Trading is accessible and easy to learn once people really decide they want to learn this business. We will layout 3 simple approaches to getting started to managing your own money as you approach or enter retirement.
1. Leverage your tax-advantaged retirement accounts and company 401Ks.
Investors every month automatically tuck away money into their retirement accounts and their company plans, but what if you can trade inside of them to generate returns in up and down markets? Now most people will say predicting the market on a long-term basis is almost impossible and to that, we would agree. But what if you're trying to predict a stock or market movement in a span of a day or two? This becomes much easier to understand when you focus your attention away from global macro trends and solely look at price actions and levels where the market is in a breakout zone in short time spans.
The great thing people fail to realize with company-sponsored plans and self-directed retirement accounts is they can make countless trades speculating in up and down markets and won't be subjected to annual taxes (depending on the investment and strategy). This allows them to take advantage of markets that are very volatile in both directions instead of a buy and hold mentality where returns will usually mimic the overall broader market returns for that year.
2. Using options as downside protection in ugly markets and making short-term trades when a stock really moves.
Now many individuals and even financial advisors don't utilize options trading because of the perceived complexity that comes with this market. But options have been around to serve two main purposes:
A. hedge portfolios that have core diversified stock holdingso where the investor is not looking to sell for tax or cost basis reasons.
B. Making higher returns in an underlying stock move without having to buy the physical shares and pay the increased margin. They then can exercise those options and be in on a stock lower than the current market price, or, cash out and collect the proceeds and move onto another short-term trading idea.
Options at first can be confusing especially because unlike holding shares in stocks where you're patiently waiting for long-term growth, options investor have to be correct in stocks move in a short amount of time before those option contracts expire worthless.
But if you stick to 10-15 stocks that have the high daily traded volume where the patterns and trading opportunities present themselves the options markets can be an ATM in growing your retirement assets faster than a buy and hold mentality.
3. Allocate a part of your savings and investments into self-directed trading.
Everyone who reaches a certain threshold in net worth should absolutely surround themselves with the brightest minds like a CPA, financial advisor, and even a portfolio manager. But a small portion of your nest egg should be actively traded where you're on the controls making all the decisions. Why? Well, if you have a properly allocated investment portfolio with a financial adviser the goal is to not panic and sell everything when markets get ugly. This could lead to a lot of frustration in determining if markets are just experiencing a slight pullback or a full-on bear market. So having a portion of your money set up to deploy in markets that are going down where you can capture those short-term opportunities in down and up markets is crucial to a successful investment plan.
The second reason its good to have a portion of your money set aside that you personally invest is because it forces you to be active in knowing what is going on in the financial markets and keeps you accountable to achieving your retirement goals. Most people who have a financial adviser will speak to them a few times a year where they check all the boxes in making sure you're on track for retirement, but you being accountable to yourself and holding your financial adviser accountable is important through understanding what is going on in the financial markets.
By actively trading a portion of your money yourself you can gauge better than the everyday investor where the markets are likely to go and to compare your returns to those that are helping you manage your wealth.
What if I am new to trading in a retirement account?
We get this question a lot especially over the last few weeks due to the market's selloff. The best way to learn to trade is to surround yourself with those that do it for a living and to apply yourself understanding what essential methods you need to be successful and forcing out the non-essentials such as the news or various indicators in learning.
No one complains when markets are going up and everyone is doing well. It's only when things go south and the markets fall do investors become reactionary and start looking at their retirement goals. But by then it could be too late where you would have to work longer than you want. So taking the step now in learning to trade for yourself will ensure you become wiser to how financial markets and the economy works, but will also set you up to be proactive and execute trading opportunities regardless if markets are going up or down in short time spans.
If you want to learn more about retirement account trading I encourage you to join us tomorrow and Thursday at 1 pm EST. Where our full-time traders will show you how its possible to trade inside your retirement accounts and learn it in a way that will be seamless once you cut through all the red tape about tax-advantaged account trading. The free webinar registration link is below and we encourage you to attend if you're ready to manage your own money.
REGISTER FOR FREE HERE