What we can or cannot do, what we consider possible or impossible, is rarely a function of our true capability. It is more likely a function of our beliefs about who we are.
— Tony Robbins
This blog is an outgrowth of a number of things. It was a way of getting the word out about my (former) training service. It is an outlet for the nascent writer inside me. It is a positive distraction from impulse underemployed; between me and those approaching retirement with underfunded accounts; between me and the young people wondering how to support a family AND save for retirement; between myself and the young people graduating from high school and college and wondering what to do with themselves.during the day. Most importantly, it is a direct line of communication between myself and the
Let me be clear about something… you can achieve stellar investment results. Let me say that again… you can achieve stellar investment results. And no it doesn’t require that you learn accounting; nor does it require that you learn some complex trading strategy; nor do you need to purchase a complicated black box system. After you learn a proper, simple approach, you don’t even need to spend an enormous amount of time on investing/trading related activities unless it becomes your passion.
The professionals say you should leave it to them, right? For many of you that may be true to an extent. I’m not trying to debate that. I’m actually saying that you don’t need to treat it as an either/or decision. You can keep the lion’s share of your retirement savings as is. You can continue making contributions in much the same way that you have been to date. But there are a few steps you can take immediately to bolster your annual returns.
- First and foremost, learn, accept and then commit to constantly improving your Emotional Quotient (EQ). EQ is just a fancy way of saying discipline and patience. While most people think investing/trading is about numbers, accounting, technology and secret “systems,” the reality is the best traders have simple underlying methodologies matched with extraordinarily strong EQs. The good news is discipline and patience are two things upon which we can all improve.
- Second, you should learn to read charts. Whether it takes you a minute or a month; a few days or a few months, learning to understand and read what a security’s price action is telling you is imperative. Trust me, it will pay enormous dividends, whether you focus on company fundamentals or whether you’re more interested in learning to trade solely based on price. If you’re only interested in producing better results in your 401K, great. Use what you learn about reading charts as an overlay to your selections based on fundamental criteria. However, if you are interested in adding a bit of alpha, follow step 3 and start trading a small account using a short-term approach.
- Third, open and fund an IRA account (preferably a Roth). It’s important to note here that you should only fund the account with a relatively small amount just once (relatively small depends on the size of your overall portfolio as well as your years left until retirement) and then allow the nature of compounding to take its natural course. If done correctly, taking this step can help you can add return while lowering the overall risk of your portfolio… two desired outcomes that don’t often go hand in hand.
I’ll be writing more about this in coming posts. In the meantime, let me know what you think… good, bad or indifferent in the comments. I’d love to hear from you.