Passive Vs. Active Investing: Which Is Better?

Does your portfolio actually know how to protect you? In this episode, we unpack the tension between passive and active investing, which might be better, why diversification may not be as diversified as it appears right now, and what it really means to build a portfolio designed for long-term success!

For the full show notes, video version, and transcript, visit thewealthmindsetshow.com/s2e30

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Transcript

You're listening to The Wealth Mindset Show where Hixon Zuercher Capital Management's team of finance professionals, portfolio managers, and a life coach come together to tackle complex topics in finance and retirement planning, so you don't have to. From investment strategies and wealth management to tax planning, retirement income, and aligning your money with your values and purpose, The Wealth Mindset Show offers the tools to thrive.

Austin Wilson:

All right. Hey, hey, hey, welcome back to The Wealth Mindset Show, where the Hixon Zuercher team helps you manage wealth, navigate retirement, and make smart decisions for a secure, meaningful future. I'm Austin Wilson, Chief Investment Officer at Hixon Zuercher Capital Management.

Josh Robb:

I'm Josh Robb, Director of Wealth Management at Hixon Zuercher Capital Management. And Jessica Hinks is joining us today-

Austin Wilson:

Woo-hoo!

Josh Robb:

... one of our senior wealth advisors, and we are going to be talking about her favorite subject, which is passive management of investments.

Austin Wilson:

Or versus active.

Josh Robb:

Versus active.

Jessica Hinks:

And I want everyone to take note, he is being sarcastic. I literally asked, "Was no one else available?" I specifically remember when being interviewed for this job years ago, Adam Zuercher asked me, "So what's your investment philosophy, Jessica," and I was just thinking, I don't have one. But I have developed pretty sincere philosophies since then, although it's not necessarily my most active part of financial planning.

Josh Robb:

No, it is.

Austin Wilson:

Gotcha. Yeah.

Josh Robb:

We are more passive because we have somebody active-

Jessica Hinks:

If it was about being passive-aggressive, I would be a knockout for this topic.

Josh Robb:

That was it. That's-

[1:26] - Life Updates: Snowstorms & Broken Furnaces

Austin Wilson:

That's right. That's right. Well, this is cool, but first of all, what's going on with our lives? First of all-

Josh Robb:

Snowstorm.

Austin Wilson:

... it's a snowstorm time, and it's very cold at the time of this recording.

Josh Robb:

I've always said... I mean, I grew up here in Ohio for most of my life... that having four seasons, I do appreciate the difference of them all.

Austin Wilson:

To a point.

Josh Robb:

And while we're in winter, if it's going to be cold, I want snow so that the kids can actually do something.

Jessica Hinks:

But now it's so cold they can't.

Austin Wilson:

Yeah, I was like-

Josh Robb:

We went to the extreme, man, where the wind chill's like negative 10. It's like, you could be outside for five minutes and then you better get back in. But when we got the snow, we got, what, 10 inches of snow or whatever, we were able to go out for little periods of time, do some sledding, build the snowmen, which it's so cold, you can't really build a good snowman when it's this cold.

Austin Wilson:

Oh, no, the snow is dust.

Josh Robb:

But they were able to go out and do all that, which is, again, makes it easier to tolerate this season, I think, when you can go out and do those things.

Austin Wilson:

Well, the snow's sticking around for a while.

Josh Robb:

It's not going anywhere, that's for sure.

Austin Wilson:

Jess, what about you? You got unburied.

Jessica Hinks:

Yeah, I got unburied.

Austin Wilson:

That's good.

Jessica Hinks:

I'm a worry wart, so I literally spend my days worrying about frozen pipes and breaking furnaces. And wouldn't you know, my furnace got really angry-sounding this week.

Austin Wilson:

Did it get fixed?

Jessica Hinks:

But it got fixed literally a couple hours ago, a hour ago.

Josh Robb:

All good.

Jessica Hinks:

So shout-out Harold Shuck Company.

Josh Robb:

There it is.

Austin Wilson:

Nice. Nice. Yeah, my three-year-old now, she's three now as of January 11th, but she decided she wanted to help me shovel snow, because obviously there's a lot of snow to shovel. She followed me, as I'm either blowing snow or shoveling, she would follow behind me with her little sand shovel. That's the only shovel we have, which I need to buy her a better shovel.

Josh Robb:

You need to get... Yes.

Austin Wilson:

And she would put it back on the concrete behind me as I was shoveling, and I was like, "Honey, that's really not helping," and so I'm putting it back.

Josh Robb:

Yes. You just kind of let it-

Austin Wilson:

Yeah, so we're in a bit of a blizzard here. It's zero degrees, and we have a foot of snow laying around. But it's all good. We're warm in here.

Josh Robb:

We're warm.

[3:22] - Choosing the Right Investment Strategy for You

Austin Wilson:

It's sweater weather, which I'm cool with. But today, yeah, we're talking about markets and investment styles and really just trying to get our minds around what the markets look like now because they look different than they have for a very long time, and there's some key things we're going to be talking about there and also just some investment philosophies. Obviously we have our own we're going to talk about. Other people have theirs, and it works out for them. But we're going to talk about why and how that is today.

So first of all, markets ended 2025 really strong. We had a third 15%+ year in a row for the S&P 500. Really great stretch as of the end of the year, and that's actually continued. But markets are up a little bit year to date thus far in 2026. However, there's a lot of choppiness going on. We've got more discussion on tariffs and trade. We've got geopolitical stuff with Venezuela. We've got Fed chair nominee as of the day of this recording. We have a potential new Fed chair coming later this year. Valuations we've talked about many times, stretch-

Josh Robb:

Potential government shutdown.

Austin Wilson:

Another potential government shutdown. Feel like we just had that. So the question is, when we're looking at our portfolios, we need to know what's in them. What is in these portfolios? Are we protected for every scenario? Because, yeah, you could say, "Look at my retirement plan," you're going to log into your 401K and say, "I've got seven funds in here and I'm good to go. I'm well-diversified," but are we? And the answer is probably not, unless-

Josh Robb:

Or not as much as you think.

Austin Wilson:

Not as much as you think. That's exactly the way to think about it here. So let's talk about... Again, this is not active is good, passive is bad, or vice-versa, passive is good and active is bad. Some people take that approach, because we're admitting some people and a lot of people have some form of passive investment in their portfolio and their retirement plans, and it can work out very well for you as long as you stick to your plan. It's more about the planning that matters as long as you're well-diversified.

Josh Robb:

And whatever strategy you come to, do your best to stick with it. Because that's really what we see as advisors a lot is jumping from one thing to another, just trying to always go after this new strategy or solution. Just find something that makes sense for you, you understand, stick with it, because consistency is really where you're going to get the most value. And you're right, there's no right answer. It's, I don't know, like ice cream flavors, right? There's all out there. Find one you really like and then stick with it.

Jessica Hinks:

There is a wrong ice cream flavor.

Josh Robb:

What? Vanilla or what?

Austin Wilson:

Beginning with mint.

Josh Robb:

Oh, yeah. I know you don't like mint. Yes.

Austin Wilson:

That's a toothpaste, not ice cream. I don't eat mint.

Josh Robb:

I don't know. A couple of my kids like mint chocolate chips.

Austin Wilson:

I know. That's my father-in-law's favorite ice cream.

Josh Robb:

They'll argue with you on that one.

Austin Wilson:

I know. So, yeah, this is saying there are ways for that to work. At Hixon Zuercher, however, we are active. So we use active mutual funds and ETFs. We actively manage equity strategies. We feel that that gives us the most control over what we do when we build client portfolios. Again, that's not saying that's the only way to do it, but that is... If you hear a little bit of bias, there might be a little bit, but we are admitting upfront there are more than one way to skin a cat. And that's a terrible metaphor, but that's what people say, right?

Josh Robb:

Yes.

Austin Wilson:

There's more than one way to skin a cat.

Josh Robb:

I don't know why you need more than one way or why you do that to begin with.

[6:29] - How Risk Exposure Relates To Your Overall Portfolio

Austin Wilson:

So let's talk about how much, where, and what kind of risk you're taking as it relates to your overall portfolio. So, again, you're looking like you're diversified, you look at your portfolio. On paper, you've got seven funds. Great. What we need to understand is that US passive equity exposure at all-time highs, and that's not necessarily the worst thing in the world. Nearly half of US equity exposure is passive, right? But we need to understand what is in a passive equity portfolio, specifically as it relates to the US, because things look different abroad. But as it relates to the US, the Mag 7 we've talked about a million times. These are seven of the largest United States companies, and almost all of them are technology companies or technology adjacent companies right now. They make up any enormous portion of the overall index.

Here are just some of the top ones, right? NVIDIA, largest company in the world. Over $4 trillion in market cap. It is nearly 8% of the S&P 500. Apple's over 6%. Microsoft's 5%. Amazon's 4%. Google's another 6 if you combine their two share classes. Meta and Broadcom are each 3% of the S&P 500. So just in a real quick little sliver of seven or eight companies there, you're talking about 30, 40% of the industry-

Jessica Hinks:

Yeah, 35%.

Austin Wilson:

... just within seven companies. Now what that means is that-

Josh Robb:

Over a third is there.

Austin Wilson:

Yeah. Seven companies. What that means is that the index, even very much compared to historical averages, is concentrated well above average levels, right?

Josh Robb:

Yep. And that goes back to, and I know we briefly hit, but passive investing really just means your investment is tracking a set group of holdings, usually an index. And an index is, again, just to-

Austin Wilson:

Most indices are market cap-weighted. That's where this is coming.

Josh Robb:

Yes. And we'll talk about a little bit more of that, why that, from a passive standpoint, that might matter. But again, nothing wrong with passive because you know what you're getting on a consistent basis-

Austin Wilson:

You're getting the market.

Josh Robb:

You're getting what the broad market has directed which, again, in this case, we're talking about S&P 500.

Jessica Hinks:

Yeah. Well, nothing wrong with passive if you're okay with those seven companies taking up a third of your portfolio.

Austin Wilson:

Well, and I'll be the first to admit, we own a handful of these, a lot of these companies, not all of them, in some way, shape, or form. These are great companies. These are probably, and I'm going to say this with some confidence, some of the best companies to ever exist. And they do it by generating great earnings, great growing earnings, great growth. They're in products that we use every single day, or they're key components of products we use every single day. So that being said, there's a reason they're so large, and the reason they're so large is they are in demand. They're in demand and they're being used all the time.

But I think even if we take a step back and we look globally, because we're just talking S&P 500 runnings, these companies have gotten so large that they even move the needle on a global scale. So the US represents 60% of the global equity market in terms of total market capitalization, so therefore, these large companies in the US are still a large chunk of the global equity market. So NVIDIA, for example, while it's 8% of the S&P 500, it's over 4% of the total world stock market.

Jessica Hinks:

And I think, did we say that NVIDIA was larger than Canada and Japan?

Austin Wilson:

Yes.

Jessica Hinks:

Their entire...

Austin Wilson:

Yeah. Yeah. It is-

Josh Robb:

Yeah. Crazy how big this one company is.

Austin Wilson:

... larger than markets. Larger than entire markets.

Jessica Hinks:

Yeah. Not the building size. I was aware of that. Thank you.

Josh Robb:

Yeah. Yes. Not the people.

Austin Wilson:

Not the people. But yes, one company.

Josh Robb:

Their market cap, which represents their assets or their income, their profit based on the number of shares they have, that is bigger than the whole Canadian stock market is what you were saying, or Japan. And so that's just crazy to think that one US company has more market share, more market cap than a whole country's market.

Austin Wilson:

Oh, absolutely.

Josh Robb:

Just crazy.

Austin Wilson:

So, yeah, like I said, NVIDIA, over 4% of the global equity market, Apple, nearly 4%, Microsoft over 3, Amazon over 2, Google, nearly 4. These are large, large companies on a global scale. This is interesting, the first top eight holdings of the global equity market are United States stocks, and they're all growth stocks. These are all technology or technology-adjacent stocks here in the United States. The first non-US tech name or non-US name in general, but not a US tech company or non-US name period, is Taiwan Semiconductors, which does what?

Josh Robb:

Makes semiconductors.

Austin Wilson:

Make semiconductors for these guys, like specifically NVIDIA. And that's only 1%. So it's amazing that the top eight companies in the world are US companies and specifically US tech companies. You don't have anyone else outside the US until number nine. And then even so, there's only a couple in the top 20 that are US companies.

Jessica Hinks:

God bless America.

Austin Wilson:

I mean, the American market has historically done exceptionally well, and as of the last 20 years, crushed the rest of the world in terms of performance. And that's the reason a lot of these companies have gotten so large. It was not until 2025 that we actually had a meaningful reversion where international stocks did significantly better than US stocks, and that's what we saw last year happen here.

So that brings us to some good discussions here, right? So when you're looking at your portfolio, again, what you're getting is this weighting if you're invested passively, and you're getting what the market gives you. The market says these companies are worth over 4% of the global equity market or 8% of the S&P 500, the market's saying that, right?

Josh Robb:

Yep.

[12:17] - What Should You Do When a Large Company Holding Stumbles?

Austin Wilson:

So you need to know and be okay with, "I'm buying the S&P 500 index fund for my retirement plan. I know 8% of that's going to be an NVIDIA, and I like it. Just okay with it. I'm okay with the risk." The question is, but down to the risk, what happens if some of these large companies... These are multiples in size of the companies smaller than them. What happens if one or two of these large companies stumbles? And what's the most recent example that's coming to mind?

Josh Robb:

Microsoft.

Austin Wilson:

Microsoft, yesterday. On the same day that Meta was up 11%, Microsoft was down 10. Microsoft's the third-largest company in the world, and it significantly moved the index, and it's because it's 6% of the S&P 500. If one company is down 10% in one day and it's 6% of the index, that's trimming off a whole bunch of market cap. So that's why this index concentration is something that people like us are watching. People like me in my role, we're noting the risk, just because of concentration, if one or two of these large companies... Or if it's because all these companies are essentially AI tech-adjacent, if this theme starts slowing down and has a major selloff, think DeepSeek, that was the thing that happened in early 2025, then the overall index is going to be down significantly, where an active manager would be able to then underweight some of these names and take off some of the risk. So that's where this comes into some discussion.

Josh Robb:

And then if you take that and then extrapolate, going back to your original example of you log into your 401k and look, "Hey, I got seven holdings in here. I chose them because they all look good on their performance," you may have two different funds-

Austin Wilson:

Holding the same thing.

Josh Robb:

... doing the same thing. And that's where you get to kind of, in a sense, stacking these funds that you think, "Oh, that helped diversify me. Now I have two different funds doing different things." Well, if you look at their underlying holdings, you're going to see that where, in a sense, you just doubled down on the same investments, doing two different funds, doing the same thing.

Austin Wilson:

That works great when they're doing well.

Josh Robb:

And it works great, but that can be deceiving. I always think, going back to my kids, my youngest son, he's in a fantasy football league, and I know... I think your husband does some fantasy football stuff-

Jessica Hinks:

Very successfully, yes.

Josh Robb:

Yes. And my son also loves certain football teams. So during drafting, he tends to stack a bunch of the same team's players on his fantasy team. And we've had this conversation of, "Hey, if they have a bad game, you're going to have a lot of players that are going to have that impact." And that's really what this is, is "Hey, I have these two funds. That's great." Well, if they all own the same thing, they're going to do the same thing. They're going to move the same direction. You're not diversifying. In fact, you're just amplifying those holdings even more.

Austin Wilson:

Well, it's kind of like if you're using the same engine in seven different cars, and the engine breaks, all your cars are broke because it's the thing driving all of them, is these large companies.

Josh Robb:

Yep.

[16:10] - What About Equal-Weighted Passive Funds?

Jessica Hinks:

Is this a bad time to ask how you feel about equal-weighted passive funds?

Austin Wilson:

That's actually a great question. And that's something that's become very popular, right? So one of the themes of 2026 is the broadening-out, away... Not away, not saying these things are going to do bad, these large companies, but other companies might do a little catching up is kind of the thinking. So, yeah, there are ways to use an index and say buy an equal-weighted S&P 500 index, where instead of NVIDIA being 8% like it is, and Microsoft being 6 or whatever, you hold all 500 companies equally.

Josh Robb:

The same.

Austin Wilson:

The same.

Josh Robb:

Yeah. It doesn't matter how big they are, all the same.

Austin Wilson:

They're all getting the... So that means that these large companies are not deriving all the returns. And actually, year to date in 2026 on an equal-weighted basis, that has outperformed the market cap-weighted index.

Josh Robb:

And Microsoft going down, it's going to have less of an impact on an equal-weighted than it does on a market cap-weighted.

Austin Wilson:

Absolutely.

Josh Robb:

On the other end, when you have a really positive outperformance by-

Austin Wilson:

You get less.

Josh Robb:

... individual companies, you're going to have less upside. So those are the trade-offs you always get.

Jessica Hinks:

For the record, to those who aren't watching us on YouTube, but are watching us on podcast, Austin is absolutely glowing right now. This is a topic he loves. This must be how he-

Austin Wilson:

I know. I know. This is kind of in my element.

Josh Robb:

He gets so excited.

Austin Wilson:

This topic is mine right here.

Jessica Hinks:

Literally, Josh and I get to talk about financial planning, and you kind of get to sit there a little more quietly, but this is your jam.

Austin Wilson:

This is my jam.

Jessica Hinks:

So happy for you to have this moment.

Josh Robb:

Guess whose idea this was?

[17:33] - Common Underexposure Within Portfolios

Austin Wilson:

I know. I wonder if this was my idea. But it was. So, yeah, let's talk a little bit more... Again, this is where... It's all about risk. And one thing that I think that is a very common thought in investors' retirement planning today is, "I'm just going to put all my eggs and all my retirement funds in the S&P 500 and never touch it and it's going to be just fine," and you know what? That's actually worked pretty well for a long time. However, a prudent investment management philosophy will not say that is enough, right? It's not enough diversification. It's done well historically.

Jessica Hinks:

Things were different.

Austin Wilson:

Things have been-

Jessica Hinks:

Things were different. I never thought I'd say that.

Austin Wilson:

Things will be different.

Jessica Hinks:

I hate that phrase.

Austin Wilson:

Unprecedented. But no, we've been in such a season of, A, large-cap tech companies doing well, which are what's the biggest component of the S&P 500, and B, international stocks really sucking for 20 years. And we're starting to see the tides shift a little bit. So this is where we would say, "Hey, if you want to have an S&P 500 index fund," or I would say maybe a large cap core active manager, yeah, great, you're going to get a great US large cap return. You need to be pairing that with some developed and emerging market stocks, both outside the US... The world equity market has about a quarter of it in developed market stocks. The world equity market has about 10% or so or a little bit higher in emerging market stocks. You probably should have some exposure to these large components, which they have a lot going for them, right? As of 2025, international was outperforming, of course, so that's good that you're buying some momentum, but valuations continue to be significantly cheaper than they are here in the United States. And dividends outside the US are significantly higher. So a couple good things going for you there.

We're seeing some structural shifts in terms of policy. A lot of these countries like Japan, South Korea are becoming very shareholder-friendly in terms of giving their companies, their large companies, tasks to go deploy capital and give it back to the shareholders and dividends and buybacks and all kinds of stuff, becoming a lot more like the US, frankly. So that's really good there. But again, it's 40% of the global equity market outside the US. You need to have some exposure to that. Most Americans' retirement plan's greatly under exposed. Do you guys see that in terms of people you talk to?

Josh Robb:

Well, yeah, because a lot of times, and again, we're just talking to the average investor here, when they look at choosing their 401k allocation, one of the things they look at is returns. And if, like you said, the last 20 years you've seen this outperformance of US, when they're looking at trailing returns, they're going to choose the funds that have done real well. Well, what are they going to weight in? They're going to be heavier in the US because when they're comparing, "Oh, this one has average 10%. This one's only average 6. I want the 10% one," well, that's probably because they're two different areas of the market. And 6 may be great for what historically you needed from it, but when you're just looking at total return from those buckets, you kind of end up heavier weighted into the US.

Jessica Hinks:

And that is why if you are a do-it-yourself investor in your 401k or retirement plan, but you maybe lack some expertise, I almost would always just recommend a simple age-based fund. Because even though you might be more heavily skewed to the tech companies or those Mag 7 than we might like, at least they are incorporating some global diversification on those.

Austin Wilson:

And rebalancing. If it's automatically rebalancing-

Josh Robb:

Yeah. And that's kind of that hybrid-

Jessica Hinks:

Yeah. So if you're going to go passive, that's my preference rather than just trying to guess your own.

Josh Robb:

And that's like a hybrid passive because while it's holding passive investments, an age-based strategy is actually going to adjust for you as you get closer to that endpoint-

Jessica Hinks:

It's not static. Yeah.

Josh Robb:

Yeah. So it's not necessarily actively managed, but it's going to be actively adjusted on a set schedule so that your allocation changes. And I think that's, like you said, if you're going to be doing something with very little oversight or continuing observation, that's one of the best ways to go, because of the structure of it.

[21:24] - How to Adjust Your Portfolio Based on Time Horizon

Austin Wilson:

Another thing is if you're looking at long-term retirement planning, of course, wherever you are, it depends on your time horizon that you're going to need money for. So it could be long-term, then we would say, "Yeah, that's probably going to lean more towards equities," but the shorter you get, you may want to start thinking about introducing fixed income into the situation for diversification purposes, for stability purposes. And now, frankly, is a decent time to be thinking about fixed income. Yields are still higher than they were years ago, higher than we were coming out of the global financial crisis for a long time, really since out of COVID. And the risk-reward in fixed income is actually pretty favorable right now.

So if you look at elevated yields, historically speaking, and where are things going right now, well, the Fed's cutting rates on the short end, the long end's probably going to remain pretty elevated, you can lock in decent returns. Essentially, if you look at the 10-year treasury yield, which is right now about four and a quarter, that's probably going to be your five-year annualized return roughly for a core bond portfolio. Four and a quarter is not bad. That's not bad without taking a lot of risk.

Josh Robb:

For lower volatility risk. Yep.

Austin Wilson:

Lower volatility, lower risk. So they are a tool and not just a ballast for your portfolio, but they can be a tool to... If equities get weak all of a sudden, they've been strong, really strong recently, this could obviously help your overall portfolio. And again, as you get closer to retirement and into retirement, they could definitely have their place to really balance you out there.

Josh Robb:

Yeah. They give you that reduction of market movement in a portion of your portfolio compared to just an all-equity. It is an adjustment. You will not get the returns, because there's always a trade-off. If you're going to take less risk, you should expect less returns.

Austin Wilson:

Absolutely.

Jessica Hinks:

And if we're wrapped up with fixed income, I wanted to throw in a little bit of a topic that I don't think was on the agenda, and it's-

Austin Wilson:

Bring it.

Jessica Hinks:

... my only contribution to this conversation-

Austin Wilson:

Bring it.

Jessica Hinks:

... and it's why I like active investments for psychological reasons. Because I don't watch investments all day, like you do. I'm not the director of investments. But I am sitting in front of human beings all day, being a financial advisor with clients, and I see how people respond during market volatility. And when things are going wrong, we as humans just feel like we need to act, like we need to do something. It doesn't have to be the right action or a huge action, but something that proves to ourselves that we are looking at the world around us and we're doing something to improve our lives and our surroundings. And so sometimes even if you're just explaining to a client, "You know what? We are looking at one to two company purchases here, companies that respond better in this economic environment," even if it's just a few percent change in a portfolio, it can be enough to really bring peace of mind. You're still sticking to the long-term plan, but I think you're just kind of adapting to human nature, which is important.

Austin Wilson:

Absolutely.

Josh Robb:

Right. And it always reminds me, they did a study... You and I both played soccer. Goalies in any kind of penalty kick statistically standing still gives you the highest chance of stopping a ball, but yet every goalie is going to choose a direction and dive because doing nothing just doesn't feel right.

Jessica Hinks:

Doesn't feel right.

Josh Robb:

And I think you're right in that in investing, doing something makes you feel better, and doing something within the confines of sticking to your long-term goals... There's nothing wrong with making adjustments. That's totally fine. Abandoning your strategy is what we always talk to avoid, making that big mistake. But yeah, definitely say, "Hey, if I tweak this here or there," and that's where that active comes in, "I just feel better, and it helps me."

Jessica Hinks:

And you probably will have better outcomes as well.

Josh Robb:

Yes. If you do it right, yes.

Austin Wilson:

Yeah. Well, another two components of that... We're specifically talking about active equities, so we're managing stock portfolios. Another thing that I think helps clients is they can go to the Fidelity app and they see you're holding 35 different companies. And they're looking through that list in volatile times and they're like, "Costco's down 20%, but Costco's not going out of business." Not a recommendation, by the way. Or Apple, "Yeah, I'm still using my iPhone, even though it's down a lot." I think that that brings a lot of peace of mind.

Josh Robb:

Yes. When you break from a name of a mutual fund that holds 100 holdings-

Austin Wilson:

Yeah. Who knows?

Jessica Hinks:

And looks like gibberish.

Josh Robb:

... to the individual company to say, "This company, which I'm owning, is it going to zero," and zero means they're out of business, "or are they going to be okay in the long run?" And that's what you're talking about.

Austin Wilson:

And the other component to active equity investing specifically, and you can also get this with direct indexing or whatever, but tax-loss harvesting opportunities, individual securities, a dollar saved on taxes is the equivalent in someone's mind of making them 10, right? That's the investment... I read that in a book. It's a real thing. Right.

Jessica Hinks:

Sure.

Josh Robb:

Tax savings carries more weight than many other things.

Jessica Hinks:

It feels good.

Austin Wilson:

Yeah, exactly.

Josh Robb:

It feels good to take money back from what you would've paid.

Austin Wilson:

Therefore, if you're looking at the opportunity to save on some taxes...

Josh Robb:

Great.

Austin Wilson:

... that's a great opportunity because you can obviously harvest some losses on some individual names because that's going to... In an index fund, it's going to be buried. You're not going to know you're going to get the total return. But you're not going to be able to do that. So another opportunity, I think, where that has some opportunities.

So, yeah, passive can work. We just are advocating, know the concentration, know the risk, understand the markets. I mean, if you watch business news, they talk about how large these companies are all the time and how big a portion of the S&P 500, for example, they are. It's just good to get your mind around there. And then making sure that even though you think you're diversified by holding five funds, making sure they're not all holding the same thing is really key.

Josh Robb:

Yes.

Austin Wilson:

And then continuing to advocate for international emerging market exposure, maybe fixed income if it fits your financial situation, just making sure you're well-diversified. Don't put all your eggs in one basket. Like I said, passive can be fine, but you just have to be aware of what's going on underneath. So any other final thoughts from you guys?

Josh Robb:

Yeah. Again, whichever direction you choose, we've talked about a lot, stick to a plan, come up with a good strategy that gives you high probability of success to meet your goals, and then just stick with it. Even if there's little tweaks along the way, that's great, but stick to the plan.

Austin Wilson:

Right. Cool.

Jessica Hinks:

No further comment.

Austin Wilson:

All right. Well, if you found value in this conversation, don't forget to subscribe to The Wealth Mindset Show on whatever platform you're listening on, and feel free to visit us at thewealthmindsetshow.com for more resources or our show notes for whatever you want to know. And if you want to know more about what we do at Hixon Zuercher Capital Management, visit hzcapital.com. Otherwise, we'll see you next episode.

Josh Robb:

All right, talk to you later.

Austin Wilson:

Bye.

Thank you for joining us at The Wealth Mindset Show, where we tackle the complexities of finance and life planning to help you align your wealth with your values. We hope today's conversation provided value and clarity as you navigate your financial journey.

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