Episode 36 - Why Uncertainty Doesn't Have to Derail Your Financial Plan
Uncertainty is a constant, but how we react to it makes all the difference. In this episode of Beyond Budgets®, we dive into today’s shifting economic and political landscape—including tariffs, job losses, and market trends—and what they could mean for your finances. More importantly, we’ll explore timeless financial principles that can help you stay steady, no matter what’s happening in the world.
Deb Meyer breaks down how to make smart financial decisions in unpredictable times, how emotions impact investing, and why diversification is key. Whether you’re navigating career change or market swings, this episode will give you the perspective you need to move forward with confidence.
What You’ll Learn:
✅ Why we naturally avoid risk—and how to reframe uncertainty as opportunity
✅ The potential impact of new economic policies on US jobs, inflation, and markets
✅ How to build a resilient investment strategy that withstands market shifts
✅ The role of diversification and why it’s like building the perfect Easter basket
✅ Practical ways to focus on what’s within your control in uncertain times
Episode Highlights
(02:44) Let’s Talk Tariffs
(12:44) Navigating Job Loss With Optimism
(17:05) Importance of Investment Policy Statements
(25:06) Navigating Financial Considerations During Retirement
Resources
📚 Clashing Over Commerce by Douglas Irwin
📖 You’re Probably Expecting This (Article by Jennifer Ternay)
🎧 Related Episode 24: Building Wealth Through Strategic Investments
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Connect with Deb Meyer
Website: WorthyNest.com/podcast
Full transcript
Deb Meyer (00:01.418)
If you could receive $50 or flip a coin whereby you get $100 if you have heads or nothing if you have tails, which one would you choose? It's not a trick question. A lot of people would actually choose the $50. It's the sure thing, right? This is what's called risk aversion where the pain from that potential loss is greater than the reward of a potential gain.
And it tends to happen with all of us. You know, we're emotional beings. The purpose of this episode is to talk about embracing uncertainty because I know for a lot of people right now, there's a lot of uncertainty. And now that's true in any time in history.
We're going to spend the first half talking about some of the current events happening in our world today, in the US especially. And then the second half of this episode talking about what that means from a timeless principle perspective … thinking about anything that's going to help you deal with uncertainty, especially as it relates to investing or the broader economy. But I do think it's an important topic to cover.
I hope that I'm being timely in issuing this episode but also creating an episode that you could listen to two or three years or five years from now and still get a lot of value from even though the circumstances of that uncertainty have probably changed. Okay so let's talk first about some of the current policies. I'm not here to issue any kind of political judgments, but it is well known now that we are under a very new administration in the U.S. politically.
We have Trump as our president and then Republican for the entire government really. So there are some very big policy changes happening. And I know for some people, they're very excited about that and other people very, very scared. Regardless of where you fall on that spectrum, I do think you'll find value in listening to this episode and just trying to get some perspective around what some of these potential changes could mean both now and down the road.
Deb Meyer (02:26.262)
I’ll then give you a good framework of really embracing that uncertainty, knowing that no one has a crystal ball. We don't know what the future holds, but we can at least try to plan for some of the things within our control. Okay, so without further ado, let's talk about tariffs. I just listened to a great webinar with Professor Douglas Irwin. He's the author of the book Clashing Over Commerce, which I'll link to in the show notes.
He had an interesting perspective on tariffs. Generally in the US tariffs have been pretty low, but based on the new administration, there are some pretty big changes coming down the pipeline. One that's already been implemented is China. We have a 10 % tariff on all Chinese goods coming here into the US.
Trump also said that Canada and Mexico are going to have 25 % tariffs. That was scheduled to begin at the beginning of February. I'm recording this on Tuesday, February 25th, and this episode won't get released until the first Thursday of March (March 6th). So there could be some changes within that, but for now, there's a 30-day hold and there are no actual tariffs with Mexico or Canada.
Let's talk about tariffs as a tool for a minute and what tariffs are, right? If you have a product or in this case if you're a domestic company and you rely on outsourced components to manufacture that product, you're hopefully going to have a nice freestanding trade agreement or very minimal tariffs when you bring those component parts back to the US for distribution.
But in the case of tariffs like Canada or Mexico, which have been long-standing trade partners, and where we've had a lot of commerce flowing freely going back as far as 1965, it is a big change to impose these kinds of large tariffs on those countries. And it's scaring a lot of people.
Deb Meyer (04:50.038)
There’s some good behind the policy changes. Obviously, it can be a revenue-raising device, which is helpful when taxes are lowered because we had the Tax Cuts and Jobs Act back in 2017 when Trump was first in power. And we're likely going to have an extension of those same tax cuts, which are supposed to sunset this year. So that's helpful to have a revenue raiser here in the U.S.
But it also can be used as a tool to restrict imports or it can be reciprocity where we're, you know, saying, okay, to another country that's imposing tariffs on us. Well, we're going to start imposing tariffs on you. So, and I'll go into reciprocity a little bit deeper in a moment, but those are the three kinds of main goals here. And if you think about the three Rs, we got raising revenue, restricting imports and reciprocity.
When we think about this in the context of specific industries, these tariffs are largely going to impact the auto industry. There could be some pretty significant supply chain disruptions, especially with Mexico and Canada being big trading partners of the US. Canada and US have a very big relationship from an auto manufacturing standpoint. It's going to be a big disruption on that supply chain.
And there'll be a lot of extra cost if we have some parts in the US, some parts in Canada, and we're going back and forth between the borders to try to get this auto across the finish line. So instead, they're going to have to innovate and think through how we're going to get all of the components into one country and not have to go back and forth and pay all these extra tariffs.
The Peterson Institute for National Economics said if these tariffs with Mexico and Canada, which are very restrictive and very bold, go into effect, that could shave off about 3 % of our GDP or Gross Domestic Product. It could also raise the Consumer Price Index about a half a percent, which on a macro economic scale is a pretty big deal.
Deb Meyer (07:07.188)
Thinking through these things, I don't have perfect solutions. I'm just trying to portray what might happen as we start to see some of these policies take effect. I don't know if they will in fact take effect next week as Trump had previously indicated, or if perhaps they might postpone them or change the percentage. I'm not sure.
Now, if we talk about another area of sensitivity, we have mass deportations and obviously Trump has taken a very aggressive stance on immigration. He's shifting a lot of immigrants out of the US, telling them they need to go back to the original countries they came from.
If you think about it from a broader economic standpoint, there were a lot of migrants in minimal-paying positions … working out on fields, making sure our food supply is good. Those roles potentially are going to be evacuated and need to be filled with other people who are willing to work for minimum wage or close to it. That's one possibility.
The other possibility is that we could look at this as a time of automation and innovation where perhaps machines are replacing some of the human positions. Any of these things could be good developments depending on how you perceive them.
I think about my former neighborhood, Babcock Ranch in Florida. I saw on Facebook the other day that they have the first robot built house. It was actually constructed by a robot in a matter of a day! That's just mind-blowing to me, but it's also very exciting. So, you know, you could look at it either way and be like, gosh, this is really hard and sad. And obviously it is hard and sad for those families that are getting deported, but it's also potentially an opportunity for innovation, for investing in technology and automation that could make America even greater. So you have decide which perspective you're going to take with this. Now, if automation doesn't take center stage and we do see, okay, these positions that were previously held by immigrants … if those are positions that are largely needing to be replaced with actual workers, real people, that cost of labor could crop up and that could lead to more inflation.
I'm not saying it will one way or the other. That's just what I'm concerned about as I think about some of these, not only from a foundational level of immigration policy, but some of the ripple effects it will have on the economy.
So for this reason, I wouldn't expect to see additional rate cuts by the Fed at least for the next six months, likely the rest of the year. Inflation could be a potential problem in the future, not only from these deportations, but also from the tariffs.
All right, and let's talk while we're on the subject of hard things, job loss.
Anytime change happens, there's an uncomfortable period of time, right? It's, it's scary. There's that fear of the unknown, the fear of failure of making the wrong choice, right? But in the case of job loss, you know, we do see, Elon Musk, he's in charge now of the Department of Government Efficiency and they have slashed a lot of government jobs not only of government employees, but even the contract workers that are outside in the private sector working with government. The interesting part about this, when they first were expecting to make some of these cuts, they had 300,000 jobs that were going to be impacted. Now that estimate is closer to 1 million. That's a big number. And, you know, it's not strictly limited to government or government contractors.
Deb Meyer (11:55.968)
It's even happening in some of the private sector roles that could be impacted by some of these other bigger changes that are happening with tariffs and stuff like that. You know, this is a volatile time for a lot of people. And the other hard part, when we look at the actual economic data, we're not seeing it right away because the labor department only tracks the private sector roles.
The US government has a separate program called Unemployment Compensation for Federal Employees Program. And it always has at least a one-week lag. And people that are laid off, they might also be waiting a week or two before they actually file for these unemployment claims. So those are some numbers that we don't have access to today to see what the real impacts of some of these job losses are. But we might in the coming weeks or months.
One thing I want to assure you, if you have been influenced by this job loss, my heart goes out to you. I know when my husband lost his job, gosh, it was in 2016, I believe, it was really hard on us as a family. It was hard on him as an employee and provider of our household.
It was very hard on us emotionally as a family trying to figure out what that next step looked like. There's a good article my friend Jen Ternay wrote recently about layoffs. The title of the article is You're Probably Expecting This. And that's what one of her bosses told her right before they let her go. I'll link to that in the show notes so you can read that article if you are impacted by any of these job losses, whether it's government or private sector, that are happening right now. It does offer some really valuable nuggets of wisdom..
Deb Meyer (14:16.04)
And again, with any of these policies, it really does come down to perspective because yes, you could look at that and be very frightful and fearful. And there are obviously legitimate concerns, but at the opposite side, you could take more of an optimistic standpoint and say, okay, maybe this is an opportunity for innovation. Maybe this is an opportunity if you do lose your job that you could reinvent yourself in a different career.
So there's always two sides to the coin and my encouragement to you would be, regardless of how you feel about these particular policies, to choose the more optimistic approach. Knowing that yes, there's going to be some hardship with any major changes, but we're also pretty resilient as a nation and for any followers of Christ, we're always resilient as followers of Christ, too.
Okay, let's take a quick break. I really appreciate everyone who listens to Beyond Budgets. It does make a big impact and difference. I love taping these episodes. So if you do enjoy it in either format, solo or interview, I encourage you to leave a rating or review. Even if it's been a long time since you've left one, you can leave another one. It does help in having other people find the podcast and hopefully sharing some good nuggets of wisdom.
Okay. Well, let's go on to a part two here. As I said before, there's always going to be some level of uncertainty. We can't perfectly know the future. We don't have a crystal ball. And if you think about it in terms of investing, emotions are going to be our enemy. Rationality is going to be the true winner.
When I think about some of the timeless investing principles, there are some overarching ideas where you can continue to find peace. Number one: the market already prices some uncertainty into it. People last week were already reacting on some of the news of these new policy changes. You could see that reflected in the stock market prices. Now, that's not to say there couldn't be further adjustments, especially if things start turning in a more negative way, but it gives us assurance that we do have a very vibrant market that can quickly adapt to changes.
So when you're thinking about your investment plan, I want you to focus on the long-term, not the short-term, but the long-term. And if you want to equate this just to running in a race, sprints are very short. They're quick, they're in and out.
You have to be extremely fast in that very short sprint, but on a marathon, you have to pace yourself. And we're in a long-term investment plan where you have to pace yourself. Reacting on short-term feelings or concerns about the underlying economy usually isn't a healthy way to think about it. Think about it more on that long-term time horizon.
Deb Meyer (18:37.726)
And also think about how much of your investment portfolio you actually need in the next three years. So, you know, a person that's already retired or soon to be retired, they're potentially going to need to access their assets far sooner than someone who's in their forties, like me. Okay. And our time horizons are completely different. Our asset mixes should be completely different for that reason. there should be some level of comfort around what your long-term asset mix is, and you really shouldn't stray too far from that. So with any of my clients I'm working with on an individual basis, we always have an investment policy statement that guides the investing decisions. And that states, okay, if one particular asset class gets more than 5 % up or down versus our target, we are trying to rebalance it. We're trying to get back to that target.
That should happen no matter what kind of economic conditions we're in. If we're facing a more challenging economic environment or if we're in a really great bull market, right? So it really shouldn't matter how the stock market happens to be doing at that particular point in time. You should always have that long-term asset mix and figure out as you get closer to the retirement age,
okay, should we be modifying that asset mix to be more and more conservative? And usually the answer is yes. So a client that's in her 70s, she's gonna have a much more conservative investment mix than someone who is in their 40s. Even though they're both parents trying to invest in alignment with their values, they're going to have very different asset mixes. Now, that person who's...
either near or in retirement, they might have to make some modifications if they're genuinely concerned about the next 12 to 24 months. If they have more inequities than they'd like, maybe shifting into cash or some kind of fixed income investment is a smart decision. But for most of us who don't need access to our investment assets for many, many years, we really shouldn't have to be changing all that much outside of just normal rebalancing because
Deb Meyer (20:59.232)
equities happen to do really well over the last couple of years. So that's really the only main difference in terms of getting to that long-term asset mix and rebalancing to it and deciding, okay, do I want to modify that long-term asset mix? Probably shouldn't be happening if you're younger, but if you're closer to retirement age or already in retirement, you may want to consider revising that target.
not on emotion just based on rationality because of your age and needs. Now, if we look specifically at equities, I do want to reiterate that what performed well in the past isn't necessarily going to perform well in the future. So the last couple of years, US large cap equities have been wonderful. Okay. They've done great as an asset class, especially the “magnificent seven stocks.”
Now, those particular companies might not do well going forward. And that's why when we think about diversification, I'll go into that concept a little bit more, it's important to have these other asset classes in an investment portfolio. You don't want to have each and every position be the same kind of position. So if we think about tariffs for a minute,
The auto industry in particular might be impacted pretty heavily if these tariffs with Canada and Mexico go through. Now, does that mean we completely avoid auto companies? No, it just means we don't want to have, you know, 50 % of our investment portfolio in auto companies or even all in large cap multinational companies. So.
Anytime you're thinking about diversification, it's always knowing that there might be some winners and some losers in a particular year and being okay that whatever is not doing so great might do much better the following year or the year after that. And that's why we have the diversification we do.
Now, if we think about small or mid cap equities, those tariffs could actually help those companies if they're based in the US and they don't have any kind of international exposure with the tariffs. So again, I know I'm bringing some present day stuff in here, but the idea is we had a great performance with large caps last year and the year prior. Mid and small-cap companies didn't do quite as well, but that doesn't mean they're not going outperform the large-cap multinationals going forward.
And if you think about it from US equities versus international equities, it's nice to have that other diversification. So having some international equity exposure is always a great addition. Thinking about other asset classes like real estate, commodities, those are also great additions. And that's regardless of what economic period we happen to be in.
Diversification is just a fancy idea for not putting all your eggs in one basket. And if you think about Easter for a minute, I don't know about you, but when I was a kid getting the Easter basket, on, on Easter Sunday was always very fun. The Easter bunny liked to put peeps and chocolate, malted milk balls and Reese's peanut butter cups in my Easter basket. And that was great because I think about if I had just gotten exclusively yellow peeps, I probably would have been kind of disappointed, right?
I like to have that variety. I like to have the different types of candy within my Easter basket. And that's exactly what diversification is. It's like having those different elements of items, knowing that they're going to taste a little bit different. Their, their texture is going to be a little bit different. and that hopefully if you didn't like the peeps, you like the molten milk balls, or if you didn't like the molten milk balls, you like the Reese's Peanut Butter Cup, whatever it is.
Just to bring that candy metaphor full circle. So when we think about that in the context of investing, again, we're looking at US versus international. We're also looking at that allocation of equities to fixed income, to real assets like real estate or commodities. And you could even be thinking about it in terms of the underlying investments.
individual stocks as opposed to mutual funds or exchange trade of funds. Individual stocks are going to be more risky because you're just buying one specific company. And if that company does well, great. But if it doesn't do well, it's not great. And you could really lose a lot of money in the stock market in a mutual fund or an exchange trade of fund. They're gathering a basket of individual stocks. They have professional management in the case of active managers, active mutual funds.
and they're bringing together a whole broad basket of companies that are going to behave differently, even if they're in that same kind of asset class. So I know I'm throwing a lot of technical terms here in this episode, but I would love for you to go back to Beyond Budgets, episode 24. It's called Building Wealth Through Strategic Investments. And I'm gonna go into more detail about some of the terminology behind investing that I've...
talked about in today's episode, but it goes into more depth in case you're kind of questioning all the different lingo. All right. And one more thing I wanted to mention on the fixed income side is that inflation, you know, is a potential concern going forward or even, and I'm not saying it's specific to 2025, but even in future years, if it happens to be concern, generally speaking with fixed income investments,
the shorter duration investments, the ones that have the shorter amount of time until they mature, those are going to be, quote unquote, safer than the longer term bonds. Because the value of bonds and the interest rates work in an inverse relationship. So if the Fed is expecting, okay, inflation is a big issue, we're going to start
Deb Meyer (28:00.818)
raising the interest rates, then that's when the value of bonds decreases and the longer duration bonds are going to be hit the hardest. So again, those can be some considerations, especially if you're close to retirement or already in retirement to consider if you're genuinely like, Hey, I really don't feel comfortable with the threat of inflation. You could look at changing from longer term duration bonds to shorter duration bonds.
or you could consider going into treasury inflation-protected bonds, also called TIPS. Those are some other options if you're genuinely concerned about inflation. But at least in my particular case with the clients that I'm working with, I'm not making any wholesale changes at this point because I'm not super concerned about inflation at least quite yet. I know that could be a potential implication but.
It's still a little bit early for me to tell. So I'm going to stick with intermediate-term bonds, at least for now, and call it a day. All right.
In closing, I just want to say there are things outside of our control, like foreign policies. And then there are other things that are within our control. That's how we react to those policy changes. So whatever you're doing, wherever your mindset is at right now, just try to stay calm. Focus on the things that are within your control. And I'm going to leave you with a quote by American industrialist, Jay Paul Getty. He says,
“Without the element of uncertainty, the bringing off of even the greatest business triumph would be dull, routine, and eminently unsatisfying.”
I love that one. So it's okay to change. It's okay to have some uncertainty. Innovation can come out of this. Growth can come out of this. New opportunities can emerge. Thanks!