TAKE CHARGE OF YOUR FINANCIAL FUTURE

TAKE CHARGE OF YOUR FINANCIAL FUTURE

This article is based on my personal experience, I’m not a financial expert but the ideas here I have used for many years with good success. I got tired of my traditional IRA or 401K going up one year then down the other and I was not happy with the fees charged on my statement every quarter.  After many years my account was just not growing that much. I wanted higher growth and more control.  So, I turned to a SELF-DIRECTED IRA.  Let’s say you had a 401K with your employer but then you moved on and don’t work there anymore.  You can have that money transferred to a self-directed IRA with no tax liability if it is done properly.  I use a company like E Trade.  Its simple, open a self-directed IRA, or Roth IRA account with them and roll the money from your old employer to that account, or simply start making your own deposits into the account, talk to your accountant or do some research on your yearly limits.

In some cases, some companies will even let you do self-directed with a portion of your 401K. I worked for a company that used Fisher Investments and I was able to have something like 90% of my 401K be self-directed thru my E Trade account.  Once this is all set up, you then manage your money, and can buy and sell whatever stock you want. I have never bought a mutual fund inside my self-directed account because I didn’t want the fees, so I created my own fund with the individual stocks I bought.

Let’s talk about buying stocks!  Don’t buy stocks on a hot tip or because you heard from a friend. DO YOUR RESEARCH! You are better than you think. Stick with what you know. Look around you, what is up and coming in your neighborhood or what company do you know that seems to be growing. I don’t listen to any one person or take the advice of one article. Use multiple sources. There is one item I always check off the list before I buy a stock with my hard-earned money and that is the companies quarterly reports. I study them. No, you don’t need to be an expert to read a quarterly report.  Look for things like sales and revenue growth over prior year. Make sure these numbers are very positive. I also like companies that have a history of beating Wall Streets expectations. The more you explore these documents the more you will understand and you will get a feel for the direction the company is going. I also look for articles about what the company management is doing with their stock. Are they buying more or are they selling? This can give you an idea of what the company insiders think of their future.

I have a diversified approach with the stocks I own. I try to make sure I have several market sectors, I would own stock in something like tech, medical, the auto industry and commodities like oil.  Try not to buy in just one part of the market. Some are IPO’s or relatively new companies to the market where I am betting that they will grow and do well. I then can take advantage of the increasing stock price. One of these stocks I own has increased 590% since I have owned it, when you do the math it’s a 22% annual growth rate. That’s much better than the 8% all the experts boast about, also don’t forget the 8% comes with about 2% in management fees so its really 6%.

The other stocks that I look for are ones that offer a dividend. With these I’m not looking for massive upside I look for established companies with a solid stock price range that pay a good dividend. I often do a search like this: “top 2019 dividend stock” I then look at their stock price, their quarterly reports then after much research I make my decision.  I’m not as worried about the stock price as much as the income from the dividend. I look for stability in these stocks.

One thing I’ve found is that it takes time to understand the terminology of the industry.  The more you read the more you will understand.  I recommend installing a stock app on your cell phone.  Test yourself, do your research and pick some stocks and see how you do.  Learn from your mistakes without investing real money.

Also, don’t forget stocks go up and down so don’t worry if the stock goes down after you’ve bought it. Remember you did your research; you are in it for the long term.  Here is a personal story on this subject. I bought a stock at $35 per share, the next month it was $17 per share. I stuck with it because all my research told me that the company was doing well and still growing at a fast rate. A year later it was $70 per share and today its around $220 per share. This is a part of managing stocks that is individual and you will have to develop your own tolerance level. I personally take a refuse to lose attitude. I will sit on a stock for years then sell once I’m back in the positive so I don’t have to take a loss. This is not for everyone but I find lots of enjoyment in it.  My advice is to start small.  Also, I am not talking about a get rich quick scheme or day trading. After all we are talking about your retirement and hard-earned money. Sometimes I take 6 months or a year reviewing a stock before I buy it.  I’m talking about being an investor.  Download a portfolio app and a stock app and give it a try. It has worked very well for me and I think you will find that with time and a little effort it will work for you as well.

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