The Three-Pronged Plan to Financial Freedom

The Three-Pronged Plan to Financial Freedom

Mar. 4, 2024

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Anyone who says they have the only solution to a problem is a liar.

There are many ways to become a great tennis player. If a coach says the strokes he teaches are the only way to the pro tour, then run, don’t walk, away.

And there are many ways to become financially free.

Keep in mind, I think “retirement” is a terrible idea. (I have so many thoughts on this. I’ll share them one day.)

But having enough money to have choices is a great idea.

And, to do that, I’ve created a three-part plan.

The first part of the plan is to have automated strategies. Automated trading, for me, is the best way to trade. I’ve given away dozens of free strategies and shared the details on a free automated portfolio in this video. That portfolio is up a hypothetically outrageous 72% in 2024 (on a $25k account), and I track these strategies monthly on my Performance Page.

I’ve been talking about automated strategies in this Newsletter since 2013 and that will continue.

Part II of the plan is to have a dividend portfolio. What’s the worst part of trading? The drawdowns. What’s the worst part of learning a new trading system? The stoplosses. What’s the biggest obstacle to trading for a living? Paying bills while the account goes down due to a losing month, or months.

When we have a job, we get paid every month. Thus, we can pay our bills. Even if we don’t do our jobs particularly well in a given month, we still get a check. That’s how we survive.

In trading, we don’t get paid every month. Thus, we don’t know if we can pay our bills. If we don’t do our job well in a given month, we don’t get a check. And we still have to pay bills. That’s not a great way to survive.

What’s the solution?

Dividend stocks.

When we have dividend stocks, we get paid every month (or quarter). We’re back to being able to survive. So having an account that’s practically “guaranteed” to make money every month is a huge help. (Yes, I know dividends can be cut, and I know it’s hard to pick which dividend stocks to own, and I know that just buying an index fund and selling shares works, too. But there are good rebuttals to all of these arguments and we can talk about those another time.)

In one account, we have systematic trading that hopefully provides upside and consistent yearly returns. In another account, we have an account that hopefully provides consistent income every year. Even if our robots are losing, our dividends are theoretically winning. That is massively important.

Part III is a turbo booster.

In this account, we’re going for big wins. If we get them, then we have exponentially more money to put into our dividend account (or high yield savings account). The faster this turbo account grows, the closer we get to freedom.

How can we do that?

Well, the automated account could also serve as a turbo. We could take one account and bet safely and take another one and bet aggressively. Nothing wrong with that.

Or we could use the stock market.

While buying-and-holding a rising and subsequently cratering stock can be a nightmare, it’s not that hard to use a simple trading system that can be done manually or via a robot.

This system, for example, would have entered on 6/1/23 on TQQQ:

That entry would now be up 124%. (Note: I’m currently in TQQQ and profitable but I sold for a nice gain during the pullback in September/October 2023 and bought back in on a breakout. That’s what’s you get for not following a system.)

I’ve done two videos on this system and you can see those here and here.

But there are two big questions when thinking about “turbo” systems.

One, does it really catch big wins? Or does it work on just one instrument one lucky time?

Two, are there any trades coming soon? It doesn’t matter if a system caught a bunch of old big winners. It needs to catch the next winners to be useful.

And we’ll look at those two questions in our upcoming Newsletters.

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Get Robot information HERE.
Visit my Performance Page HERE.
Buy my new book HERE.
The Inevitability of Becoming Rich
is HERE.
My latest YouTube video is HERE.

 

Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.