Where did your retirement go?

This week, Saga revealed that 44% of over 50s don’t know at what age they’ll be able to fully retire; that one in six have put off retirement indefinitely; and that 55% are retiring later than they’d planned.

The main culprit has been financial reasons. Investment funds are not performing as they should. What can we do about it?

Many people come to trading with a plan to boost their retirement funds. And there’s no reason why investing in the markets can’t do just that. But there’s a problem – the returns from trading are inherently volatile. There’ll be good periods, and there’ll be weak ones. This is not what we want to see happening to our nest eggs.

Investors become disillusioned and fail to achieve long-term success. So, what goes wrong, and how can we work towards long-term profitability?

Like most men from the world of high finance, I often listen to the radio while I do the washing up.

A while back, I found myself listening to a broadcast on Radio 4 about weight loss and exercise programmes. You know those extreme fitness programmes, like Insanity, promising you a perfect body in 60 days? Many of us start trading with similar expectations …

We’re subjected to adrenaline-fuelled marketing … promising us great results … and when we hit the first hurdle … many of us bail out.

We’re left feeling like we’ve been suckered, when all we were doing was trying to better ourselves.

It’s a cycle that I’m sure most of us recognize.

So how can we break out of it to make meaningful change in our lives, rather than repeatedly throwing ourselves to the wolves?

I figured that if we could understand the cycle better, we might recognize where we’re going wrong, so I thought I’d take a look at the stages here …

 

1. Buying the dream

First off, why does the marketing have to be so full-on? All those superlatives. Can’t they just tell us like it is?

I’m going to tell you something here that I don’t often talk about …

When I published my first trading product, I was determined to do things differently. I told people exactly what it did, in plain English, and left them to see for themselves that this was clearly the best product on the market (which I firmly believed it was).

The result? No one was interested.

Why?

Well, would you buy a diet book that told you you needed to follow its rules steadily for a number of years, losing maybe a couple of pounds one month … putting a pound back on the next month … and slowly shedding a stone or two over the next two years? And that if you were really disciplined about it, you could keep that weight off forever.

Tempted?

I didn’t think so.

Don’t get me wrong, I’m not suggesting that anyone should lie or be misleading about what their strategy can achieve, but it’s important to remember that starting out with a new trading strategy is about implementing change in our lives, and human beings just aren’t that good at change.

We struggle to keep to the smallest habits – stuff that should be dead simple, like placing a 5 minute trade each evening … or not dipping into the biscuit tin each time you make a cup of tea.

To make a change in our habits we need to feel ‘fired up’ – and all that marketing is part of it. It’s the first catalyst for us to make a change, and is an important (if slightly cheesy) part of the equation.

Don’t fool yourself that you can be completely rational about making a change in your life – we all need a bit of chivvying along the way.

So lets say that you’ve been spurred into action by an motivational email you’ve received … and you’re feeling really fired up that ‘this time’ it’s going to work …

(I’m going to assume here that, like all good Trader’s Bulletin readers should know, you’ve checked the results and are happy that this product has proved profitable in the past and comes will a full guarantee.)

 

2. Getting started

You’ve signed up and the trading manual has landed on your doormat … what next?

Do you tear open the envelope? Or do you put it to one side until you’re in the mood to get started?

If I waited to ‘feel like it’ before I went for a run … or before I got up at 6am for a swim session … it just wouldn’t happen. Life is not a waiting room.

There isn’t a ‘right moment’ – that’s just your brain’s way of making excuses. If you’re not getting started, be honest with yourself about why not – laziness? fear? Once you’ve got the truth, it’s easier to break down those barriers.

 

3. Staying motivated

What keeps you going once the initial rush of enthusiasm has faded?

What makes you sit down once a day / once a week to action your trading strategy?

The money building up in your account? Of course, that’s nice, but it’s rarely coming in fast enough for us to get that heady rush we’re after. And what about when you hit a drawdown?

Here we get to the nub of the problem … the reason why gyms slowly empty after the January rush of enthusiasm … why diets are abandoned after just a couple of weeks … and why running programmes grind to a halt at the first twinge of that old injury …

Many of us feel that we’ve done the hard bit when me take that first step towards change … but we’re kidding ourselves.

The reality is that if we really want to make a change in our lives, there’s a slog involved. It means sticking to the diet even though the bathroom scales haven’t shown any results in two weeks … it means going to the gym when we’re feeling tired, fed up and our brains are telling us ‘not to overdo it’ … and it means keeping the faith in our trading strategy when we’ve had four losses in a row and our account has taken a dent …

 

10 ways we can help ourselves

For some people, success comes easily – usually these are people for whom self-discipline is natural. For those of us who struggle with discipline, it’s a muscle we have to exercise by repeated use. Here are some ideas to help you flex that muscle …

1. Be honest with yourself – don’t fall for your own excuses. If you can’t be bothered – admit it. If you’ve made a mistake – own up to it.

2. Take responsibility for your own actions. Too often, at the first sign of trouble, the mud starts flying!

3. Look for a strategy offering steady, consistent returns rather than huge, attention-grabbing headline numbers.

4. Don’t over-invest in one system – remember, even the best investments can go down as well as up. You need to be diversified, spreading your money across investments with different returns and risk profiles.

5. Set yourself achievable goals. Look at the size of your trading fund, and work out what you can hope to make within a set timeframe.

6. Be realistic about the amount of time you can devote to this project, and schedule your time.

7. Focus on the longer term instead of worrying about how much you’ve made (or not made) ‘today’ or ‘this week’.

8. Praise yourself when you trade well. Good, disciplined trading doesn’t always give short-term profitability – sometimes we can do everything to the letter, and the markets just don’t care. So, even if your profits haven’t gone to plan, give yourself a pat on the back for staying focused.

9. Monitor your results – don’t rely on how you’re ‘feeling’ about your trading to gauge how well you’re doing. As human beings, we tend to feel the pain of a loss more keenly than the thrill of a win, so you may underestimate your performance.

10. Get support. This can be very tough for traders – there’s no shortage of forums out there, but I’m disappointed by how often a bit of banter on a forum can lead to vicious trolling. I endeavour to keep the Trader’s Bulletin forums as supportive as possible – trading can be a lonely game, so we really should welcome the support we can get and receive from each other online.

At Trader’s Bulletin I’ve made a concerted effort to move away from systems with huge returns but high volatility, looking instead for stead profits that can be consistently maintained. I’d urge traders to look at the Systems we’re using section of our website, at strategies like Hav Trading, and you may even be able to grab one of the last places on the Income Raider trial.