When I first began this website, I planned it to be just for my paintings and sculptures but as I thought about it more, I realized that it had the potential to be a platform for all of my thoughts, ideas, and concrete plans for both my children and my guests on this site.

Today’s Pondering covers investing for different ages. These, as always, are just MY opinions. They reflect how I view the markets, what I have done over the years, and are generalities. For the most accurate advice regarding your own finances, you must go to your financial advisor.

When we first begin to make enough money to take care of our personal needs, only then can we try to develop a strategy for long-term investments. Each person has their own idea of how much risk they can take. When I first thought of investing, I knew that my tolerance was pretty high. I was new in practice and never invested more than I could afford to lose. To me, THAT is a very important mantra to use as a new investor. It is the unique risk-reward that drives each person and the tolerance for risk will dictate what and how much you can risk.

My first decision was to prepare for at least six months of cash needs. Some people think that this is too much in terms of emergency cash but, being new to investing, I wanted to be safe. Of course, you also need to prepare for the possibility of sudden illness or even that remote possibility of death, so life insurance or disability insurance is a must for the young investor.

For the purposes of this short overview, I’d like to skip over what many people do regarding buying their first house or buying land for use as an investment vehicle; these concepts are too complex for this overview, but nonetheless should be seen by any and all up-and-coming investors. However, I will touch on the stock market, an extremely prominent vehicle for investors.

The earlier you can begin to invest in the wonderful, beautiful businesses of our country, the better off you will be in the future. Many of you will have employer 401K plans as well as IRAs that might be company funded, or even a Roth IRA (which to me is the right way to go). The main benefit of a Roth IRA is that the money that you put into this account is NOT deductible from your yearly taxes BUT the income derived from it is NOT taxed when you take it out much later in life. That is a huge advantage over other investing methods. I like the idea of forced savings. If your employer matches your investment, please take advantage of that benefit.

An important note: spend within your means!!! I know that we “want” things, but it is important to think of all the ramifications in life, not just supplying your “immediate gratification”. Yes, I know this is very simplistic, but this is just a primer…a beginning “lecture” on investing.

The young people who are reading this should focus on long-term views of the stock market. Stocks like Apple, Facebook, Google, and Tesla are your long-term stocks to buy (read about “Blue Chip” stocks). For these stocks, forget the ups and downs of the markets because you have many years of growth ahead of you. Try to invest monthly, no matter what price your favorite stock is priced. Long term, these stocks will average out and therefore it is hard to always buy low. There are too many permutations in market prices to try to buy “just right”!! Please read plentifully about how to invest and do your own thinking. (No one cares more about your money than you.) Most young people are almost 100% in equities with few bonds. As you age, the pundits suggest a portion of your portfolio should be in bonds. It is a safe and balanced way to conserve capital.

As an older gentleman, I am much more aggressive in my way to invest in stocks. I like to take an active role in trading. This is NOT for everyone. I’m discussing this because it is a very “safe” way to increase income with few risks. This is called a covered call strategy. There is also a stock called QYLD that does exactly that, but I prefer to do this with a broker as an aide to increase my income. Here are the nuts and bolts:

First, this is called a “covered call” because one has to OWN the stock before the call is sold. Let’s use Apple as an easy example. I own Apple at a cost of $160. I decide to say to someone “out there,” “Do you want to buy my 100 shares of Apple at $185 two months from now?” They say, “ Okay, I’ll pay you $.50 a share for that option.” Oh boy, they now pay me $50 into my brokerage account. (If you have 500 shares then the option amount is $250) Happy yet? Here’s the good news: That money is mine no matter what happens two months from now. I’m happy!! Now the market is rising fast. Am I worried? Nope! The markets fluctuate all the time. I am only focused on the strike date two months from now.