Last week I met with Tom. Tom is 52 and his big goal is to retire at 57. He's a director at a large medical device company. Tom makes really good money, owns his house here in Santa Barbara, and has a golden retriever named Teddy he loves dearly. 𝗧𝗼𝗺'𝘀 𝗰𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲: Tom's biggest asset outside of his house is a big bunch of stock from an old company he used to work at. The stock price has been on an absolute tear and has almost doubled in the past 12 months. The value of of his stock of that company alone is worth well over $1M at this point. He is a great saver (on track to save almost $100k this year) and is building up other assets in his 401k and brokerage account, but this old company stock is a huge driver of his financial future. 𝗛𝗼𝘄 𝘄𝗲 𝗮𝗿𝗲 𝗵𝗲𝗹𝗽𝗶𝗻𝗴: With about 5 years to his goal retirement, we are creating a "sell plan" for Tom. He still believes strongly in the company and where it's headed. But he also recognizes that a) anything can happen in the next 5 years and b) if he's wrong, it could push back his retirement timeline. Our plan involves two factors: 1) covered calls to generate income while setting a target selling price 2) a time based approach where we sell a set amount of shares each quarter - basically dollar cost averaging for selling It's a little bit of splitting the difference - if the stock continues to go up, Tom will continue to participate in the upside. But if it goes down, we are starting to diversify into other assets as well. Of course, we won't time this perfectly. If the stock skyrockets, Tom will probably wish he hadn't sold at all. But if it goes down, he'll probably wish he sold more. There's always risk, but the big thing is that we are taking action and getting started now. -- Ultimately our goal is to turn Tom's hard work and diligent saving into a paycheck in retirement. So that he can retire to a life he loves - more travel, more time with his dog, and more time enjoying Santa Barbara. --- PS: in the right situation, covered calls can be a great strategy. But they certainly aren't for everyone Here's a case study we ran for a client: https://lnkd.in/gaiDiv6D
Ben Tuscai, CFP®
3mo
And with this work Tom is much closer to actually being able to attain this goal, and have help along the way for life's challenges. I think that last part is so crucial. The upfront work is great and is needed, but the guidance along the way helps avoid the big missteps.
Patrick Rathbun
3mo
Love the work you're doing, Joe. Been following quietly on the sidelines and I'm very impressed!
James Gibson
3mo
Most importantly, what's the guidance on this stock? Is there continued upside?
Marketing For Advisors | Co-host: Advisor Marketing Made Simple Podcast 🎙️
3moI love this example of a client win. The only part of this post that confused me as a non-techie person was this part. "1) covered calls to generate income while setting a target selling price" From a messaging standpoint, how would you describe this in a way that someone like myself could understand it?