Monday, January 31, 2011

Intel Sale

Decided to get out of Intel early. I might get back in, but decided to take a little profit against a probable downturn tomorrow. I made $18.57 off this trade. So far, since Jan 25, I have earned $44.18 off an initial investment of $2052.07. My goal for the short term will be to average $25 per week, until I get to around $2500.

Different Strategy for the Non-Retirement Account

A couple of weeks back, I reported that I was changing my brokerage account and adding some money towards it. At first, I was looking to keep using the account as dividend growth account. It was going to hold stocks that would be growing their dividends or had high current yields.

That has changed for the time being. Last week, I bought Bank of America(BAC) on a dip with the intention to get out of the stock when it rose to my liking. Basically, I am looking to make $25 out of the stock and then move on, which I did today. BAC rose back to what would be a $25 profit for me and I sold it.

The proceeds from the sale have gone into Intel(INTC). It took a bit of a hit today with it announcement of a chip-set flaw, and I took advantage of that. Now Intel is a two pronged attack for me. If I can hold on till Thursday, I can take advantage of its dividend payout of $0.1812 per share.

The reason I have made this switch in strategy is because I wanted to see if I can eventually add to our income. With my wife having trouble finding a job that fits our children's schedule, I have been pondering different types of income stream. If I can succeed at this, I can hopefully free up that worry. I understand that this is a risky was of going about, but sometimes we have to increase our risk in order to succeed.

Thursday, January 20, 2011

FSC Redux

Since I moved my Scottrade account over to TD Ameritrade, I decided ot kick in an additional $1000 to the $1060 that will be transferred. With that, I have been looking to stocks that I will be purchasing with those funds. Of course, I have limited myself to dividend plays as that is my current investment strategy. Until all debts are payed off, I am looking to build up a base of income paying stocks. I believe them to be safer plays for the near term.

I am looking split the $2060 into two stocks, one a dividend growth stock and the other a high income one. For the former, I have not committed yet, but have a short list that I am mulling over. For the later, I have decided to get back into Fifth Street Finance (FSC). I really like this company and management seems fully invested in its growth. Basically, it is a small to medium business loan company.

Currently, FSC is looking to pay out their dividends monthly and the yield is at 10.6%. This seems quite high, but it is in range with similar companies. A $1000 investment, should yield me around $100 a year for the near time and the stock does not fluctuate too wildly.

Cool Retirement Calculator

found a great spreadsheet calculator over at Dividends Value. I can track your earnings with your dividend investments for as long a period you want to chart. This will give a good indicator as to what you will be earning annually with dividends.

I decided to play with my two stocks in a Roth IRA, Altria (MO) and McDonalds (MCD). My initial investment in both is quite small, but looking at what they can do in the future is quite amazing. The first chart below basically shows what happens with my initial investment only with dividends reinvested:

This second chart shows what happens if I added $2000 per year to the account:

The results for both are quite amazing. After 25 years with my initial $2000 investment, I would be earning $1500 annually. That would mean an initial investment yield of 75%. That is quite staggering. Also, the investment would be at $35,000.

Now if I added $2000 per year, after the same 25 years, the value would be at $281000 and I would be earning nearly $13,000 per year on dividends. I like the sound of that.

For both charts, I used a 7% dividend growth rate, which is quite conservative for the 2 stocks. Both MO and MCD have been averaging over 10% dividend growth rate over the past decade.

This is quite a handy tool to use and I will be going use it as a tool in my investment research for dividend plays.

Thursday, January 13, 2011

Changing Non-Retirement Brokerage Account

I made a decision yesterday to consolidate my accounts. The move is to the same institution as my current Roth IRA. It will make for better paperwork and and simpler transaction between portfolios.
In anticipation of the money transfer, I sold off my shares of Altria and Fifth Street Cooperation. I purchased both in May of last year and kept them for almost exactly 8 months. The results of my investments are attached.

The results include commission costs. Overall I made $48.34, excluding minimal taxes. This is not too bad of a result, for a $1,000 investment over 8 months. For a start into income investing, I consider it a positive, especially since it was held for such a short term. I am now researching purchases for the new account and am considering putting in an additional $1000, depending on how we do at tax and bonus season.

Monday, January 10, 2011

2010 End of Year Update

This has been one crazy year. The good news is that we are well on our way to killing off the credit card debt. The bad news is that we had to use up some retirement savings to get there. That is the problem with only having one income, and it is something I want to remedy this year. I did some calculations and found that either we were going to end up increasing our debt or start from scratch and build up our retirement accounts again. I opted for the latter because it would be less of a strain on us emotionally and we would save money in the long run. We were getting ourselves into a bad cycle if we did not cut this off.

So, here is where we stand from the beginning of the blog:

As you can see, 60% of that difference is due to the estimated loss in value of our cars. The rest is because of less income really. We have tried to really keep expenses low, but we have had some unexpected medical costs.

For 2011, I already stated our goals here. The key really is to get our retirement accounts back up and to finish off that auto loan. I have been considered looking into a home refinance to know the mortgage down a few years, while still maintaining our current payment level. That will now be until I feel the home value is up to a safe level.