Do you have a 401k at your job? Are you vested? Are you worried about the contributions declining because of this dooming recession? If so, let’s talk.
For many people being introduced to Stocks comes from the Human Resources department in a standard corporate setting. Typically, after 90 days you are given the option to either contribute a 3-12% monetary sum to your shiny new 401k plan. You would sign a few documents stating that for every paycheck, you will allow your compensation to deduct that percentage amount, and then the magic happens. You adult :-).
Around this same presentation you are shown a few pre-packaged plans that have been created according to your age and the future year that you will retire…according to the government. For example, Vanguard 2045, Vanguard 2055, you get the idea. The next step is waiting for your employer to match your contribution when you have been fully acclimated into the company, aka vested. This is the safest, least risky version of stocks, because since you are not managing, monitoring, or manipulating it, the growth either up or down is controlled by the stock market.
For me, I like living a bit on the edge so this standard form of saving was never enticing to me. Sure the presentation says something like if you invest early and stay with the same employer for the next 45 years you will have saved a Million dollars. I know. I understand. The idea that you can only control a portion of what happens in your 401k, while knowing if a recession hits, your savings also takes a hit, seems odd. This sounds like the secret Wall Street knows but would never say.
It was the summer of 2014 where I sat on a call and heard Chuck Hughes talk. I was intrigued by the notion of being in control of where your funds lie and having the ability to move things around when you saw a need. Now let me ask you, what things do you purchase in excess every month? Whatever they are: Cosmetics, Fuel, Electricity, Department store items – those things are actually investments. If you believe in Target, appreciate them being in close proximity to your home so that you can pick up items that you believe you need, you very well should put 2% in $TGT. As they increase revenues and hit their goals, they will pay out their shareholders dividends. Dividends are (a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves). You will receive your cash dividend and use it or re-invest it in that stock and let your money compound. When I think of all of money, I’ve invested in drinking Starbucks Venti Caramel Macchiatos but I didn’t actually have an investment in $SBUX, I know now that I was doing myself a disservice.
