Q: June, I am hold?ing three stocks right now, BAC, F, and HPQ, need?less to say this has been a rough year. My orig?i?nal invest?ment was 10K in each, and I am down about $4,000 since the begin?ning of the year. My thought is that I am best hold?ing on for the long term, since swal?low?ing a 5,000 dol?lar loss is not appeal?ing to me. I have another 10K in cash right now and am think?ing it may be wise to add to each of my posi?tions in these com?pa?nies since I still see them as solid com?pa?nies (for my 5 to 10 year win?dow). I am seven years into my Army career (33 years old) and have made the deci?sion to go war?rant and will be com?plet?ing my full 20. My finan?cial sit?u?a?tion is strong in terms of hav?ing zero debts and lit?tle to no monthly pay?ments to speak of. I make my full con?tri?bu?tions to my Roth IRA, (for the last 3 years). Would you stick with the afore?men?tioned stocks or do you believe I should move away from the auto?mo?bile and bank?ing indus?try which every?one else in the world seems to be?doing?
?John, Fort Leonard Wood,?Mo.
A: Pick?ing win?ning stocks is a tough task. Just ask me, I was a stock bro?ker for seven years before set?tling in as a finan?cial plan?ner. Even pros that live and breathe stocks every day aren?t always suc?cess?ful. And, to com?pli?cate things some?times a com?pany sur?prises investors with par?tic?u?larly unwel?come news, such as higher cus?tomer fees. That may drive that stock?s price down as well as oth?ers in its same sec?tor. With that in mind, maybe it?s time to try a dif?fer?ent approach.
It sounds like you?re in ter?rific finan?cial shape! With no debt, mod?est expenses, and steady income as well as a career path you?re in a posi?tion to lever?age your finan?cial sit?u?a?tion to cre?ate a really nice nest egg. I would focus on build?ing a solid core of broad-based invest?ments. Are you par?tic?i?pat?ing in the Thrift Sav?ings Plan (TSP)? This is an excel?lent exam?ple of a core invest?ment for retire?ment. You can save a lit?tle on taxes today, invest in inex?pen?sive index funds and build for your future. In the sec?ond quar?ter of next year the Roth ver?sion of the TSP will be avail?able mak?ing it an even a sweeter deal. That means you could invest up to $16,500 after-tax dol?lars and enjoy a tax-free income stream dur?ing retirement.
I know retire?ment isn?t your only finan?cial goal, so as part of your core invest?ments you could invest in a short-term bond fund for goals within the next two to five years and a diver?si?fied port?fo?lio of funds or exchange-traded funds for longer-term goals. These, again, all rep?re?sent core-type invest?ments. In my mind this type of approach should account for about 90% of your portfolio.
With the other 10% you could feed the beast. Take a flyer, go-for-broke, lis?ten to your neighbor?because in the end your finan?cial suc?cess will not be deter?mined by your abil?ity to pick that win?ner, but rather by tak?ing a solid, fun?da?men?tal approach to build?ing your finan?cial future.
So, do I think you should dou?ble down on your stock picks? No. Instead start to build a frame?work for the long haul. And, from a glass half full per?spec?tive, while no one ever looks for?ward to los?ing $5,000, you may be able to pick up a tax break. In a bro?ker?age account, you can sell your losers and off?set any real?ized gains (appar?ently not applic?a?ble to you at this point) and deduct up to $3,000 from ordi?nary income. Then, after 30 days, if you still believe in those com?pa?nies you can buy the stocks back. Talk about turn?ing lemons into lemonade!
And, by the way, I?m proud of you for repeat?edly fully fund?ing your Roth IRA. Thank you for your service.
black hawk down david blaine iowa state evan rachel wood i don t know how she does it katamari roatan
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