Failing to Plan is Planning to Fail

Contributor: Tim Hartley

A study in 2019 found that 75% of “baby boomers” (defined as someone over the age of 55) don’t have a written financial plan for retirement. For millennials, the figure rises to 87%, and for Gen X’ers, the number is 81%. Overall, only 18% of Americans surveyed had a written financial retirement plan currently in place.*

You’re here! We are excited to have you with us. So, what’s your plan? The answer is more complex than “get more money”, “live a better life,” or “build generational wealth”.

Below are five simple steps to help you get your plan together, and to be the hero (that you already are) for you and your family.

Step 1: Write it Down

Yes, this seems silly, but it works. A study done in 2019 proved that when people write down their goals they are 42% more likely to achieve them than those who don’t.** This also helps you visualize what you hope to achieve. As the old cliché goes, “out of sight, out of mind.” Keep those goals in front of you so you know what you’re working/trading for on a daily basis.

Step 2: Determine What Type of Trader/Investor You Are

This is where some effort comes into play. Everyone is different, and everyone has a different strategy. That’s what is great about the Stock Dads group. There are all different types of investors and traders. Whether you’ve never done trading, this is your first time, or you’re a seasoned veteran who wants to learn more then you should head over to stockdadsofficial.com to learn about different investing and trading strategies. The myriad of choices available – day trading, options, long-term stocks, cyclical stocks, blue-chip stocks, ETFs, index funds, small-cap, mid-cap, large-cap, penny stocks, etc. –  can be overwhelming. You can see why this step is important. You want to leverage the knowledge out there, so you maximize your returns.

Step 3: Planning

Once you have written down your goals and determined what type of investor or trader you’d like to be, then it’s important to have an investing strategy and plan. This topic is talked about a lot in the group and on the Stocks and Sandals Podcast. Buying stocks without a solid plan is setting yourself up to lose. The stock market doesn’t owe you anything. Take your profits or losses, because losses will happen, and do what’s best for you. You don’t have to pick a winner every time. You just have to have a plan so when you pick a loser you aren’t wiped out. When buying a stock, you need to have an entry and exit strategy for each stock you own. If you buy ABC stock at $20 and it drops to $15 then that’s a 25% dip. Should you sell, hold, or buy more? Conversely, if the stock goes from $20 to $25, that’s a 25% increase. Should you sell, hold, or buy more? These are questions you need to answer before these prices are hit. Setting price targets (PT) is important so you know your risk/reward ratio. When the stock is going down, it feels like it’ll never go up again. When it’s going up, it feels likes it’ll stay there forever. Emotional trading is NOT a strategy.

Step 4: Research and Due Diligence (DD)

This isn’t Pokémon, you don’t have to catch them all. I’ve been guilty of this, where a stock that has potential is at a great price but I don’t have a lot of funds so I bought one share just so I can say I own the stock. Investing can be overwhelming when looking for which stock to invest your money. Don’t get FOMO and never jump into a stock without understanding it. If you can’t figure out where to begin then a great place to start is look at items in your home. Those brands are the brands that you and other families are buying everywhere. Look into those companies and determine which ones are best for you to get started with your investing. As you become more experienced, sign up for newsletters that discuss new and existing companies. This way you can do your own DD on the company to determine if it’s worthy of your money. Always remember that it’s your money. You’re here to build wealth, not make contributions to failing companies. That’s the plan anyway 😊.

Step 5: Ask Questions

This is important. You want to understand where a company is headed, what are the trends, how might the economy affect the future of the brand. Posing questions in the Stock Dads Discord and the Facebook group is a great way to get started. You can also email or call investor relations to ask questions about what they are seeing in the marketplace and projections they have on certain topics that affect them. While they don’t always provide every answer to all your questions, it can help shed light on the trajectory of the business and whether you wish to invest your money or not.

Whether your early in your investing career or nearing retirement, it’s important to have goals and plans in place. Follow the tips above and check out episode #2 of the Stocks and Sandals Podcast with Aaron Mabon regarding goal setting to get starting on the right path.

It’s never too late!