Monday, September 26, 2011

Week 22 Deposit

When investing and trading your own money even with a lot of experience you need to recheck your risk management.

EDIT: At the time this blog entry was posted I had a Youtube video here. That has been removed but I want the rest of my content to be remain. Nothing hidden no past mistakes ignored. All out in the open.

Up until now I placed emphasis on building up investing so I could start getting some base income started. Mostly for psychological reasons at this stage of funding. My mind automatically went towards Trading. I noticed though that my eyes would not drift on lower down to poor neglected savings. Neglected being a joke but with a lot of truth. Too often having that backup money that isn't actively doing something gets overlooked. But that is the same argument for not getting insurance.

When looking at the odds of an emergency happening its easy to look at them individually. What are the odds I will have a car accident? Pretty low. What are they odds the furnace goes out? They last 18+ years so pretty low. But get enough "pretty low" occurring events and its just a matter of time before something happens.

Given enough time, some sort of one off emergency will happen. That has to be calculated into our portfolio.
When making a budget do you have a category for "one time" expenses? Do you tell yourself that you won't really budget in an oil change because its a one off things that only comes up every 3 months? Or 6 if you are like most people. But do you have at least one "one time" expense? At that point shouldn't it be figured into the portfolio? That's the realization I came up with this week and why that savings needs to be higher over making more money.

There will always be another trade tomorrow.
There will always be a dividend stock to invest in tomorrow.
There will always be some emergency in the future.

Weekly Activity
$100 deposit into Savings

Model Portfolio Totals

Trading Account: $300
Estimated Monthly Income: $0 (Not ready to trade until Phase 1 completed)
Max amount in Forex trade (20% of account): $60
Max loss per trade (2% of account): $6

Investing Account: $1314.13
Estimated Monthly Income: $5.74
     ERF: $1.68 income/month
     O: $1.05 income/month
     JNK: $1.84 income/month
     PCY: $1.17 income/month
     TLT: $250 reserved for future purchase
Maneuvering Cash: $110.03

Savings Account: $500
Emergency: $400
Portfolio Protection: $100
CDs: $0
Precious Metals: $0

Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others.
I am not a financial planner, financial advisor, accountant, or tax adviser. The financial actions I talk about are for my own portfolio and money and only suited for my own risk tolerance, strategy, and ideas. Copying another person's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.

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