Listing out the Goals of the Trading Account. Phase 2

While I do not have solid data to estimate how I will do in the future I have to start with as close a guess as I can and then as trades and data come in I can refine my future profit estimates...

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.

Wow. So yeah there you have it. The Model Portfolio will "fail". My current estimates show that I cannot meet my goal of generating income to cover bills for the Model Family, with my current level of contributions, within 15 years. I placed the word fail in quotes because as I discussed in the video, is it really failure? I am not only talking about dollar goals either.

There is something to be said for how one lives their life. I'm a big believer in motivational thinking. I could go off on entire blog and video series on the topic... and I probably will. For now though think about this...
As we grow up to becoming an adult we have teachers, guides, and lessons that we learn to shape who we are as a person. These impact our lives and shape our personalities and who we are as a child changing into a teenager into an adult.
Why do some believe that process stops when you become an adult? The process or how our thoughts and focus and what we spend our time doing altering and defining who we are as people.

More specifically to how this relates to the Model Portfolio: when we allow ourselves to slip into a mindset of life being...
1: Go to work.
2: Work.
3: Come home and get ready for step 1 tomorrow.
Then of course our personality and belief system will eventually shift towards that. It eventually becomes automatic. Sub-conscious. We then fall into what I describe in the video where 15 years from now I ask myself what would have happened if I tried... then get back to work.

The Model Portfolio will bring in benefits to my life beyond what cannot be measured in numbers with % or $.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others.
I am not a financial planner, financial adviser, accountant, or tax advisor. 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

Listing out the Goals of the Trading Account. Phase 1

With the goals of the Investing account defined we can focus on the Trading account...

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.

I want to expand more on Time as a resource for the trader and investor. As I mention in the video, we can add more money through deposits.  We can also start our record for successful trades and numbers for trading.We can read new books and watch new videos and learn from past mistakes. What we cannot do is get back the one natural resource that every person has. Time.

I spent a year stuck in "Analysis Paralysis". Planning how I would trade and invest. I thought I had to get all of my money first before I could start but funnily enough never had $10,000 lying around. I found myself worried that I might be missing something when in the end I did. I missed out on opportunity by inaction.

The advice given out in the financial world seems contradictory at times. Don't over trade, but if you never trade you never make profits. Learn and understand money management and risk management, but again you have to trade and make mistakes to learn some of it. I've even done it several times in my videos to you guys. When everything is said and done though at some point you have to roll up your sleeves and jump in. Hopefully my videos and blog entries help in that.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others.
I am not a financial planner, financial adviser, accountant, or tax advisor. 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

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.
but...
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
Stock
Energy
     ERF: $1.68 income/month
REITs
     O: $1.05 income/month
Bonds
     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.

Listing out the Goals of the Investing Account, Phase 2

With Phase 1 of the investing account for the Model Portfolio done I move on to Phase 2.

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.

25 positions for a 4% portfolio risk is important for me. Yes the solid Dividend Aristocrats have paid and raised dividends for 25+ years. Who knows what will happen in the future. Look at bank stocks. They used to be the cornerstone of many dividend income accounts. Not only did they cut their dividends after 2008 but their share price was devastated.  If you were going to move your money to something else... you might as well have to start over you would have easily lost 50% or more of your position.

The 25 stock and ETF for the Investing Account phase 2 are going to be across multiple sectors. Consumer staples, restaurants, real estate, health care. I have read too many horror stories of people who went "all in" with a couple of companies. 1 or 2 don't work and they lost everything.



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.

Listing out the goals of the Investing account, Phase 1

If I am going to manage a dividend growth investing account for 15+ years I need to set out my goals...

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.

In the video I mention that getting paid weekly was important for the dividend investing account. I want to talk a bit more about that. When selecting stock and ETFs it was the last thing on the list of important things I needed. Safety, stability, a good yield, strong potential for future growth and the other topics I discuss in my other videos take priority. ERF was the final piece of getting paid in week 3 of each month. But if I didnt feel that it was a good income source with stability and everything else I look for in an investment? I wouldn't have picked it up. To be honest, I got lucky that it pays during week 3.

I'm pretty pleased with how Phase 1 of the Investing account turned out. I do not have TLT yet but its just a matter of being patient and controlling emotions in buying when it's the right time. The move to Sharebuilder in the long run maybe a good thing as now I can DRIP and let compounding take over.


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.

Investment: ERF Enerplus

Enerplus is a good addition to my dividend investing account...

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.

You can learn a lot when researching a new company as a possible investment and I'm not talking about learning about the company. Before ERF, I didn't know about tight gas or waterflood oil. Investing isnt all about making money.

Something I didn't mention in my video that is a big plus for me with ERF... they spend a lot of time and money hedging with calls and puts on their oil and natural gas. This will help them maintain their dividend and stabilize losses. Its something they do openly talk about. It can give some exposure to trading in the markets without actually doing the trading ourselves.  Most companies will do this but its interesting to see them talk about it so openly in their reports.


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.

Week 21 Deposit

Quite a bit going on with the Model Portfolio...

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.

As I mentioned, there is a lot going on. I sit here waiting for my Investing Goals video to compile and I will have to split it into two videos. Windows Movie Maker is not liking the 16 minutes I have so far. I have another video on entrepreneurship that occurred to me today while at lunch. That's pushing others I had planned back to next week. Its an exciting time and things are starting to move that I want to share.

The Investing account numbers are income per month. If its quarterly they I will average it out per month. If its a bond fund that tends to fluctuate its dividends then I will use the average of the past twelve trailing months. The point here is to compare what each one is paying so that I know where to add more money.

One last note. On the Investing tab I have moved the commissions into the cost basis section. The way Sharebuilder works is that you say how much you want to apply towards an order. They take the commission out of that and then use the rest to buy whatever can be had. That is different from other brokers where you buy X number of shares and whatever it costs is taken out of your account and then afterwards they take more money out for the commission. For free trades on Sharebuilder the cost is still the same it just means that you get a little bit more for your order.
Since it is so different and my cost basis is all nice and neat at an even $250 for each one I felt it important to share that.

Edit: Alright you guys are pretty sharp and observant so I'll mention a slight edit. I changed ERF from a stock to energy classification. The reason? It gets it's profit from commodities: oil and natural gas. This is a different type of income source then those generated from a traditional stock that has a customer base where  they sell a service or finished product.
I'll be talking about ERF this week but since technically I did purchase it last week I needed to record its data.



Weekly Activity
$100 deposit into Trading
$1.16 dividend from O
$1.77 dividend from JNK


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: $1363.43
Estimated Monthly Income: $5.74
Stock
Energy
     ERF: $1.68
REITs
     O: $1.05
Bonds
     JNK: $1.84
     PCY: $1.17
     TLT: $250 reserved for future purchase
Maneuvering Cash: $110.03

Savings Account: $400
Emergency: $300
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.

Type of Investments: 4 - Royalty Land Trusts

Royalty Land Trusts. They aren't often talked about in the dividend growth world but they do offer some nice current yield...

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.

In the video I paint a picture that these things run out of their natural resource and an investor loses all their money quickly. The lifespan of these trusts are measured in decades when they start up. The drop off in the dividend paid out because of rising costs takes years to occur. There is plenty of time to monitor and get out in time. The trick is not to be greedy. Not to get every last bit of payment because you don't want to be holding the bag.

Something else to consider. The dividends are 100% based upon the current going rate of the natural resource sells for. When oil rises trusts like BPT will pay out more in their next dividend. If natural gas falls then trusts like HGT will have a lower payment.  From an inflation point of view this can help pay for your personal bills. Buy up enough oil trust shares to cover the rising cost of gasoline in the summer time. Do the same for a natural gas trust to cover your winter heating bill. If these natural resource prices fall then yes you will get a smaller dividend however you will have a lower bill to pay for when you are living off of these also.


Disclaimer: The investments and trades in my videos and blog entries are not recommendations for others.
I am not a financial planner, financial adviser, accountant, or tax advisor. 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

Week 20 Deposit, Dreams and Goals

I know where I stand starting up month 6, do you?

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.

I thought the order would go through for PCY last week. But since it was a holiday I guess their computers took the day off too because their automatic orders were not sent Tuesday morning. 1 week isnt going to be a game changer but it is something to plan and be aware of for the future.


Weekly Activity
$100 deposit into Savings


Model Portfolio Totals

Trading Account: $200
Max amount in Forex trade (20%): $40
Max loss per trade (2%): $4

Investing Account: $1357.10
Stock
REITs
     O: Scheduled for purchase 9-11-11
Bonds
     JNK: Scheduled for purchase 9-11-11
     PCY: Scheduled for purchase 9-11-11
Maneuvering Cash: $1357.1

Savings Account: $400
Emergency: $300
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.

Portfolio Management: 7- Hedging and Speculation

I take a slightly different viewpoint on hedging and speculating

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.

Ok so we all hedge and we all speculate. Now that we got that out of the way lets tackle the differences between hedge fund managers and people.
They have more money to work with.
That's about it. Seriously.

Think when you first started your current job. There was lots of things new. Other people were doing things and their jobs that you had no idea how to do. With time and experience the mystery of how they do it was cleared up and you learned the tricks of the trade for your job. Then you see the new person hired and they make the mistakes that you know better not to do... because you did them. You learned.

Hedge fund managers make tons of money because they started with lots of money and they know what to do.
Their knowledge came with time and patience. Those are not unique and we can reach that point.
What we do not have is millions of dollars but to be honest? Do we need millions? They have to make that much money because they have millionaires funding them, lots of people funding these hedge funds all expecting big profits. There is pressure to compete and meet these expectations. They have to find ways to grow and protect a ridiculous amount of money.

Us? We just need $2,700 a month. In comparison we have it easy. All we lack is knowledge but that can be gained with time.


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.

Week 19 Deposit

What a comical series of errors for this weeks deposit video. Between cleaning the garage, Bobby (our Saint Bernard) injuring himself at the dog park, and Windows 7 errors the video didn't happen on time.  I'll try to knock it out this evening.

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.

The $100 went to the investing account. I am just about done funding phase 1 for the investing account. If my time horizon for investing is 30+ years why even bother with different phases especially if phase 1 only takes 4-5 months? Two reasons.
1: Its about breaking up the overall goal into small achievable ones. If my goal is to be making $3,000 a month... that's going to take awhile. For me and my personality I am going to need smaller and defined goals to get me there. Last month I made $4.12. It can get discouraging seeing how far there is still to go. Slowly but surely we'll get there with what financial goals we lay out for ourselves.
2: By taking the time now to plan out and lay out a foundation for the investing account we will make it easier later.
I have a video planned to cover phase 1.

EDIT: Seriously Windows Live Movie Maker?!? You think its a good idea to start updating while I have a 500 MB file compiling? Its like fate is against me getting this weeks deposit out lol.


Weekly Activity
$100 deposit into Investing
$1.22 dividend from PCY


Model Portfolio Totals

Trading Account: $200
Max amount in Forex trade (20%): $40
Max loss per trade (2%): $4

Investing Account: $1375.28
Stock
REITs
     O: Funds transferring to Sharebuilder
Bonds
     JNK: Funds transferring to Sharebuilder
     PCY: Scheduled to be repurchased at Sharebuilder
Maneuvering Cash: $468.05

Savings Account: $300
Emergency: $250
Portfolio Protection: $50
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.

Dividend Investing: 6 - Payout Raito

I continue my investing series with another statistic that can give a lot of light onto the dividend policy of a company...

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.

There are a lot of different ways to look at the ideas behind what a payout ratio represents. It can be based on EPS, free cash flow, free cash flow before capital expenditures, before debt is calculated in, etc.
The key point is to figure out in some way...
1:  How much money the company generates.
2:  How much they keep to grow the company in the future
3:  How much money they have to pay as a dividend.



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.

"Storage Wars" is the Financial Markets

We can get interesting lessons of the markets from different types of media...

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.

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.