Back in 2000 I worked at a software company that went public. As all tech stocks did in 2000 the price of the stock skyrocketed. Our sales department was full of young, new professionals who couldn’t believe our good luck. We calculated how much our stock was worth according to Yahoo finance (remember when Yahoo was the go to resource…yikes!). My manager was a few years older then me – meaning she was probably a wise, old 28 year old. She sold some of her stock and bought a new car in cash and bought a house with a decent down payment. Another manager heard what she did and told her that she made a huge mistake. He told her she should have never sold the stock since it was just going to keep going up and she just “left tons of money on the table”.
I think you know how this story ended. The said “hot” stock plummeted, as in $100+ per share to $3 per share, a few months later. While my manger had a house and a paid for car the rest of us were left wondering what could have been. The brilliant rule my manager followed was knowing her own financial goals. She wanted to own a home and a car. She realized that she could achieve those goals by selling some stock – and yes walking away from the potential upside.
Your Financial Goals Matter Most
The upside is always hard to walk away from, but a clear picture of what you want can help you figure out when to walk away. Financial goals can help you weed out the financial noise that we are constantly being fed – buy this stock, sell that one, never do this, always do that. Generic advice is rarely correct for everyone. You need to know what you want to accomplish with your money and focus on achieving those goals.
I read an article once that said the most important thing to ask your broker is “How will this investment advice help me reach my goals?”. That really stuck with me. If I tell you not to pull your money out of your investment accounts to pay off your mortgage because your investments are growing at 9% that might be ideal advice or terrible advice. Its ideal advice if your goal is to save $2 million before you turn 55. It is terrible advice if your goal is to get rid of all of your debt so you can travel the US in your RV as soon as possible.
Get clear on YOUR financial goals and then you can filter all the financial advice you hear through that lens.
Reach out to schedule a call if you would like to to discuss how I can help you build a financial plan around your goals.
Anyone in your life overwhelmed by all of the financial advice out there? Help them understand how important their goals are by sharing this article.