Wealth Stories to Share (Part 1)
The Journey of Building Abundance and Timeless Truths of Investing
My life's twists and turns that have given me the education on money, investing and the truths of wall street are many. I look forward to sharing them.
I have been in the investment profession for over 25 years and I am proud of the essence and truth of what my industry is and does for people. When done correctly with the right disciplines and following time-tested principles it is beautiful. When it is abused and treated like a casino it is dark and ugly. The clients who I have served over the course of my career are a shining example of what saving and investing over the course of a long career can do for a family.
The value of time can not be ignored in any part of one's life. It is by far the most valuable thing we all have! This is the single most important factor in investing and creating wealth. Einstein stated "Compound interest is the 8th wonder of the world. He who understands it earns it: he who doesn't pay it." Compounding is all about time and patience and that will be a post in and of itself coming soon.
I wish I still owned every stock and mutual fund I had ever purchased. Good, the bad, and the ugly. The power of the good over 30 years would surpass the bad by 100X.
When I was a manager at Merrill Lynch one of my hardest things to deal with was clients who were unhappy with their broker. The story I remember like it was yesterday is directly related to this principle of time and discipline in holding and not selling. I got a call from an older gentleman and he asked for a new person on his account. When I asked him why he stated "he keeps asking me to sell my stocks and I don't sell stocks I only buy them." I was taken aback by this. Never heard anyone ever say that in my entire career up to that point so I pulled up the account and was astonished! The performance was off the charts on the compounding on the portfolio with a return of well over 20% a year. Not one sell in the history of the account. The stocks were blue-chip names everyone in the world knew about. No big secrets in this mix from some magic newsletter. Just a long time period and discipline. Great story I will never forget and this is the ultimate truth when you are in your growth phase of life. It changes when you need income and then selling and changes become more common but until then buy and hold!
People who save and invest over the course of their careers come to me with large nest eggs built with their blood, sweat, and tears but most importantly their discipline. See the blood, sweat, and tears are going to happen to everyone but without the discipline, the nest egg will not. Find quality investments and stay invested as you give it the proper time and you will be rewarded.
Once you are in the window of looking at creating your income stream in retirement there is a change in philosophy. We now go from paying into the investments to drawing out and that is a whole different ball game. The window to start making that transition is about 5 years before you want to retire and that is the time to develop a floor income plan. Once you have built up your 401k, brokerage account, savings, and pension you are ready for the good life! This is when we shift gears to match the income from our investments with our expenses in life so we no longer have to worry about large drops in the stock market that could cause a wipeout. I will cover this in part 2 of this series called Floor Income Planning.
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by John Lohrenz the Author of The Prosperity Project. The Prosperity Project is available now on Amazon and Barnes & Noble, If you are interested in finding your own formula for building abundance and a map for a life well lived check out The Prosperity Project