While any one of these factors can lead to a good investment, the intersection of these factors leads to waves of changes that companies must contend with – some will capitalize on them while others will be left behind.
The essence of Cocktail Investing recognizes the intersection of several powerful forces – economics, demographics, psychographics, technology, policy, and more – that, when combined, give way to a powerful force that shifts the what, where and how people and businesses are going about their daily activities. At the very core of these uber-catalysts, companies, be they business-to-business (B2B) or business-to-consumer (B2C), need to respond to the changing landscape and adapt their business models. If they don't, odds are they will shift from a once-thriving business to one that is struggling and likely to be left behind and replaced by others. Think of the transformation and rise in the share price at Apple post iPod, iTunes (its payment processing content engine), iPhone, and iPad compared to the fall of BlackBerry and its shares after the iPhone. One could argue these waves of transformation are affecting how and where future generations will be educated.
As we'll talk about in the coming pages, buy-and-sleep investing in the stock market won't help you, either. You need to have at least some of your assets in growth and that's true even after you retire.
No matter how you look at it, not only do you have to save but you have to be an active investor to get the most from your money and get the life you want, be it debt free or kicking back in the lifestyle you want in your golden years. In many ways, what we're saying is rather similar to what hockey legend Wayne Gretzky has said is one of the secrets of his success – knowing that he needed to be where the puck was going…he had to get ahead of it and all the other players that were simply following it. The same holds true for investors.
Inherent in that statement, which we suspect you subscribe to, is being able to decipher from all the noise that is out there and putting the pieces of the puzzle together to identify the companies that are best positioned for what lies ahead, while sidestepping the pretenders and those that will be left behind.
If you are an experienced investor, you may be formulating a plan of attack using the pain points we've identified in this chapter as a way of screening potential stock positions. There is no doubt the aging of the population gives rise to opportunities for healthcare companies, end-of-life-care companies, asset managers, and online investing platforms, as well as others. As you'll see, we'll be sharing techniques and procedures to help you identify the better positioned companies and how to determine which may be better for you – shares in a 9 percent dividend paying company or one whose shares are trading at a 30 percent discount to its price to earnings growth ratio?
Cocktail Investing Bottom Line
The economic climate has changed dramatically. The much-heralded savings and investing practices of past decades are no longer delivering the expected results. Frustration and even rage are evident across society as families look at the current state of their finances. The nation is facing a veritable crisis, as a significant portion of the population has not and is still not saving sufficiently or investing effectively, which will impact even those who have the good fortune to be otherwise well prepared. We present an accessible, alternative way to look at investing in a style that is enjoyable to read, exciting the mind as well as touching the heart.
At a time when people are living longer, many are increasingly concerned that they will not have enough money to last during their retirement years. According to data published by Fidelity Investments, the average 401(k) balance at the end of March 2014 stood at $88,600. This means that average investors will likely fall short in saving for their retirement unless they take a more active and informed role in saving and investing for their golden years.
● Whether you are raising children, saving for retirement, concerned over living a longer healthy life, or trying to make the most of your education let alone put food on the table and make ends meet, you need money.
● You can only work so many hours in a day and so many days in a week, and that means you need to make sure your money is working for you.
● Saving is a step in the right direction, but to grow your money over time in order to achieve your goals, you will need to invest to get the most from your money and get the life you want, be it debt free or enjoying the lifestyle you want in your golden years.
● Buy-and-sleep investing is over, and you need to be an active investor who is taking note of the ever-shifting series of landscapes.
● Cocktail Investing recognizes pain points as well as opportunities that arise from the intersection of several powerful forces – economics, demographics, psychographics, technology, policy, and others – that, when combined, give way to a powerful force that shifts the what, where, and how people and businesses are going about their daily activities. At the very core of these uber-catalysts, companies, be they business-to-business (B2B) or business-to-consumer (B2C), need to respond to the changing landscape and adapt their business models. That offers opportunity for investors like you.
Chapter 2
Getting Started
The secret of getting ahead is getting started.
Though no one can go back and make a brand new start, anyone can start from now and make a brand new ending.
Great love affairs start with Champagne and end with tisane.
Hopefully, we have convinced you that you will be best served relying only on yourself for your retirement and that the investing wisdom of the 1980s and 1990s is no longer going to deliver the same types of results. Saving and investing for your future is a lot like ice skating for the first time – you can feel a bit unsure and wobbly at the start and it can take a bit more effort than expected, but once you get some momentum going, it can get a lot more comfortable and natural. So, where to start?
First Step: Saving
How's that for a topic heading to make you groan and skip ahead to the next section?
Saving: It is a dire imperative but calls to mind excruciating lectures by Mom and Dad accompanied by profuse finger-wagging and a desperate desire to stick one's tongue out – or maybe that's just us, but you have to admit spending can be fun. Out of respect for you, the reader, we'll make this as quick and painless as possible.
There are three types of savings, and everyone needs to have at least the first two of these three:
1. Emergency fund
2. Retirement savings
3. Special-purpose saving (buying a home, college for the kids, that dream vacation, man cave, or fantasy shoe closet, etc.)
Most financial advisors typically recommend stashing away at least three and preferably six months' worth of living expenses for your emergency fund. If your income tends to be more volatile, consider having closer to a year's worth. This isn't the “I-seriously-need-a-vacation-from-my-insane-boss emergency fund,” but rather, savings intended to protect yourself in case of an unexpected loss of a job, a medical emergency, or an unanticipated home or auto expense.
According to a Bankrate.com study released in mid-2015, 29 percent of all Americans have no emergency savings, and of those who do, just 22 percent had “enough to pay for at least six months of expenses.”6 That's a big problem, because according to the National Endowment for Financial Education, about 60 percent of adults experience a financial emergency each year, 20 percent experience an unexpected transportation expense in a given year, 19 percent report having an unexpected home repair or maintenance