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Getting from Point A to B with a Financial Planner

By April 18, 2017 No Comments

Many people underestimate the need for a financial planner who can help us move from point “A” to point “B”; but having such personnel is so vital to your success.

Recently I had the opportunity to step onto the stage at The Camille Playhouse to play the role of Hoke Colburn in “Driving Miss Daisy”. This was my theater debut, and it meant weeks of rehearsals and a steep learning curve.

Why would a busy professional take on something like this? Well, I believe it’s important to keep challenging yourself with new things that stretch you, and I can honestly say that this was a wonderfully enriching experience. I’m very grateful to our Director, Eric Vera, for the opportunity.

A Poignant Story… that you and I can learn from

The 1989 Hollywood version of Driving Miss Daisy, starring Jessica Tandy and Morgan Freeman, was nominated for 9 Academy Awards – a testament to what a powerful story it is.

The beautiful friendship that develops over 25 years between Miss Daisy and her chauffeur, Hoke, is the result of mutual respect and many shared experiences. If you know the story, though, it doesn’t begin that way. At first the fiercely independent Miss Daisy does not want a driver, even though it’s patently obvious that she really does need one.

As I rehearsed this part on stage, it struck me how Hoke’s job is very similar to my real life role as a financial planner. My job is to be a reliable driver for my clients, to help them get safely to their destinations. It would be understandable for them to start out wondering what I can do for them, but along the way we get to know and respect one another. That is so very important to me because, just like Miss Daisy, there are times when we all need a trusted friend to be honest with us for our own good.

Our country has tendencies to go crazy with Powerball fever on occasion… The thought of buying a $2 ticket and becoming a billionaire overnight is intoxicating for a lot of people.

Now, if someone spends $2 one time for the sheer entertainment value, buying a Powerball ticket is fairly harmless. The problem is that there are many people who buy MANY tickets, thinking they might actually have a good chance. And many of those people do this on a regular basis. The vast majority of these people (just about all of them in fact) will say goodbye to every penny.

Imagine if those regular players wisely invested that money instead.

Of course, other people treat investing like a kind of Powerball game, and that can be just as bad. Still looking for that big overnight windfall, they choose speculative investments. Penny stocks… futures & options… forex trading… “sure-thing” business startups…

Rule of Thumb: If you hear words like “fast return”, “easy money”, “sure thing”, “passive income”… RUN.

Your “bookie” is not your friend, and a reputable financial planner is the opposite of a bookie. Your financial planner will be with you for the drive, and tell you the things you need to hear along the way.

Whether or not you are a current client of mine, for at least the next few moments think of me as your own personal Hoke. Here’s one example of the kind of information I can show you as we drive together:

Dollar Cost Averaging

Recently, we’ve seen a lot of market volatility, and one strategy worth considering in this kind of environment is Dollar Cost Averaging. By investing continuously and systematically, this strategy takes advantage of market fluctuations over time to reduce the average share price you pay for a security. Although the strategy can’t protect you from loss in a declining market or guarantee that your investment will gain, it does eliminate the need to decide when to invest, thus requiring no effort to “time” the market.

To be effective, dollar cost averaging requires you to invest the same amount of money in a particular security (e.g., a stock or a mutual fund) on a regular basis. By doing so, your money will automatically buy more shares when the share price of the security is low and fewer shares when the price is high, thus generally decreasing your average price per share.

The following table illustrates how share price fluctuations can yield a lower average cost per share when you invest the same dollar amount regularly.

Regular Investment Price Per Share Shares Purchased
$200 (each month) $25 8
$200 $20 10
$200 $10 20
$200 $20 10
$200 $25 8
$1,000 Total Average Price Per Share = $20 56 Total Shares

In the above example, the average market price per share over the five-month purchasing period is $20 per share ($25 + $20 + $10 + $20 + $25 = $100, divided by 5 = $20). However, because the regular amount of the monthly investment buys more shares at the lower share prices, the average purchase price per share is $17.85 ($1,000 invested divided by 56 shares purchased = $17.85). Note: This example is for illustrative purposes only, and does not represent any particular investment.

If you’d like me to send you an information sheet about Dollar Cost Averaging – the kind I offer my regular clients – it would be my pleasure. Just send me a quick email reply and I’ll be happy to forward it to you.

But do you have a financial planner who sharing this kind of information regularly with you, and helping you get to where you want to be financially?

Humphrey G. Thomas is registered with and offers securities through Kovack Securities, Inc., member FINRA, SIPC. 6451 N. Federal Highway, Ste 1201, Fort Lauderdale, FL 33308 (954) 782-4771 Advisory services offered through Kovack Advisors, Inc. HG THOMAS WEALTH MANAGEMENT, LLC and Empower Your Wealth unaffiliated with Kovack Securities, Inc. and Kovack Advisors, Inc. Humphrey G. Thomas is registered in GA,MN and TX. Check the background of this financial professional on FINRA's BrokerCheck