What Will You Do With Your First Million Dollars?
I like to write posts based on threads that I have recently found while perusing trading communities. Recently I saw a trader post a thread asking what people were planning on doing with their wealth once they made it. The discussion focused on what the trader was going to do with his first million dollars (not as much money these days as it used to be, but it is a number many traders still fixate on).
Respondents to the thread either shared their own plans or criticized the trader for asking the question at all, telling him he should stop daydreaming and get on with the business of actually making the money.
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Do you agree with those people? Is it better to focus on making money instead of what you are going to do with it? Or is there a point to “daydreaming,” as those traders put it? I would argue that the critics on that thread were both right and wrong: right in telling the trader to stay focused, but wrong in taking a short term view.
The question you should ask yourself is,
“Am I daydreaming, and avoiding the business of trading, or am I planning for my future, and using that to motivate my trading so that I make smart decisions?”
Signs You Are Daydreaming:
You are not working hard on your actual trading right now. You spend all your time thinking about the future and none of it focusing on the present.
Your plans for the future are incredibly nebulous. You think something like, “I will give half my money to charity,” but not which one or what you want that money to accomplish. Or you think, “I will use this money to relax and enjoy my life,” but you do not have a plan for what would actually contribute to your life and make it more worthwhile.
You think $1 million is a lot of money. Sorry to say it, but with inflation and today’s economy, $1 million doesn’t go nearly as far as it used to go. Lots of people cannot even afford to retire on that kind of money, especially if you are only in your 20s or 30s right now.
Signs You Are Setting Real Goals:
You have actually calculated how much money you would need to retire and achieve any additional goals you have for your lifestyle over the remainder of your life, and you know just how big a number that actually is.
You have concrete plans with real definition and meaning. You know what would make your life better, and how much it would cost to create it or do it. You know what causes you care about, and exactly how your money could help drive them forward to success. You have a reason for making $1 million—or more.
You know that success is an ongoing journey, and there is never a point at which you can rest on your laurels and stop making rational, level-headed plans. You probably have heard that a lot of lottery winners go bankrupt within five years. That is because they know nothing about long-term planning. If you actually get to the point where you have a ton of money through trading, you will definitely have learned how to plan on the way there. That should not deceive you into thinking though that you can ever stop. You still have to maintain a budget and stick with it or look for ways to keep growing your accounts later.
Goals Are Important
While I believe that the person who posted the thread who inspired this article was indeed daydreaming, and not actively planning, I disagree entirely with the critics who responded that there is no point in thinking about the future. I actually think that for the majority of traders, it is an indispensable ingredient of success. “I want to make a lot of money” is not a real goal. It is only a vehicle for creating or doing what you want. What you want is the end goal, and it will motivate you to make the money by making smart decisions in the present.
Have a clear picture of where you want to be, and then do everything you can to get there. Read more about setting shorter-term trading goals.
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