I once overheard a stock broker bragging to a man about the yacht he kept docked at the most exclusive club in Seattle, and the man replied, “Where are your client’s yachts?”
You may be wondering if it is a good idea to invest. On the one hand, it seems like it would be a wise thing to do, and on the other hand, you might be worried about losing your shirt. After all, we’ve heard the stories of pro athletes who trusted the wrong advice and lost millions. In a lot of cases, these athletes invested in business or real estate opportunities that they knew nothing about, or they turned over all their investments to an adviser who misused their funds.
Truth is, most stock brokers aren’t concerned about the client’s outcomes. It’s all about commissions on sales. The smart thing to do is to find an investment adviser who is legally bound to hold your interests above their own.
Another trap is day trading, moving money from stock to stock in a daily buy-and-sell strategy. This idea that you can “beat the market” through “aggressive investing” more often leads to losses than gains.
The best advice I can offer is to buy a globally diversified portfolio of quality stocks and bonds and hold. The basic idea is, you buy the market, because we don’t know what’s going to happen in the market. But we do know that things will go up and down, and unless there’s an alien invasion, there will be no day where it will all be down at once and stay down.
Bottom line: investing (correctly) in the stock market is the greatest wealth creation tool. If you want your money to grow now and for long after your athletic career is done, invest in the stock market. Markets go up and down, but over the long-term, the stock market has always ended up going up. By thinking long term, and sticking with it, you can create a structured, disciplined investing plan that spreads your portfolio, so it is globally diversified.
The market correction we saw earlier this month, on February 5, was the biggest decline ever in a single day. I had several clients call me that day in a panic wondering what they should do. I asked them to repeat back to me the coaching I’ve given them all along, “This is a normal market correction, and it’s going to be okay. Just remember to think long term, and turn off the news.”
The good news is, I’ve never heard of anyone losing their fortune by working with a non-commission based adviser and following a sound investing and money management strategy.
Just like your coaches have advised you to become an elite athlete, an investor coach can help you navigate your financial world. The big question then becomes, how do you find the right coach?
Avoid those who want to sell you complex financial products with high commissions and confusing terms. Look for a fee-based investor coach who will ask you questions about your life situation and stay in close contact with you. A good investor coach can guide you to put together a portfolio that is appropriate for your situation today–and helps you plan for your life ahead.