy: Yay or Nay? & Cleaning Up Your Portfolio

Our 2 Cents – Episode #140

Splurge-Worthy: Yay or Nay? & Cleaning Up Your Portfolio

On the podcast this week, Steve and Gabriel share some home items that are worth the splurge and others that are a waste of money. Then, keeping with the theme of your home, they’re discussing how everyday household tasks can serve as reminders of successful financial planning.

1. Splurge-Worthy: Yay or Nay?:
   • Big savers to big spenders, what’s your spending personality?
   • Are we giving a ‘Yay’ or a ‘Nay’ to these home item splurges?
   • Instances where the upfront splurge will actually save you more money overtime.
2. Cleaning Up Your Portfolio:
   • Taking out the investment “trash” in your portfolio.
   • Cleaning out the “closet” in your financial life.
   • Periodic maintenance of your finances and portfolio.
   • Don’t procrastinate “scrubbing the bathrooms” of your investment portfolio.

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Podcast Transcript

Announcer: You are 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: Hello and good morning, good afternoon, good evening. This is Gabriel Lewit and Steve Lewit here with you live-ish.

Steve Lewit: Ish.

Gabriel Lewit: Well, you probably aren’t listening to us live, but we’re live and we’re welcoming you to today’s show.

Steve Lewit: Yeah, I think Ish was absolutely correct after a long weekend.

Gabriel Lewit: Live-ish.

Steve Lewit: Live-ish.

Gabriel Lewit: Yes.

Steve Lewit: Yeah. It was hard for me to get back into work mode.

Gabriel Lewit: What a nice Memorial Day weekend. It was beautiful.

Steve Lewit: It was great.

Gabriel Lewit: Beautiful weather. And we hope you folks out there had a wonderful time with family, barbecues, pool days, spa days, exercise days, whatever you did.

Steve Lewit: And thank you for your service, if you served.

Gabriel Lewit: Absolutely. 100%.

Steve Lewit: Yeah, yeah. You didn’t serve, right? I should know that, right?

Gabriel Lewit: Are you really asking me?

Steve Lewit: Yeah, I should know. I wanted to serve, but I was 4Y. You know what 4Y is?

Gabriel Lewit: I do not.

Steve Lewit: I couldn’t see. My sight since a young man was very, very bad. Actually, it was during the Vietnam War, so I kind of happy I didn’t serve. But I really wanted to. Yeah, so I feel bad. But thank you everybody, if you are a server. Appreciate that.

Gabriel Lewit: Yes. Indeed. Absolutely. It was also my birthday.

Steve Lewit: Yeah, which your dad forgot.

Gabriel Lewit: Which he did. Yes.

Steve Lewit: Oh, that’s terrible. Folks, I keep promising to buy Gabriel a birthday gift… But he’s fixing my microphone. Is that better?

Gabriel Lewit: It is better.

Steve Lewit: Okay. But I can’t figure out what to buy him, but I think I have an idea for this one. So this one you’re going to get a gift.

Gabriel Lewit: I didn’t even want a gift. Maybe a happy birthday.

Steve Lewit: Well, I was in meetings all day and I-

Gabriel Lewit: Giving you a hard time.

Steve Lewit: And the office had a party for you, and I didn’t know about it because I was working with our wonderful clients.

Gabriel Lewit: Yes, indeed. Well, folks we, again, hope you had a wonderful time this last past weekend, and we’re excited to jump into today’s show with you.

Steve Lewit: We are.

Gabriel Lewit: Yeah. So to kick things off here today, we’re going to talk about home items that are worth the splurge.

Steve Lewit: Yeah, that’s such an interesting thing to think about.

Gabriel Lewit: Yeah. Of course, this is under the assumption you’re ready to buy something for your home in one of the following categories that we’re talking about here, and you’ve got the money to decide whether or not you should buy the splurge or buy the more modest, less splurgy version.

Steve Lewit: So, what motivated you, Gabriel, to pick this topic? Because I think it’s pretty interesting.

Gabriel Lewit: Well, I thought it was interesting too. That was my motivation.

Steve Lewit: Right. Okay. I mean, it’s not like a deep financial investigation like taxes.

Gabriel Lewit: Well, each one of these, we have about six or so items, we’re going to talk about an hour on each.

Steve Lewit: Okay.

Gabriel Lewit: So, I hope you’re ready.

Steve Lewit: One of our shorter segments.

Gabriel Lewit: Yes. It’s very deep dive. No, these are just little tidbits on these different items we’re going to talk about here and whether or not you may or may not want to splurge on them.

Steve Lewit: All right, let’s go.

Gabriel Lewit: All right, so first and foremost is knowing if you are or not a splurger personality wise. I know some people out there tend to be penny pinchers and others tend to be, “Give me, give me, give the best of the best.”

Steve Lewit: All right. Well, can we reframe penny pinchers to being frugal? I mean, penny pinchers sounds so negative.

Gabriel Lewit: Well, I was giving polar extremes.

Steve Lewit: Oh, polar. Okay. Well, some people are penny pinchers.

Gabriel Lewit: Well, some are, and some are just frugal, and some are spenders and some are big spenders.

Steve Lewit: Yes. Okay.

Gabriel Lewit: So first I think understanding what kind of personality you are when it comes to spending can be very important because it’s important to know yourself so you can control your impulses or lack of impulses and respond accordingly. And I’ll give some examples of that as we go along. It’s also a little bit, depending on what you’re going to buy, we’re going to get into some of the items here, if you know that you are on the more frugal side, sometimes that can backfire on you because you go on the cheaper end and then you kind of get what you pay for. So that’s the goal of today, is identifying things that maybe are worth splurging on if you’re not naturally a splurger.

Steve Lewit: That would be penny wise and pound foolish. That is correct, right?

Gabriel Lewit: I think that is the phrase.

Steve Lewit: That is the phrase, yeah. All right.

Gabriel Lewit: I’m not sure exactly what penny wise and pound foolish-

Steve Lewit: That means you save pennies, but you lose sight of the bigger picture.

Gabriel Lewit: Ah, yes.

Steve Lewit: Which is what you were alluding to is that people might be too tight for their own benefit.

Gabriel Lewit: Yes, yes, yes. Indeed. Okay, so let’s talk about item number one on the list. We’ve got LED light bulbs.

Steve Lewit: What’s interesting about that is that I just bought LED light bulbs and I’m looking at regular light bulbs and LED light bulbs, and there’s a tremendous difference in the price.

Gabriel Lewit: Huge difference, Yay. So here’s what happens. You have a house that has regular light bulbs and a bulb goes out and you just need one bulb, and you go to the store and there’s fancy LED light bulbs now, most commonly actually, and then they’re like $12 for two, and then you can go get two regular light bulbs for like $1 each. Yay.

Steve Lewit: You can get these big cases that have 20 light bulbs in there.

Gabriel Lewit: And you just need two bulbs, and your house is basically all original non-LED light bulbs. So what do you do? You buy the regular ones and then this process continues because what happens is they burn out a lot quicker than LEDs.

Steve Lewit: It’s like you’re always replacing a light bulb.

Gabriel Lewit: Right. And so the challenge here, folks, is if you do splurge on LED bulbs, typically you don’t want to have a mixed match of regular bulbs and LED bulbs because they tend to give off different lights.

Steve Lewit: Different kinds of light.

Gabriel Lewit: And you get into the whole nitty-gritty of LED light bulbs, which we’re not getting into here today. Color temperature, and all sorts of stuff on the LED bulbs.

Steve Lewit: Well, but if you have a kitchen or a bedroom, you don’t want to have one kind of light here and a different kind there.

Gabriel Lewit: Some people don’t care. I’m a little OCD on that front. That would drive me nuts. So the question is, do you splurge and replace all the bulbs in your house with LEDs?

Steve Lewit: Well, here’s the question. Is that a splurge or is that a great economic decision?

Gabriel Lewit: Initially, it would be a splurge because it is much more expensive.

Steve Lewit: It feels like a splurge, but economically it’s not. Because those light bulbs last forever.

Gabriel Lewit: Well, they typically will last many, many years. Some will last 10 years, some will last 25 years, some will last who knows how long. Depends how long you leave your lights on. But that’s the idea here. And I think it’s worth it. I actually did this to my house about two and a half years ago.

Steve Lewit: You replaced them?

Gabriel Lewit: All of them.

Steve Lewit: All of them.

Gabriel Lewit: Well, I should say there’s still a couple lingering around that are not LEDs, but the vast majority are. And I think it cost me a couple of hundred dollars in light bulbs over a few trips. And I was like, “This is crazy.”

Steve Lewit: Yeah, even in the office here, they started replacing. In my office, there must be on the ceiling like 16 lights or something like that and every week I’d have two lights burning out.

Gabriel Lewit: Yeah, and they kept coming back in.

Steve Lewit: They kept coming back in and get on the ladder and replacing the lights and saying, “Can I get in here now, Steve? Is this a good time?” And then they started replacing them with LED lights.

Gabriel Lewit: Good for them. As they should.

Steve Lewit: And I hardly see the maintenance people anymore.

Gabriel Lewit: Now we can’t even say hello.

Steve Lewit: Can’t say hello.

Gabriel Lewit: All right. So that’s item number one. Okay, let’s check in here. Worth the splurge, yay or nay?

Steve Lewit: Which?

Gabriel Lewit: LED light bulbs.

Steve Lewit: Oh yeah.

Gabriel Lewit: Let’s put the exclamation point on this. Yay or nay?

Steve Lewit: Yay. Yay.

Gabriel Lewit: Yay. Okay. Yay. I agree.

Steve Lewit: Oh, Yay. Yay.

Gabriel Lewit: Okay. How about number two? Smart programmable thermostat.

Steve Lewit: Yay.

Gabriel Lewit: Yay. All right. What is this, folks? This is a thermostat that effectively you can control with your phone, with apps. It’s smarter, you can schedule temperatures, things like that. And they do generally cost about 550% more than traditional thermostats.

Steve Lewit: Yeah, they’re not cheap.

Gabriel Lewit: But they say you can save up to 8% a year on energy costs. And over time, that might actually result in more money that you’ve saved than the amount that you paid for the thermostat.

Steve Lewit: It’s so easy to get into the habit of using an old thermostat, you chug downstairs in your PJs and fiddle on the wall and see if you can get it right. And you just do it. And you think, “Well, why should I buy anything else?”

Gabriel Lewit: Well, I am still doing that actually in my house.

Steve Lewit: Are you?

Gabriel Lewit: I do not have a smart thermostat yet. So this was maybe also, I was like, “This is meant for me I think.”

Steve Lewit: This is for you.

Gabriel Lewit: I’ve been thinking about getting one for a while. I’m like, “I don’t know if I feel like spending the money and hiring the electrician.”

Steve Lewit: Oh splurge, man.

Gabriel Lewit: Yeah, I think I should probably.

Steve Lewit: It makes your life easy. You can do everything, like you said, on the phone, you can talk to it sometimes.

Gabriel Lewit: Well, maybe that’s a good thing if you’re lonely. “Thermostat…”

Steve Lewit: “Thermostat, are you having a good day today?”

Gabriel Lewit: “What’s the weather?”

Steve Lewit: “What’s the weather?”

Gabriel Lewit: So, then folks, yeah, what would you say here, Steve?

Steve Lewit: Yay.

Gabriel Lewit: You’re Yay?

Steve Lewit: Oh, definitely Yay.

Gabriel Lewit: Well, maybe I need to take the next step on that front there. Then you get into how many different types there are.

Steve Lewit: Wait a second. Maybe you’ll get a birthday present.

Gabriel Lewit: That’s not what I want for my birthday present. A thermostat?

Steve Lewit: A thermostat.

Gabriel Lewit: Come on. That’s not what you give someone.

Steve Lewit: That’s what a loving father gives his son.

Gabriel Lewit: Take me out to lunch or dinner or something instead.

Steve Lewit: All right, we’ll do that.

Gabriel Lewit: That’ll reap memory dividends, as they say, as opposed to a thermostat will not yield.

Steve Lewit: Well, every day when you look at that, you said, “My dad gave me that.”

Gabriel Lewit: You just said you auto program it, you never look at it.

Steve Lewit: That is true. That is true.

Gabriel Lewit: Set and forget.

Steve Lewit: I can program my voice into it.

Gabriel Lewit: All right. Okay. So, Yay for that one. Okay, let’s talk about spending money on something called an energy audit.

Steve Lewit: I’m not so sure about this one.

Gabriel Lewit: It’s on the list. I didn’t come with it.

Steve Lewit: What on earth is it? I don’t even know what an… Well, I kind of know what an energy audit is, but I’ve never heard that-

Gabriel Lewit: Yeah, I hadn’t either. So that’s why I thought I’d mention it.

Steve Lewit: No one’s ever knocked on my door.

Gabriel Lewit: If you’re on the show or listening to the show here and you’ve ever had an energy audit, please email us and let us know who you use.

Steve Lewit: I’ve personally had an energy audit at my doctor’s office.

Gabriel Lewit: Yeah, this is different.

Steve Lewit: Okay, this is different.

Gabriel Lewit: This is somebody, it doesn’t say a company here, but somebody that would come to your house and check for leaky windows, doors, outlets, anywhere where energy can be sapped from your home, and then they’ll give you a recommendation plan for approximately how much money you might be losing for energy and what you could do about it, which naturally would probably be plugging those new windows, things of that nature. And the question is understanding how much of your utilities and bills, et cetera, every month that you might be wasting.

Steve Lewit: Well, I guess the question is, how much does an energy audit cost?

Gabriel Lewit: Well, it says here, Steve, with an energy audit, you get a full assessment of where your home is wasting energy for the low price of between $208 and $676.

Steve Lewit: I’m not buying that. I’m not spending the money. No. Ding, ding. No, no. Look, it’s easy. Before I replaced my windows, it’s like I’m walking in my kitchen, there was like a breeze going by from my window. I didn’t need an audit to tell me that. I could feel it.

Gabriel Lewit: Well, that’s the question. Would you splurge or not splurge on this?

Steve Lewit: No. No, I’m not buying an energy audit. Are you?

Gabriel Lewit: I don’t know. Probably not. I’ve thought about it. Actually, I had an HVAC person over at my house for, it was typical checkup two years ago, years ago, whatever it was. And he was trying to get me to do this whole vent sealing thing inside your vents where they seal all the ducts so no air leaks out and it makes it all more efficient. And it was going to be like $2,000.

Steve Lewit: Oh yeah?

Gabriel Lewit: And I was like, “Well, I don’t know.”

Steve Lewit: You could get in there and just paste it up with chewing gum.

Gabriel Lewit:  Go for it. Come on over.

Steve Lewit: Folks, we were in Seattle last week and did you know they have… I’m sorry to go off on a topic here, Gabriel, but I think it’s so ridiculously interesting. They have a place where they have walls filled with chewing gum that people paste on the walls.

Gabriel Lewit: Yeah. It’s one of apparently the top attractions in Seattle, which is really, really gross.

Steve Lewit: I thought it was disgusting.

Gabriel Lewit: Absolutely disgusting.

Steve Lewit: And people love it.

Gabriel Lewit: Called the Gum Wall.

Steve Lewit: The Gum Wall, indeed.

Gabriel Lewit: Yeah.

Steve Lewit: But what people don’t know, we were told in secret, is that every two years they wash all the gum off and you got to start all over again. So it’s not a permanent place you can put your gum.

Gabriel Lewit: It’s absolutely filthy.

Steve Lewit: It’s disgusting.

Gabriel Lewit: Do not go.

Steve Lewit: Do not go.

Gabriel Lewit: Not at all interesting as some of the travel websites say.

Steve Lewit: Yeah, I don’t know what-

Gabriel Lewit: It happened to be right by Pike Place Market, which is why people go visit it, because otherwise it’s just a little ridiculous.

Steve Lewit: It’s ridiculous.

Gabriel Lewit: We digress.

Steve Lewit: I digress. Sorry, sorry.

Gabriel Lewit: Okay. How about mattress?

Steve Lewit: Very important. Yes.

Gabriel Lewit: Splurge or not splurge, Steve?

Steve Lewit: Splurge.

Gabriel Lewit: I did, what was it, five years ago, I splurged and bought the Tempur-Pedic.

Steve Lewit: Mattresses are expensive, man.

Gabriel Lewit: But it’s like every day when I climb into bed, it’s like going to a hotel, just like, “Ah.”

Steve Lewit: It feels good, right?

Gabriel Lewit: It’s a great mattress.

Steve Lewit: Yeah, it’s great.

Gabriel Lewit: It is.

Steve Lewit: Sleep is so important. But they are really expensive. And lots of times, Gabriel, they’re just unaffordable for some people. You’re talking about thousands of dollars.

Gabriel Lewit: Well, and again, the premise here is that you could afford it, but you’re questioning whether or not you should or shouldn’t for just being smart with money purposes. Should you or should you not splurge on the mattress? I would vote absolutely Yay if you feel like you could benefit from a better mattress, better sleep, improves everything.

Steve Lewit: If you’re getting up in the morning, your back hurts, you don’t sleep at night, you’re tossing and turning, you’re sweating. I sound like a commercial. “Buy a Lewit mattress. Dial your number.”

Gabriel Lewit: This was a few years back; I have to go back and see if it’s been changed at all. So there was this one intersection I used to go shopping by and, what’s a big mattress store around here? Mattress Firm, I think?

Steve Lewit: Yeah, Mattress Firm.

Gabriel Lewit: Well, anyways, there used to be three different mattress store brands all in this corner intersection, no, four of them, sorry, and somehow Mattress Firm had bought all these other companies, and so all the stores changed their names to Mattress Firm on the outside. So there was literally four Mattress Firm stores, literally you could see all four of them from the center of the intersection in different corners.

Steve Lewit: That is weird. That’s pretty weird.

Gabriel Lewit: And it was just like, “What the world?” And they kept them all open for the longest time.

Steve Lewit: Wow.

Gabriel Lewit: I was like, “This is ridiculous.”

Steve Lewit: I can’t imagine.

Gabriel Lewit: “Hmm, which one do I go to?”

Steve Lewit: They were splurging on stores.

Gabriel Lewit: Yes, they were. I’m assuming they consolidated that down to probably one.

Steve Lewit: I’m sure.

Gabriel Lewit: I’m guessing. Anyhoo. Okay, so Yay to that. Let’s see if we have one other item on the… I’m going to throw you a couple of curve balls here, Steve.

Steve Lewit: Okay.

Gabriel Lewit: Should you splurge, Yay or nay, on accent furniture?

Steve Lewit: Yay.

Gabriel Lewit: Yay?

Steve Lewit: Yay.

Gabriel Lewit: Oh, the article says Nay.

Steve Lewit: Oh.

Gabriel Lewit: But there’s no right or wrong answers to this.

Steve Lewit: Your home is your kingdom. I mean, accent furniture is what makes your place look sharp.

Gabriel Lewit: Well, according to Kristen McGrath, a savings expert with Retail Me Not-

Steve Lewit: This is a savings expert?

Gabriel Lewit: From the article.

Steve Lewit: Come on.

Gabriel Lewit: It says, “That coffee table you love three years ago may be the bane of your existence today. While it’s typically recommended to invest in quality pieces for larger items like couches, dressers or coffee tables, accent furniture is where you can find fun, affordable pieces for less to liven up your home.”

Steve Lewit: Yeah. All right. She’s tight. She’s a miser. Oh, I love accent pieces. Katie, aren’t the accent pieces the most important?

Producer Katie: Well, what if your style changes?

Gabriel Lewit: Katie’s saying, if your style changes.

Steve Lewit: How many people change their style?

Gabriel Lewit: What this lady is saying. Well, fashion, style, home, they all-

Steve Lewit: You’re not going to go from traditional to zen modern.

Gabriel Lewit: I don’t know, man.

Steve Lewit: Come on.

Gabriel Lewit: Okay. How about window decorations and curtains?

Steve Lewit: Nay. Nice open windows. Let the light in. You don’t need all that junk in front of your windows.

Gabriel Lewit: How about area rugs?

Steve Lewit: Yay. Very important.

Gabriel Lewit: This says Nay because your pets or kids or somebody’s going to pee on it or ruin it or something.

Steve Lewit: What a negative way to look at life.

Gabriel Lewit: It also says bedsheets, nay. I would argue Yay on that one.

Steve Lewit: Yay. Oh.

Gabriel Lewit: You got to have good sheets.

Steve Lewit: Definitely.

Gabriel Lewit: Got to have good sheets.

Steve Lewit: 1000.

Gabriel Lewit: I think anything to do with sleep splurging is a Yay.

Steve Lewit: Yeah, what is it? 1000 threads?

Gabriel Lewit: Yeah, thread count. Okay, last one. Glassware.

Steve Lewit: Glassware. Yay.

Gabriel Lewit: This one says Nay.

Steve Lewit: Oh man.

Gabriel Lewit: You’re failing. Maybe you’re winning.

Steve Lewit: Do you know what it’s like to hold a glass in your hand that doesn’t feel good or fit well?

Gabriel Lewit: Well, remember when I said you had to know your natural personality type? You’re not a thrifter.

Steve Lewit: No, I’m not.

Gabriel Lewit: So, I think, folks, that’s tilting his answers here for you.

Steve Lewit: I’m a Yay guy.

Gabriel Lewit: All right, well hopefully you found that interesting. I don’t think you’ll have a question specifically on those for us, but if you do (847) 499-3331. Let’s turn to a little bit more… What’s the word I’m looking for here? Technical topic.

Steve Lewit: I thought this was a lead into a new business, like home decorating or something like that.

Gabriel Lewit: SGL’s Goods.

Steve Lewit: SGL Home Decorating.

Gabriel Lewit: Home Goods.

Steve Lewit: And a mattress company.

Gabriel Lewit: Sure.

Steve Lewit: No good.

Gabriel Lewit: “Coming to a corner store near you. Four of them.”

Steve Lewit: Yeah, I’ll stick with financial planning.

Gabriel Lewit: All right, so we’re going to talk next about how to clean up your portfolio. And after you’re done decorating your house with new home goods-

Steve Lewit: After you’ve spent all your money and don’t have a portfolio.

Gabriel Lewit: Now you have to clean up your portfolio. So these are some specific things that you can do and we’re going to use some analogies for you.

Steve Lewit: And this is pretty serious though.

Gabriel Lewit: Well, yeah, of course it is here. And so we’re going to talk about things that you typically do around the house and a parallel to your investment portfolio that I think just makes talking about these things a little bit more interesting. So let’s start with number one, everyone’s favorite chore to do in the house. Okay, which is what, Steve?

Steve Lewit: Clean out the closets.

Gabriel Lewit: No.

Steve Lewit: No? Wash the floor?

Gabriel Lewit: No.

Steve Lewit: I should have read the article.

Gabriel Lewit: By the way folks…

Steve Lewit: Clean out the garage?

Gabriel Lewit: I always assume Steve never prepares. He never fails me.

Steve Lewit: Well, I let you take the lead and then I just roll with it because you’re really good at it. Clean out the… What’s the-

Gabriel Lewit: Taking out the trash.

Steve Lewit: Taking out the trash. Okay.

Gabriel Lewit: Yes. This is my least favorite thing to do that I’m in charge of.

Steve Lewit: Oh, okay.

Gabriel Lewit: But it’s obviously very important. If you didn’t take out the trash, what would happen?

Steve Lewit: It would be smelly. Awful.

Gabriel Lewit: It would be very smelly and dirty in your house, which would make your house not very good.

Steve Lewit: Smelly and dirty.

Gabriel Lewit: All right. So what does this have to do with your investments? Well, every now and then it’s important to take out the investment trash.

Steve Lewit: Yeah, I love this analogy by the way.

Gabriel Lewit: Meaning you go through your portfolio and you’re looking for things that are no longer good, they’re expired, they’re dirty, they’re just frankly trash that you need to haul out to the container and set on your curve for the big old garbage truck.

Steve Lewit: Yeah, or you’re hoarding it. A lot of people hoard stuff like trash, trashy stuff and it’s just sitting there because you just can’t let go of it.

Gabriel Lewit: Yeah, so you don’t want to hold on to things if you’re cleaning things out, you’re taking out the trash, you’re organizing, you’re trying to prune, there are things that you can prune inside of your portfolio. And how do you do that, Dad? You have to first know what’s in your portfolio, which I’m always amazed by people that really have no clue what they’re even in or how it works.

Steve Lewit: Yes.

Gabriel Lewit: So, let’s start there. You’ve got to identify, it’s kind like if you have a closet full of stuff, you wouldn’t do this with your trash, but if you have a closet full of stuff, you’d spread it all out over the floor and you’d see what you want to keep or what you don’t want to keep.

Steve Lewit: “There’s a shirt I haven’t worn in four years, maybe I should give it away.”

Gabriel Lewit: Can I tell you what is the worst, as a side note?

Steve Lewit: Go ahead.

Gabriel Lewit: If you are taking out a trash bag and it somehow breaks open and it just gets all over your floor, your driveway, that is the worst.

Steve Lewit: That’s the worst.

Gabriel Lewit: Yeah, pretty much. Okay, so yeah, how do you do this, Pops, with your investment portfolio? How do you identify the trash?

Steve Lewit: So, everything in your portfolio should be there for a reason. So if you own a mutual fund or you own a stock, you go one by one, you say, “Why do I own this? What is it here for? What’s the purpose of it?” And this is especially important if you inherit stock or mutual funds because a lot of people that inherit stock, I have clients that inherited AT&T stock or inherited… I can’t think of another name off the top. And they won’t sell it even though it’s ruining their portfolio in the asset classifications because they’re emotionally attached to it.

So, if you go through each piece, just like you said, if you have clothing, you go through each piece and say, “When’s the last time I wore this?” So, I have a rule in my closet for my clothing is that if I haven’t worn it in a year, it’s leaving because I’ll never wear that thing and it’s just going to sit there. But we hold onto that stuff. And in portfolio management, that’s disaster just to hold onto stuff like that.

Gabriel Lewit: Well yeah, that’s one of I think the most important parts is there is no maybe shortcut for this. You should go one by one in your portfolio. Now, if you’re having somebody advise you on this, then same thing. You should go through that and understand what it was that was purchased, why it was purchased, and what goals it’s aiming to accomplish inside your investment portfolio.

Steve Lewit: Well, if you’re investing in a portfolio, the bigger question I think Gabriel is, “What is your investment philosophy?” Do you have an investment philosophy or is your investment philosophy, “Joe, my dentist told me to buy this so I’m going to go buy it. Or I get a newsletter or I follow the guy that yells at you all the time on the TV.” That’s not a philosophy. That’s just like chasing dreams.

Gabriel Lewit: Yeah. Yeah. So your follow-up to that is saying, “Hey, what should I be invested in based on my philosophy of investing?”

Steve Lewit: Yes.

Gabriel Lewit: And if you don’t have a philosophy of investing, you need to find one.

Steve Lewit: Or you need to find somebody who does, because you shouldn’t be investing.

Gabriel Lewit: Yeah, you don’t want to just chuck your money in the market and just have it do whatever. It should be very purposefully driven. Okay, so how about our next thing here is periodic maintenance of items around the house.

Steve Lewit: Yes.

Gabriel Lewit: Okay, so whether it’s your fridge that you get the filters cleaned, maybe you actually change the air filters in your furnace, you get your air conditioner unit checked once a year. Somebody comes and checks your sump pump from time to time. You want to check on these things to make sure that they’re in good working order. What are some of the things that you should check about your investment accounts periodically as well to make sure that they’re in overall good working order?

Steve Lewit: All right, so before we were talking about specific holdings. “I have a stock, I have a mutual fund, what I have.” Now we’re talking about something more global. “Is my portfolio working efficiently? Is my portfolio well-balanced? Is my portfolio leaning to a certain asset class that may or may not perform in the future?” We see a lot of portfolios, Gabriel, where they’re basically US large stock portfolios and that’ll work well when the US does well, but there are yeah when international does much better than the US, so it’s looking at it more globally and saying, “It’s working, but is it working efficiently?”

Gabriel Lewit: Yeah, so it may be a little bit of a different take than things that you know are, quote-unquote, “trash” that you want to get rid of or you’ve been sitting on for a while that you’ve got to take out. This is a little bit more strategic, focusing on efficiency, optimization of your portfolio, looking at different asset classes you might own and saying, “Can I get something better for this asset class?” It maybe isn’t junk but there’s something better out there, better part, newer part that makes it run more efficiently. It’s like when you switch from ComEd to solar, you can get lower wattage hours cost or whatever. I don’t know electricity that well.

Steve Lewit: No, you don’t.

Gabriel Lewit: Kilowatt hours.

Steve Lewit: I don’t either.

Gabriel Lewit: Kilowatt something, right?

Steve Lewit: That doesn’t sound right, but I don’t know either.

Gabriel Lewit: Anyways, I did this, it was a solar farm. I didn’t actually do solar panels, but I signed up for the solar farm thing and the whole point was that my energy cost would stay level for the next couple of years instead of going up if ComEd raised it, and it saved me money on solar. So the question is, can I accomplish the same thing, the same amount of energy usage, for example, in my home at a cheaper price? Well, similar question with your portfolio. Can you generate better returns at lower risk? What are the different ways that you can make your portfolio more efficient?

Steve Lewit: Yeah, and it’s kind of like looking at what you have as looking at the past. ‘I bought this, I have it. Why do I have it?” When you take a checkup like this, you’re kind of looking to the future and saying, “Where could problems arise?” So if you’ve got a sump pump, you want to have a check though in the middle of a major storm.

Gabriel Lewit: I do have a sump pump.

Steve Lewit: Okay. Is that something I should stop and talk about? Your sump pump.

Gabriel Lewit: Yes, if you have a sump pump. Absolutely.

Steve Lewit: That was a rhetorical, “If you have a sump pump.” Meaning-

Gabriel Lewit: See, now folks I get to play the Steve role.

Steve Lewit: Is that what it feels like?

Gabriel Lewit: It is, yes.

Steve Lewit: Oh, I like it. So your sum pump, Gabriel-

Gabriel Lewit: Oh, thank you.

Steve Lewit: You want to have it checked annually, like your furnace and your air conditioning.

Gabriel Lewit: It’s a great pump. Actually, it’s really old. I need to get a new one, I think.

Steve Lewit: Let’s move on.

Gabriel Lewit: What were you saying about sump pumps?

Steve Lewit: Anything, you’re looking for problems in the future, which is why you check it up.

Gabriel Lewit: You’re right.

Steve Lewit: That’s it.

Gabriel Lewit: You don’t want to have a bad sump pump.

Steve Lewit: Or furnace or air conditioning.

Gabriel Lewit: Well, the sump pump in particular will flood your whole basement, which is no good.

Steve Lewit: And that is misery.

Gabriel Lewit: It is no good. Alrighty, how about, we’re going to do the last house analogy here, cleaning bathrooms?

Steve Lewit: I’m sorry.

Gabriel Lewit: What?

Steve Lewit: I just think that’s funny.

Gabriel Lewit: Well, nobody wants to clean bathrooms is the point.

Steve Lewit: Well, here, I love cleaning my bathroom.

Gabriel Lewit: Of course you do.

Steve Lewit: When I clean.

Gabriel Lewit: Yeah.

Steve Lewit: Which isn’t often.

Gabriel Lewit: Soap scum, mildew.

Steve Lewit: I hire people to clean.

Gabriel Lewit: Nobody really wants to do the bathroom cleaning-

Steve Lewit: Because I’m a splurger.

Gabriel Lewit: I’ll tell you what, I like to vacuum. I do not like to clean bathrooms.

Steve Lewit: Yeah, I’m a splurger.

Gabriel Lewit: Good for you.

Steve Lewit: On cleaning.

Gabriel Lewit: So, the question is, what are the parts of your investments that you never really want to get to? And I’ll give an example. I think it’s something along the lines of you do realize it’s something you need to make a change. You’ve been unhappy with performance, but you’ve just been procrastinating. It’s like, in other words, you’ve already identified the problem. Your bathroom’s dirty, you got to clean it, you’ve just been procrastinating. Folks, sometimes it’s just time to do it.

Steve Lewit: Yeah, I think procrastination is a big deal. Life is busy, life is busy. And it’s like you’re looking at the bathroom and I go out and take a hike in the park or something like that. So I take the hike in the park and the bathroom doesn’t get cleaned. The same way as the portfolio. It’s hard work, I don’t know if it’s hard work, but it’s work to go through a portfolio and clean it up. A lot of people just don’t want to do that. Especially if you’re doing well. When the market is going up, very few people that manage their own portfolios really look at it.

Gabriel Lewit: Well, yeah, it is especially interesting, go back four or five years when the S&P was on a upwards trend, people were making 15%, 20%. Even if the S&P was up 17 or 25, they’re saying, “Hey, well I’m up.”

Steve Lewit: Yeah, everything is good.

Gabriel Lewit: “As long as they’re up, what’s an extra percentage point or two?”

Steve Lewit: Well, they don’t even think of that. They don’t even look, they say, “I’m doing well.”

Gabriel Lewit: But when you’re down, it’s a little different. Or when the market is as choppy and flat like it’s been really the last six, seven months, then you tend to pay more attention to these things. You get that impetus to start to put some of this into motion.

Steve Lewit: Yeah. And the thing about cleaning bathrooms is that if you clean them regularly, it’s less work than if you wait God knows how long before you clean them. It’s the same with your portfolio. If you clean it regularly, it’s a better portfolio. It’ll serve you better.

Gabriel Lewit: Definitely. Definitely. Well that was what we wanted to talk to you about today. Bathrooms, trash, cleaning out the fridge and things you should splurge on. What?

Steve Lewit: No, this was a very unusual show because it was all about home items.

Gabriel Lewit: Well, I did intend to group them together for that purpose.

Steve Lewit: You crafted it in a kind of interesting way. I actually enjoyed talking about these things.

Gabriel Lewit: Got to keep crafting. Well, if you have questions of course on your investment portfolio, how to clean that up a little bit, tune up your holdings, getting out the trash, anything we can help you with, which, as you said Steve, what are some of the things you like to splurge on? Well, someone to clean your bathroom for you. Well, maybe you should splurge if you haven’t already on having an advisor to help guide you through some of these more challenging areas. That’s part of what we do.

Steve Lewit: I thought for sure this was a lead up to saying, “Let us help you clean your financial house.”

Gabriel Lewit: No, I thought you were going to say we would clean someone’s bathrooms for them. Which, if you’re available for that-

Steve Lewit: Gabriel and Steve Cleaning Service.

Gabriel Lewit: You’re in a starting a company mode today, huh?

Steve Lewit: Right next to our mattress company.

Gabriel Lewit: There you go. So yeah, let us help you if we can. Call us here (847) 499-3330 or go to sglfinancial.com or email us at info@sglfinancial.com and we are here to help in any way that we can.

Steve Lewit: We are.

Gabriel Lewit: So, in the interim here, we hope you have a wonderful day and a wonderful rest of your week until our next show.

Steve Lewit: Stay well, everybody.

Gabriel Lewit: All right. Talk to you soon.

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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