Fix It Friday Ep. 19 - The Fatal Side Effects of Financial Ozempic

• Products marketed as low-risk and comforting can quietly reduce wealth through inflation
• Behavioral finance and cognitive biases make investors prioritize short-term comfort over long-term growth
• Owning real assets and staying disciplined protects purchasing power and builds wealth
• Understanding real risk versus perceived risk helps improve investor behavior and decision-making

Disclaimer: [00:00:00] The following podcast by Fusion Family Wealth, LLC Fusion is intended for general information purposes only. No portion of the podcast serves as the receipt of or is a substitute for personalized investment advice from Fusion or any other investment professional of your choosing. Please see additional important disclosure at the end of this podcast.

A copy of Fusion's current written disclosure brochure discussing our advisory [00:00:15] services and fees is available upon request or at www.fusionfamilywealth.com. 

Jonathan Blau: A welcome to another episode of the Fix It Friday edition of Crazy Wealthy Podcast. Today I'm gonna tackle a concept that might very well change the way you think about your [00:00:30] money forever.

Let me start with a question. What if the very thing that you think is protecting your wealth is actually destroying it? What if the investments that you've been told by our industry, the [00:00:45] wealth management industry, are safe? Are actually quietly jeopardizing your financial future and your legacy. I call this phenomenon financial ozempic.

It's as dangerous to your financial health as ozempic [00:01:00] can be to our physical health when we're using it as a shortcut.

Voiceover: Welcome to The Crazy Wealthy Podcast with your host, Jonathan Blau. Whether you're just starting out or [00:01:15] are an experienced investor, join Jonathan as he seeks to illuminate and demystify the complexities of making consistently rational financial decisions under conditions of uncertainty. He'll chat with professionals from the advice world, [00:01:30] entrepreneurs, executives, and more to share fresh perspectives on making sound decisions that maximize your wealth.

And now here's your host. 

Jonathan Blau: So let's take a look a little bit more deeply [00:01:45] at what it is that I'm trying to come across. Think about Ozempic. It's marketed as a miracle drug for weight loss. People take it because they don't want to do the hard work. They don't want to eat better, they don't want to exercise or change their [00:02:00] habits.

Ozempic masks the symptoms, but it doesn't cure the root cause, and eventually those bad habits can catch up with us. Finance works the same way. Instead of building resilience. Patients and discipline [00:02:15] investors look for shortcuts. They want comfort, not growth. They want certainty, not volatility. The industry is more than happy to pander to these wants for a fee selling investors, products that soothe their fears, [00:02:30] products that actually feel safe, but in the process of feeling safe or sabotaging our wealth.

So let's take a a look at the truth. Real risk isn't volatility or the temporary up and down movements in the number of [00:02:45] dollars in our portfolios. Real risk is the loss of the value of every one of those dollars that may be fluctuating permanently, and the value of each of those dollars is only lost permanently because of what I call the disease of [00:03:00] money or inflation.

Inflation compounds historically at about 3% a year and eats away permanently to the tune of 3% at the value of every one of our dollars. If your dollars can't buy what they used to, you've lost [00:03:15] wealth or real money. Or purchasing power, even if your portfolio looks stable from quarter to quarter, the real solution is to own real assets stocks, which historically compound and beat inflation over decades.

[00:03:30] That's how you protect purchasing power. But the industry solution is financial ozempic. They myst define risk as volatility. These temporary fluctuations in the number of dollars in our portfolio. Their [00:03:45] ozempic or fixed is bonds, annuities, structured products, low volatility, exchange traded funds, and other investments that fall into the broad category known as alternative investments.

These, in my [00:04:00] view, are only band-aids. They make you feel safe because your portfolio doesn't bounce around as much, and here's the fatal side effect. Bonds freeze your principle and the income that the principle is generating for [00:04:15] decades. So inflation silently erodes your wealth like an illness that goes unnoticed until it's irreversible and there's not much you can do about it.

So imagine a three decade retirement. If you're heavy in [00:04:30] bonds, you're turning your money into wallpaper. You won't feel the pain along the way because inflation is slow and sneaky, but by the time you notice it's too late, your retirement and your legacy have been jeopardized. 

BREAK

[00:04:45] So let's talk about other financial Ozempic products.

These are products that I call products of the darkness they're marketed by. The industry is magic pills. They'll offer things like same return as stocks with [00:05:00] less risk. I call these iCal investments, pure fantasy. They really don't exist o other than in our imagination. Here are another few examples of, of these, what I call products of the darkness.

Something called buffered [00:05:15] exchange traded funds and structured notes. What these do is they, they sell the investor on limiting your downside, uh, the amount you can decline during a down market. But what they also do is they limit your upside. So over time, that means your [00:05:30] total returns would be lower than if you simply stayed invested with traditional exchange traded funds or equity investments that are diversified.

There's another, uh, product that's sold out there where they engage in what's called covered call writing. What this means [00:05:45] in English, it's let's say you own Coca-Cola stock, and today it's selling at about $70 a share, and you decide you need more income. Well, one way you can generate income is you can sell another investor The right.

To buy the Coca-Cola stock from you, which today is at [00:06:00] $70 for let's say $75 at some time in the future. And what happens is once Coca-Cola St and, and you could by the way take in a premium like an insurance premium for selling that right to the investor, that's where you generate the additional income.

But what happens is, at some [00:06:15] point in the future when Coca-Cola passes that $75, the person you sold the right to actually calls it away or buys it from you at 75. When it hits 80, 85, 90, you're no longer in it. So what you've done is you've, you've created this extra [00:06:30] income, which by the way is taxed at the highest ordinary income rates, rather than simply staying with the stock and letting it appreciate, and future sales on that appreciation would be taxed at lower long-term capital gains rates.

So [00:06:45] covered call writing again sounds great. It appeals to our biases where we have a loss aversion and we want more certainty affixed to our total returns. So we think the income is giving us that, but in effect, the income is giving us returns that [00:07:00] are taxed inefficiently and that actually eat up. The, the real future, uh, returns from capital gains.

The next product I wanna highlight is annuities. Annuities lock in income for life, and that sounds very [00:07:15] comforting until inflation eats away at that fixed income just like it does at bonds. And we recognize that that comfort was at a steep price, which was really destroying the purchasing power of our money.

These products soothe [00:07:30] fear, but they sabotage real wealth, their financial comfort, food, and just like comfort food. They feel good now, but hurt you later. So what's, what's the real fix to this? It's purely behavioral. Develop the [00:07:45] temperament to live comfortably with volatility. Understand that volatility isn't risk, it's the price of admission for wealth creation, and inflation is the real enemy.

The only way to beat it is to own real assets like [00:08:00] stocks and stay disciplined and let those real assets returns compound uninterrupted. Here's a line that's actually worth remembering as it relates to this concept. Volatility is the price of admission for wealth creation. [00:08:15] Inflation is the thief in the night, so stop looking for shortcuts.

Stop buying financial ozempic and build habits, not illusions. Here's my challenge for everyone who's listening today. Take a hard [00:08:30] look at your portfolio. Ask yourself, am I relying on bandaids? Am I sacrificing long-term growth for short-term comfort? If the answer's yes, it's time to fix it. Own real [00:08:45] assets.

Stay disciplined. Protect your purchasing power. That's how your money and your retirement and your legacy will be protected. Thanks so much for tuning into this episode of Fix It Friday. We look forward to seeing you next time. You can [00:09:00] access all of our podcasts, including today's on Apple, Spotify, all your favorite venues, as well as crazy wealthy podcast.com and Fusion family wealth dot com's website.

Voiceover: [00:09:15] Thank you for tuning into another episode of The Crazy Wealthy Podcast for more insights, resources. And to sign up for our newsletter, visit Crazy wealthy podcast.com. Until then, stay crazy wealthy.[00:09:30] 

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