Wait - Are You Sabotaging Your Future

John M. Dabbs


Photo by William Iven on Unsplash

I've spent the past six years as a financial consultant before hanging it up. I didn't have the "sales" mentality required for a booming financial services career. Taking the FINRA (financial industry regulating authority) licensing examinations, attending conferences and seminars gave me an insight into the business and the markets. I'm about to give you some unsolicited insight and advice. Before you choose to act on any of it, always consult your personal financial advisor as everyone's situation is different.

Spread out your holdings

As we finish 2020, it is obvious this year has been a major catastrophe on many levels. The financial markets have faired well as a whole, but not for some companies. This is the reason we do not put all of our eggs in one basket - especially when it comes to buying stocks. If you were invested in one of the companies that were involved in personal home gyms or pharmaceutical companies that make drugs, you may have hit the jackpot. On the other hand, some big names lost millions.

It's essential to diversify your holdings. Do not invest in only one company, a single area, commodity, or sector of the stock market. One major downturn can pull all related stocks down too, by association. It's just the way people's minds work. People drive the price of stocks, and a good portion buys and sells on impulse by giving into emotion.

Think big-picture

Those who do best in the market, and their 401K holdings, do not change things around based on emotion. If you try to time the market, you'll most likely lose every time. Invest in a strategy. Systematic investing is your best way to make gains in the market. You may have heard terms like dollar-cost-averaging, which means if you buy a fixed dollar amount of shares on a regular basis, you would end up paying less for them on average than if you only bought them when you saw the cost going down. When you buy on a regular basis, sometimes you'll pay more for shares, and sometimes you'll pay less. You'll also buy more shares for the same amount of money when the price swings lower and fewer shares when the price goes up.

It is very difficult to time the market and buy during swings in the stock prices. In most cases, the price has already fallen and started back up when you notice it is falling, and it starts back down when you notice it's up and want to sell shares for a profit.


Do not follow the stock market closely and become worried about your holdings. As said before, most people lose money trying to time the market. When stock prices are falling and people panic, they sell. If you sell a stock that was falling - you will get what selling price for the stock when it's sold. If the price was down, you get less money. Many people buy a stock when they see it has gone up. When a stock is up, you are paying more for shares than you would if you bought it when it was down. You can buy fewer shares with the same amount of money.

You will lose money buying stocks that are up and selling stocks that have fallen in price. The idea is to buy low and sell high. Managing your portfolio on emotion will keep you in the poor house. Women traditionally manage this impulse better than men. They can handle the rush of emotion that comes with market swings better than many men. Remember, we are looking for delayed gratification here. Get rich quick schemes seldom pay off.

Invest wisely - FinTec

Financial technology has come a long way. We have easy access to the reports and backgrounds of all publicly traded companies. We also have quick access to reports and trends on the economy, trade, and political rumblings which can cause markets and businesses to react.

Use the features available on your iPhone to watch stocks and gather information on the companies you have holdings in. You can do the same with most mutual funds too. There are many financial platforms that allow you to make your own trades and do your own research with tools within their websites. Schwab, E-Trade, TD-Ameritrade, and others provide you the information and ability to conduct your own planning and execution of stock trades.

If you aren't comfortable with your own research and judgment, you can use Robo-advisers. These programs will gather information on your personal situation and recommend portfolio changes for you. In most instances, the Robo-advisers are less expensive than a human financial adviser. The choice is yours.

History and the market

The stock market in the United States has a history of gains. According to Investopedia.com, the S&P 500 Index has gained an average of 10% every year since its inception in the 1920s. You'll see similar results with the Dow Jones Industrial Average.

The S&P 500 is an index of 500 large companies on the United States stock exchanges. The Dow Jones Industrial Average is the average of the stock holdings of 30 of the United States' largest and most significant companies. These two indices are used to track the general health of the businesses on the U.S. Stock exchanges. There are others, such as the Russell 2000, which is an index of 2000 smaller businesses.

Novice and simple investment means

For the beginning investor, most people are invested through our company's 401k retirement plans, and similar mechanisms. These plans generally allow members to direct their investments into pre-approved mutual funds and other financial instruments. I personally am invested through my employer's 401k, and have another Roth IRA which is invested differently. Some plans do not allow decision making and roll employees into a "target-date" fund. These funds are managed based upon the time until retirement. The closer the employee gets to retirement age, as identified by the fund's name (i.e. Target Date 2035 Fund), the more conservative the investments in the portfolio.

For those who do not know this, a mutual fund is a group of stocks and bonds managed by a portfolio manager, or management team, like a single stock. When you buy a share of a mutual fund, you are buying into a collection of stocks and bonds. Each mutual fund will list its holdings in the documents as required by the SEC (Securities and Exchange Commission).

How do I invest

Each person and situation is different. For me, I am fairly savvy and know about the markets. In my 401k my investments are split between a fund that is similar to an S&P Index fund (mirrors the stocks in the S&P 500), and a target-date retirement fund. My Roth IRA is invested in a mutual fund with a goal of capital appreciation. I used the company's research tools to find the funds with the best long-term and short-term performance history and chose a fund based on this.

Each person has a different philosophy on how they want to invest. I suggest you think about your plans and consult a professional. Do your research too, don't solely rely on your financial professional. Invest in what makes sense for you, and in the companies, you believe in (environmentally friendly, etc..).

Plan for the future

One thing is for certain, we do not know if social security is certain when we retire. It wasn't meant to be a sole source of income for retirees. We have to plan for our own future retirement. It should consist of savings, investing for grown of our nest egg (using tax-advantaged programs is a help, such as Roth IRAs, and 401k plans).

My father-in-law always told me to think of retirement as a milk-stool. They have three legs. To gain minimal stability in retirement we also need three legs to hold us up: social security, our own 401 or IRA, and company pension or savings. At one time, many employers offered pension plans with guaranteed benefits. This is no longer the case. We must invest in our own retirement if we are to succeed. Fail to plan and you plan to fail. It's that simple.

Thank you, and I hope this gives you some understanding and motivates you to plan for your future.

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Happy 2021! May it be much better and rewarding than in 2020.

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An outdoor enthusiast with a passion for travel and adventure. John is a professional consultant and photojournalist.

Johnson City, TN

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