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Sign of the Times Thumbnail

Sign of the Times

After a recent phone call from my 21-year-old son, I realized that some things never change. History does repeat itself in human behavior and how people want to “get rich quick” or how some say, ‘I’m going to retire by the time I’m 30”. The latter was the comment made by one of my son’s friends. He and a handful of others plan to get rich quick.

With the advancements in technology, it has never been easier to invest with an account on apps like Robinhood, SoFi, and Stash. Many of my son’s friends (Gen Z) are using these platforms on their quest to get rich quick and retire early. For young inexperienced investors, I equate this to the euphoria around the tech bubble of the 90s or even certain pyramid schemes. Television commercials, known as infomercials, often broadcast in the middle of the night, promise that you can work from home, use other people’s money, or have access to their secret formula to get financial independence.

My message to these young individuals is simple. Individual positions in stocks and bonds are equivalent to playing the lottery or going to the casino hoping you will hit it big to achieve financial freedom. Even with a high level of due diligence, historical data will show that diversification, understanding risk, and utilizing a financial advisor will give you the opportunity for better returns and meeting your real retirement goals than buying and selling individual stocks. Most individual investors will hop on the wave when a stock is on the rise and then sell when the stock is dropping. Information hits the internet in an instant, but by the time you hear what a stock is doing, it’s too late. Buying high and selling low are emotional decisions. This would be the equivalent of buying a home when housing prices are at their highest and immediately selling your house when prices are at their lowest. You wouldn’t do that.

The fact is, there is nothing wrong with engaging in these apps or buying and selling stocks in any other form, as long as you know the purpose. Is it for fun, a hobby where you are engaged to learn about the companies you are buying? Is it entertainment, just like the lottery, or a night at the casino? In all of these scenarios, you should know that the funds you are using are disposable, be sure you can afford to lose it, and by all means, be certain it doesn’t affect your daily living or retirement plans.

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This commentary on this website reflects the personal opinions, viewpoints and analyses of the Financial Strategies Group, Inc employees providing such comments, and should not be regarded as a description of advisory services provided by Financial Strategies Group, Inc or performance returns of any Financial Strategies Group, Inc Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Strategies Group, Inc manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

Written by Steve Wilbourn

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