I always hated it when people called me an investor. How dare they lump me in with that slow money!
And then I grew up.
Like most people, my perspective on life changed. With a family to take care of, I needed to think about the future.
While I found it quite natural to slip between these worlds, far too many traders fail to generate real wealth.
Caught up in the everyday struggles of life, they wake up one day years down the road without any idea of how they got there.
I recently sat down with the WealthWise Podcast to discuss this very topic.
It’s one of those rare moments when I open up and talk about my family’s money.
In fact, this inspired me to create the Raging Bull Investor Newsletter, which for a limited time, I’m giving away for free.
Now, don’t panic if you haven’t started socking money away.
I want to show you exactly how you can incorporate investing into your trading plan and why now is the perfect time to start.
The Coronavirus Made A Lot of Stocks Cheap
No other time in modern history has seen a strong economy stopped dead in its tracks. There’s bound to be a lot of damage that lasts for years beyond what we know now.
But I can tell you one thing – it has created a once in a lifetime opportunity.
Traders inherently understand the need to time the market. A great trade at the wrong time is often worse a bad trade at the right time.
We’re unlikely to ever get a chance to pick up fantastic companies at 20%-50% discounts. History says a dollar invested now will go further than in five years.
You don’t need to overthink the stock selection. No one knows whether the cruise lines will exist next year. However, chances are the airlines will. Certainly, Apple isn’t going anywhere.
Right now, I’m looking at the companies that have been around for a while and will weather the storm.
Here’s an easy way to think about it. Group stocks into three categories of risk.
- Glory Gambles: These stocks will be around in the future. What we don’t know is whether they’ll be shadows of their former selves or be back to business as usual.
- Southwest Airlines (LUV), Delta Airlines (DAL), Hilton Hotels (HLT)
- Big Growth: Companies in this category still conduct business, even if it’s limited. They’ve got big brands and balance sheets to invest in their future.
- Apple (APPL), Google (GOOGL), Visa (V), Disney (DIS), Netflix (NFLX)
- Safe & Saucy: These companies don’t worry about recessions. They pay big dividends and keep on chugging no matter what.
- Altria (MO), Duke Energy (DUK), AT&T (T), Proctor & Gamble (PG)
One thing should be painfully obvious – I didn’t go deep off the bench to find these names. These are big brands and the best in their fields.
Here’s the major difference between investing and trading. In trading, you get multiple instances to let averages work for you. Investing has more limited chances. That’s why the extra risk and payoff for names like Boeing (BA) or Dave & Busters (PLAY) aren’t worth it.
Set Up A Transfer Schedule
Now, in order to treat your investing like it should be, you need to consider it entirely separate from your trading.
For starters, try to match what most corporate 401k accounts do. Take a portion out of every week’s or month’s earnings and put it into a retirement account. Use whatever schedule works, just make sure you stick to it.
This shouldn’t be an account you trade. I don’t care if you have a 90% win-rate. Make a concerted effort to simply invest.
Now, that doesn’t mean you buy and hold like a buffoon. However, at this moment, all you need to do is find the names you want, decide on an allocation, and start averaging in.
We have an opportunity at this moment to make investing easy. Ten years down the road, stock selection will require a lot more research and effort.
Also, make sure you learn about all the tax savings accounts and advantages available to you. The last thing you want to do is pass up benefits you’re eligible for.
Educate, Educate, Educate
The day I stop learning is the day I stop moving. Trading and investing require you to be on the top of your game.
One real easy way to do that is through my free investing newsletter.
I’ll drop you some clever ideas along with some family secrets that I’ve only recently decided to share.