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How I’m Becoming a (Financial) Dragon: 3 Easy Steps

How I’m becoming a (financial) dragon, AKA investing for retirement. I Look beyond traditional methods of saving like 401ks and IRAs.

What is a Financial Dragon?

So maybe you’re wondering, what IS a financial dragon and why would I want to be one? Well, I’m not talking about crushing my enemies or reigning fire all around. I’m talking about what a dragon does best. Hoarding. Specifically, investing for retirement.

I have been researching strategies on how to invest for retirement. In Than Merrill’s article The Top Investment Strategies for your Retirement, he focuses on traditional methods of investing using 401K and IRA accounts. These more traditional investment strategies have a proven track record, but slow growth. Dragons live a long time; they are patient but they are also greedy.

Image of a blue dragon sleeping on a pile of gold
You too can have a dragon’s hoard for retirement. Image courtesy of Istockphotos.com

On the other hand, what about aggressive investments? Anisha Sekar wrote an article on the importance of aggressively investing in your twenties. She says:

Basically, an aggressive portfolio gets you much better returns on average. On the other hand, you’re more likely to lose money and more likely to lose big.

I learned that in regards to aggressively investing, I generally should see better returns than the safer investments over the long term, but the volatility is going to be higher in the short term. This can lead to large account value swings. The closer I am to retirement, the less aggressive my investment strategy should be because I have less time to make up for any short-term losses. 

Portfolio typeAvg. returnMoney at age 65
Most conservative (all bonds)5.3%$650,099
Balanced (half bonds, half stocks)8.2%$1,365,441
Most aggressive (all stocks)10.1%$2,273,988
Assuming starting age of 25 and contributions of $5000 per year

I am not in my 20s, but I still have plenty of time before retirement to take on a larger risk profile. 

For the Hoard!

Step 1. Learn how to budget.

Let’s be honest, not everyone had access to the same tool kits growing up. I know people that did not have to pay attention to a bank account balance until they were in college; some even later into their 30s and 40s. Budgeting means looking at our income, figuring out our expenses, and determining how much disposable income we actually have to invest. I’m talking about money I can comfortably invest, the money I can walk away from and still be able to pay my bills and eat. I also know I should always have an emergency fund for unexpected expenses prior to allocating money for investment. Lastly, it’s also important for me to remember to budget for entertainment as it’s vital to my mental well-being. Having a hoard for retirement is great, but I don’t want to forget to enjoy my life. The last thing I want is to turn into a Scrooge!

Step 2. Look at ETF’s

There are many different stocks out there, such as Gamestop (GME) or Apple (APPL). Trying to pick individual stocks is something even the pros struggle with, but luckily there are Exchange Traded Funds (ETFs). ETFs are a collection of stocks all in one basket, usually focused on a selected industry or index. Individual stocks are likely to be more volatile, jumping around with the current news, whereas an ETF is diversified and grows more slowly over time. Like individual stocks, ETF shares are traded throughout the day at prices that rise and fall based on supply and demand.

The biggest advantages to ETFs are trading flexibility, portfolio diversification/risk management, and lower costs. Since I’m looking to invest long-term, these benefits are right in line with my dragon-like motivations. When choosing an ETF, I did my homework and picked the ones that align with my goals. I personally think of it as investing in the future I want to see, so my portfolio consists of solar energy, robotics, and marijuana. These are all industries that I think should be a larger focus in the future.

Bonus Heat: I look for ETFs that pay dividends. I can collect a little bonus scratch from dividend-paying investments, which are companies nice enough to share their profits with their shareholders. The dividend amount is paid out on a per-share basis, so the more I own, the more dividends I receive. I use the Robinhood app and have it set up to reinvest any dividends that come my way.

Step 3: Keep Putting In

My final step toward becoming a financial dragon is consistently putting money in and not withdrawing it. This can be a hard one!  My first instinct when I see a stock falling is to get out quickly before it’s a total loss even though I know it’s certainly not going to be. First, I haven’t lost (or gained) anything until I’ve sold it. Second, because I am consistently investing in the fund, I am buying at these lows also, bringing down my cost average. Why?  Because I’m a dragon. A dragon is always adding to its pile, no matter what price the peasants in the market are charging for gold!

Example: I purchased shares in AdvisorShares-Pure Cannabis ETF (YOLO) in 2020 at $12.34 per share. It then soared to $30.00 a share a couple of months later. Now it’s sitting at $24.00 and pretty much sitting sideways. I’m not sweating the fact that I didn’t secure those gains by selling, and as soon as I have more expendable income, I’m going to buy more. Why? Because I am focused on the long term, not the short term. I’m not planning on touching it for 20-30 years. It’s a long game. I’m a dragon. I can wait.

Personally, I’m trying to invest 5% of my income at a minimum, 10% when I can afford to. The amount is less important than developing the habit of investing in something on a regular basis. As scary as investing seems, I’m much more afraid of not doing it.

About the Author

Picture of a woman with short cropped black and red hair. Jenn P. Reilly is an artist and writer who spends entirely too much time on social media, she recently started investing during the 2020 pandemic lockdown and came to Financial Ineptidude at the beginning of 2021. Currently, she’s taking the Coursera Social Media Marketing Specialization. Her only goal is obtaining a pile of gold she can sleep on like Scrooge McDuck. Follow her on Twitter or Instagram with Financial Ineptitude or as @Jennherselves.

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