You Only Live Once, So Plan Well


You Only Live Once, So Plan Well

Since the end of January, #YOLO has been a rallying cry on internet message boards where amateur investors drove up stock prices for video game retailer GameStop and movie theatre chain AMC. While everyone should have opportunities to build wealth via the markets, we believe this particular group of rebels are only half-right about their investment strategy.

It’s true “you only live once,” and you need to make the most of the financial opportunities available to you. But that’s exactly why we prefer measured, long-term financial planning to short-term speculation.

How much could you earn? How much could you lose?

Setting aside the larger implications of #YOLO for our financial system, let’s focus on the individual.

Yes, some GameStop and AMC investors cashed out large multiples of their initial investments. But many others let their investments ride hoping for even greater returns and lost big. Still, others came late to the party and bought in at much higher prices than the original investors did. When these original investors decided to cash out quickly, prices fell dramatically resulting in catastrophic losses for some investors.

While we generally support folks getting more interested in investing, managing your financial affairs using apps and message boards isn’t the soundest of strategies. Case-in-point: a second wave of investors who thought they were joining the movement to boost AMC Theatres mistakenly purchased stock in the AMC television network. Seriously. You can’t make this stuff up.



Short-term gains or long-term prosperity?

While making a couple thousand bucks overnight sounds exciting, that ROI is no match for the wealth-building power of a balanced, diversified financial plan.

The small investments many of the #YOLO crowd cashed out could potentially be compounding by 10% annually had they invested in the S&P 500 rather than the hot stock of the moment. Hopefully, some #YOLO investors will reinvest their earnings in plans that will help them create a more secure financial future.

But that leads to another problem with #YOLO: creating secure financial futures wasn’t really part of the plan.

Some folks wanted to make a quick buck. Others, nostalgic for the pre-COVID days of shopping at the mall and going to movies, wanted to support struggling companies they love. And still, others just wanted to “stick it” to Wall Street firms who were betting GameStop and AMC would continue to struggle; they thought it would be fun to shake up a system they perceived as rigged against them.



What’s your plan?

Rather than debate the merits of these motivations, let’s think about the things that aren’t on this list of reasons to #YOLO:

  • Buying a new house
  • Sending kids to college
  • Paying down debt
  • Topping off an IRA or 401(k)
  • Starting a small business
  • Supporting an infirmed parent
  • Saving for a dream family vacation
  • Moving to the ideal retirement destination

There are many reasons to invest your money. For most of us, it should be to accomplish goals that require money like the list above. Seems obvious, but people often lose sight of the most obvious things especially when it comes to money.

As for the other reasons – “make a quick buck,” “stick it to Wall Street,” or “I love that company” – leave that to those with money to burn as that’s the most likely outcome.