ECON 101

Five simple steps to securing your financial future

It’s simpler than you might think

L.A. Fosner
6 min readFeb 6, 2021

--

Black and white photo of a man sitting in a chair, his head in his hands, covering his entire face.

Since the furor over the shorting of GameStop stocks began, we’ve seen a flurry of trading. Despite angry gamers and newbie traders buying the brick-and-mortar company’s stock to stick it to big investors, the stock has tumbled, dramatically.

From its high of a little over a week ago, at $490/share, it now sits at a paltry $63.77/share. Now that the initial excitement has worn off, it’s likely to continue to plummet. Granted, it’s still higher than the pre-pandemic price of $4/share, but if you are an activist trader who was planning to gloat over the damage you’ve done to institutional investors, you may have done so at your own expense.

As promised in my last piece, here is some sound advice (gleaned from a lot of online reading, Suze Orman, and my own experience) to help you play it safer going forward. This is not a comprehensive investing guide, it’s more of an outline for one way to invest safely, without having to study the market or worry that you’ll lose it all in a bad bet.

If you have a company 401k, IRA, or Roth IRA, you have a huge advantage. If you don’t have company sponsored retirement accounts, consider setting up a regular (traditional) IRA or a Roth IRA. Traditional IRAs are pre-tax, so whatever you contribute, up to a certain amount, is tax-free — until you withdraw it.

With a Roth IRA, you’ll have to pay taxes on the money you invest, but not on the profits from it — provided you follow all the rules. The amounts you can contribute to non-employer-sponsored retirement accounts is limited. However, you can continue to invest additional income outside of any retirement accounts you may have.

Here’s how:

1: Buy index funds. These combine a lot of different companies from various sectors. They are meant to mirror the indices (hence, the name) and typically do as well or better than the overall market. In the examples below, we’ve used 5% interest, compounded annually. But the latest figures show the historical market return is closer to 10%. So, think of these examples as the minimum you can expect, with twice as much, potentially.

--

--

L.A. Fosner

Writer/Activist/Humorist/Catalyst for Change. Dispelling the myth of white/male supremacy, and removing religion from government. ProLIFE, not ProBIRTH.