KEN'S STORY (Stock Market Investing Case Study 7 of 8)
Ken got the investing bug while visiting with a day trader friend, and watching him write a cheque in the high six figures to cover the current year’s income taxes. This man had started with 75K and subsequently turned it into a considerable sum.
One of his friends decided that he could be a day trader too, and tried to replicate the success but ended up losing his entire investment. This experience showed Ken that there are no guarantees when investing. He also learned that the stock market can fluctuate greatly, for example, during the market crash of 2008 his portfolio dropped almost 40%. The volatility taught him to roll with the ups and downs.
In the beginning, when Ken had accumulated sufficient money from his work efforts, he set himself up with a broker to advise and handle his investments since his knowledge of investing was rather limited . But that first experience was less than satisfying.
He was losing more money than he was making.
The final straw was when he was informed that his account had been transferred to someone who was just starting out, and who had no experience investing a dime. It most definitely wasn’t a confidence builder. Since then, Ken met a broker through a professional acquaintance who is very competent and trustworthy. Ken’s experience so far has been very positive, with the relationship going on 14 years, and good returns over the years.
To mitigate stock market risks, the strategy that works best for Ken is to purchase medium risk blue chip dividend-paying stocks. He prefers to avoid the high-risk companies. Although he doesn’t enjoy paying taxes on the dividends, he finds that selling his losers at the end of the year helps to offset the income, which reduces his taxes while also being an incentive to re-balance his portfolio every year. Ken recently topped-up his tax-free savings account giving him the advantage of tax-free dividends and tax-free capital gains. He maintains several accounts and he is also in the process of topping up his son’s account.
Ken has done very well with his investment accounts however it did take work to get there.
The money wasn’t handed to him on a silver platter. He had made up his mind early in his life that he was going to be successful no matter what it took.
He remembers having this desire and drive to succeed from a very young age. Growing up in a small town, Ken was driven and unstoppable, doing everything on his own. He had left high school before graduating, for reasons out of his control, however, along the way he did complete high school part-time while he worked in law enforcement, and he went on to attend university part-time majoring in law.
Ken is very much a self-starter. He built two consulting firms from the ground up, he worked as an independent consultant for five years before that, and he worked for the government and law enforcement before that.
The first career change that Ken made was in 1974 when he left law enforcement to take up a career in the government because it offered better security and benefits for his family. After serving in the government for 18 years, and a number of promotions, Ken realized that further advancement was unlikely. He wanted to be a real decision maker to make a difference through changes to government policy and regulations. Ken felt he had more to offer and that his future with the government was growing stagnant.
There was much more that he wanted to accomplish.
He felt that couldn’t happen within a rigid inflexible environment. Therefore, in 1992 he decided to join an international consulting group travelling throughout North America and representing many international and multinational companies.
Five years later, Ken decided to move on once again by starting his own business. He opened a consulting firm, building it from the ground up and he eventually brought in a partner. During the building phase, Ken hired and trained a number of young lawyers in international trade while continuing to build strategic alliances with other firms.
Ken developed his business through business contacts, referrals, word of mouth and the hardest type of business development – cold calling. This resulted in Ken being able to develop and maintain a wide array of clients, including several multiyear clients that required permanent resources to assist them in their day to day operations, which, as a result provided a steady revenue stream for Ken’s company. He found that along with the multiyear clients, he liked to have at least four active files on the go at all times. This enabled everyone on staff to stay busy while also allowing time for him to market his services to new clients.
Along with the stress that comes from operating a business, Ken also found that it can be stressful being the sole bread winner while at the same time being responsible for your own paycheck as well as the paycheck of the staff. He found it interesting however, because through all the worry, the hard work and the perseverance was paying off as one file was nearing completion the phone would ring and, lo and behold, a new client would be on the line looking for assistance.
During that same period, Ken started an Investigation company to handle client needs. He had a number of investigators working for him and when it became too much for him, he decided it was time to bring on board a gentleman to oversee and manage the business. The new manager was forward thinking, taking that company in a new direction and expanding the service offering. As that business began to flourish, Ken and his manager both began a University program to obtain a certification that would advance the company’s business objectives.
Ken found the change and challenge refreshing albeit exhausting,
He attended classes during the day, and from late afternoon until midnight, he was returning calls, reviewing files, leaving instructions for staff, and preparing for the next day’s classes. The hard work paid off because, after Ken graduated, the new credentials allowed them to completely change the direction of the investigations company. They obtained contracts across the country which more than tripled the company’s revenue.
Ken had an inner drive to succeed and no matter what the challenge was, failure was not an option.
Ken recalls that there were many stressful days, many sleepless nights, and also many questions in his mind, such as “what was I thinking leaving a secure government job?”
But even with the stress and sleepless nights, the desire to succeed got stronger because he knew he had little other choice but to succeed, because his family was relying on him. Through it all, Ken managed to persevere, and as he says, knowing that there were bills to pay, and that his family was relying on him, it made him work twice as hard to make sure he succeeded.
Looking back, Ken is very happy with what he accomplished.
He feels he put the naysayers to rest, as his success over the years speaks for itself. Ken feels a sense of real accomplishment, by being able to go into a company and help that company restructure itself to save money while also representing and protecting their best interests. It also gave him a sense of satisfaction that he couldn’t achieve while working for the government.
Ken wouldn’t change a thing, because had he stayed in the government, he would never have been able to accomplish what he has, or achieve the satisfaction or the feeling of self-worth. The experience of developing and building companies from the bottom up, along with the sense of accomplishment and satisfaction achieved by being able to assist and help others is priceless.
He wouldn’t hesitate doing it all over again, even with the worry and stress starting out.
Deep down, he knew it was the right thing to do, and that it would be alright, and it was. Originally Ken had wanted to build a bigger consulting firm, but when his wife became ill, they decided family came first. Ken wound down both businesses, packed up their home and they moved halfway across the country to be closer to their families.
No sooner had Ken and his wife unpacked their belongings that he was already feeling restless. The need to start something up again was so strong that Ken bought a franchise business with a partner.
It was a new learning experience for him, and he soon discovered that he didn’t care much for franchise businesses or, at least this particular one, because the minute they turned the corner, the franchisor increased the price of the products. Ken and his partner decided “enough of that”. They sold the business and Ken returned to what he loved most: consulting.
* Case study based on May 15, 2015 interview conducted by Y. Gagnon
About this blog
This is a blog about investing for beginners. You can count on quality information
Yvanne wrote a 2-part book series about investing for beginners. She is an investor with an entrepreneurial character and a creative spirit. In the context of her career, she was trained as an analyst, and later as a manager. Find out more here.