In the last few months, I’ve had a lot more conversations that start with something like:
“Should I buy this crypto I heard about?”
or
“My buddy made 40% on a meme stock—am I missing out?”
These are fair questions, and it’s hard not to wonder if you’re sitting on the sidelines while everyone else is cashing in.
So I made a quick video about what I’ve been telling clients who feel that itch to jump in—and how to do it without derailing the rest of their financial plan.
If the video sparks more questions, or you want to talk through your plan, just reply or give us a call.
Transcript
Hi, I’m Danny Clark from Solidarity Wealth. Recently, I have received quite a few inquiries about investing in the latest hot stock or cryptocurrency.
Meme stocks are back and trending again on social media. When someone mentions earning 30+% over a very short period of time, or a neighbor discusses their gains from the latest hot stock, it’s natural to question whether you’re leaving money on the table.
This fear of missing out becomes especially acute when you’ve reached a stage in your career when you have discretionary income to deploy.
Investing vs. Speculating: How to Tell the Difference
But there’s an important distinction between strategic investing and speculation that we need to address.
So how do you tell the difference between the two? One place I always start (with clients, friends, and even in my own portfolio) is with a simple question that we live by at Solidarity Wealth. Do you understand what you own and why you own it?
When clients inquire about the latest crypto coin or similar investments, my first question is always about the underlying business model and value proposition. More often than not, there’s uncertainty about these basic fundamentals. This represents speculation rather than informed investment decisions.
Why Speculation Has a Place—But Needs Boundaries
Speculation does have its place in a portfolio, but it’s important to recognize it for what it is and treat it accordingly.
You wouldn’t gamble your retirement savings at a casino, and the same prudent approach should apply to speculative investments.
So here’s how I handle this with my clients who get the itch to play the market. It’s what I call the 5% rule.
Take 5% of your investment portfolio, not your total net worth, but your investment portfolio itself, and that’s your speculation budget.
Want to invest in the latest altcoin you keep hearing about? Fine, but only with 5%
Convinced that the latest meme stock has more room to grow? Okay, but stay within your limit. This way, if your hunch pays off, great. You’ve made some money, and you won’t feel like you missed out. But if it goes to zero, and that does happen more often than people think, it won’t derail your actual financial plan
Most people will talk about their one big win, but they won’t mention the numerous losses they’ve encountered first.
What Matters Most in Your 30s and 40s Financially
Here’s what really matters most for my clients who are in their 30s and 40s. You are just entering the prime earning years, and maybe for the first time, you have some extra income to invest, save, or spend with purpose.
You may have kids, a mortgage, and you definitely have some big financial goals ahead. The habits you build now matter way more than hitting it big on the latest meme stock.
Maxing out your 401((k), building up that emergency fund, and maybe setting up a 529 account for your kids. These aren’t particularly sexy. Nobody’s making TikToks about dollar-cost averaging monthly. But that’s the stuff that actually builds wealth over time.
Consider this. If you consistently save and invest over the next 20 years, you don’t need to find the next Apple stock. Compound growth will do the heavy lifting for you.
Thoughtful Investing vs. Blind Speculation
Just to clarify, I’m not completely against all speculative investments. Some of my clients thoughtfully select individual stocks based on companies they understand and believe in, like Disney, because of family experiences, or Berkshire Hathaway, due to respect for their leadership philosophy.
This kind of engaged investing can actually enhance your overall financial awareness around the stock market in general.
The key principle to maintaining proper perspective? Speculation should be treated as a small component of your overall strategy, not the foundation of your financial plan.
While the next hot stock might capture headlines, it’s the decisions you make in your 30s and 40s around saving, planning, and staying disciplined that actually build wealth. That’s what we help our clients focus on every day.
