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Why Did I Start Dream Financial Planning?


About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area, that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual financial planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the The DREAM Financial Planning Process ™  to help our clients achieve their goals.


After working in the financial services industry for 15 years I feel there are two groups of people that have historically been underserved, young people in their 20s and 30s and minorities. The Industry is built to serve people that have a minimum of $500,000 to invest. It's a great business model; someone has $1 million to invest and you charge them at least $10,000 annually to manage it.

This usually leaves young people and minorities who don’t typically have large amounts to invest working with inexperienced advisors that are more focused on making a sale to generate commissions and less concerned with building a lifelong partnership focused on helping you achieve your financial goals. Of course, that’s if they can even find an advisor to work with them at all.  

Why Did I Start Dream Financial Planning?

I founded Dream Financial Planning as an Independent, Fee-Only, Fiduciary firm that offers financial planning and investment management. We have a special program where we charge a low monthly fee for those that haven’t accumulated enough assets to work with traditional wealth management firms.  We help with issues including but not limited to budgeting, employee benefits, paying down student debt, and proper insurance coverage. If you do have significant assets to invest, we’re still able to work with you and provide a high level of service for a more reasonable and transparent fee than traditional firms.  

I plan to write a new blog post every week, so if there are topics or questions you’d like me to address please send me an e-mail and let me know. I also wanted to tell you a little about my story, how I discovered the stock market, and what drives me to help my clients achieve their dreams every day.

Beginnings

100%. That’s how much I lost on the first stock I ever purchased.

Now, my total investment was only $500, it was the spring of 2000 and I was only 16.

The name of the company was DMC Stratex networks and I saw it on the cover of Smart Money magazine listed as “One of the 10 best companies to own for the next decade.“ The company eventually filed for bankruptcy and I lost about 98% of my initial investment before I sold. This was the first time I learned not to invest in a company just because they’re in the headlines.

Whenever people ask me how I got interested in the stock market I just start laughing. It was totally by accident. It was the summer before I started high school and I was flipping through the channels.

This was the summer of ‘98 before Netflix, YouTube, etc. and it was a weekday. If anyone has ever called off sick from work and watched TV all day, there isn’t a lot on TV that would interest a teenage boy. It’s the judge whatever show, soap operas, Jerry Springer, Oprah, infomercials and ESPN. As I cycled through the 50 or so channels, they all seemed the same except for CNBC. The ticker tape scrolling across the bottom of the screen caught my attention and I was hooked.

The Dot-com Bubble

During the late 90s, it seemed like everyone was getting rich from investing in the stock market. Cab drivers, waitresses, and teachers were all getting rich buying the latest dot-com with tons of page views and no earnings. I too wanted to get rich quick and figured investing in the stock market was an easy and surefire way to do it, or so CNBC made me believe.

I grew up in the small town of Stephens City, VA about 90 miles west of Washington, D.C. Growing up I always thought we were poor, but now I guess my family and most of our neighbors were considered lower middle class. That didn’t stop me from watching CNBC every day and getting various companies' annual reports mailed to my house. When that wasn’t enough, I went to the bookstore or library and tried to get my hands on every book I could read about investing. 

My parents thought all of this was hilarious. They told me I had champagne taste, but beer money. They called me a dreamer and said that my head was always in the clouds. This is one of the reasons I named my firm Dream Financial Planning.  The other reason I named my firm Dream Financial Planning is that I view Financial Planning as a tool to help individuals and families achieve their dreams.

After a few summers of mowing grass and a few months of working my first job at McDonald’s, I had $500 saved up. This amount was so important because it was the minimum amount needed to open an Ameritrade account. Side note, Dream Financial Planning has partnered with TD Ameritrade. They serve as our custodian, hold all client assets, and mail monthly statements to clients.

At the time I thought I was a genius and I thought the Smart Money magazine cover story was going to make me rich. I wasn’t and it didn’t.  Remember, I lost virtually my entire $500 investment. In hindsight, I made every mistake that you could possibly make. I still see potential clients and friends making some of these same mistakes today.  My goal is to use my early experiences and failures to educate others and help them improve their returns.

Warren Buffet and Peter Lynch

Drawing on my experience as a varsity wrestler as a freshman, where I got my butt kicked every single match, I knew there was only one thing to do, work harder. I became obsessed with becoming a better investor and learning where I went wrong. 

This led me to discover Warren Buffet, Peter Lynch, and other great investors. I began reading Warren Buffet’s annual letter to shareholders of his company Berkshire Hathaway.   This annual letter is always full of great insight and gives you a glimpse into the mind of the world’s greatest investor. The book The Intelligent Investor by Warren Buffet’s mentor and the father of Value Investing Benjamin Graham showed me how to apply mathematical rigor to find stocks that were trading for less than their true value.

However, my favorite investing book is One Up on Wall Street by Peter Lynch, the long-time manager of the Fidelity Magellan fund and one of the best mutual fund managers of all time. Mr. Lynch focused on investing in the companies whose products you know and use and always investing for the long term.

My experience

I feel my experience makes me ideally suited to help people that are new to investing or working with a financial advisor for the first time.  I won’t say falling in love with the stock market at such a young age drove every decision in my life from that point on, but it influenced most of them.

Moving to Northern Virginia so I could attend George Mason University and pursue internships in the area was a major decision for me. This led to me starting my professional career in 2005 as a Broker Trainee at Scottrade in Fairfax, VA. A co-worker at Scottrade referred me to a job with the Wise Investor Group at Baird in Reston, VA. Each stop on my journey has been a continuous learning process. This eventually led to getting my CFP® to enable me to provide Comprehensive Financial Planning to my clients.

Throughout my 15-year career, I’ve seen several areas where investors make mistakes that negatively impact returns, I’ve highlighted a few below: 

Don’t try to time the market or hold large cash balances for an extended period of time.

Trying to time the market is a nearly impossible task. Looking back over the 20 years from Jan. 1, 1999, to Dec. 31, 2018, the S&P 500 return was 5.62% per year. If you missed the 10 best days in the stock market, your overall return was cut in half. Six of the best 10 days in the market occurred within two weeks of the 10 worst days.  

Be diversified

If you’re planning to invest for the first time and have less than $200,000 to invest, please don’t invest in individual stocks. To build a properly diversified portfolio of individual stocks you need at least 30 stocks. Don’t put your entire investment into one company as I did as a 16-year-old, there’s just too much risk. 

Don’t trade headlines

You don’t need to buy stocks just because they're getting a lot of airtime on CNBC. Even though CNBC is literally how I discovered the market, please don’t watch it every day. Now I realize it’s just a lot of noise. Also be careful of buying a stock just because someone said good things about it in the Wall Street Journal, Barron’s, or any other publication. Always do your own research and if you don’t have the expertise, reach out to a qualified advisor.

Dream Financial Planning

When I tell people that Dream Financial Planning is an Independent, Fiduciary, Fee-Only firm this leads to a few questions which I listed below. I’ll address each of these questions in a future blog post.

Independent - How’s being an independent advisor different from an advisor that works at a bank or brokerage firm?

Fiduciary - What is a Fiduciary and how does it help you serve clients better?

Fee-Only - What is a fee-only advisor?

Check out some of our recent blog posts


Early 401(k) Withdrawals at a Young Age: What You Need to Know

"You’re a CFP® professional, Great what’s a CFP®?”

The Surprising Student Debt Problem of High Earning Millennials


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If you’d like to learn more about Dream Financial Planning and see if we’re a good fit for you and your family, please visit www.dreamfinancialplanning.com.

If you have questions you’d like answered or topics you’d like to see discussed in a future blog post, feel free to send me an e-mail at lamar@dreamfinancialplanning.com or reach out: 

Contact


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