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Investments in 2012

January 7, 2013 by Jeff Davidson 1 Comment

2012 Investment GainsAs one of my resolutions for the year I will be paying closer attention to my investments and working to grow them this year. As I mentioned in my 2012 recap post I did make my goal of growing my investments by $10k for the year, mostly from my auto deductions to my IRA and some good market growth. This year I want to focus more on my dividend stocks.

Overall my investments did quite well for the year with a return of 12.35%. Although this a bit under the S&P rate of 14% it is not to shabby. I’m going to break down what I own and how they have done.

IRA Account

In my Vanguard IRA account I had an automatic contribution of $80 and it is distributed amongst these 4 funds:

VTSMX – Total stock market fund
VGSIX – REIT index fund
VGTSX – Total international stock index fund
VIPSX – Inflation-protected securities fund

Overall the this account had a 13.26% return for 2012 with no losers so I’m happy there. I am keeping this account balanced with 15% in bonds (VIPSX) even though Vanguard recommends 22% at my age. I figure when I hit 50 I’ll bring it mor in line but because of the late start I want to be a little more aggressive.

For this year I’m keeping the auto contribution as is for now and thinking about increasing a bit around April. Right now it is set at $4,100 a year and gives me room to contribute $900 more by April 15th.

Dividend Stock Account

I use Buyandhold.com for my dividend stock account. It has a low fee which gives me 2 free trades a month and free auto dividend reinvestment. Over all this account only did 7.62% return for 2012 and did have a couple losers that dragged it down.

The first loser of the year was Intel (INTC) which was down 19.69% for 2012. It is also my biggest holding for this account which helped bring it down. With a dividend yield of only 4.25% I’ll be looking at this closer this month and decide if its a keeper.

The other loser was Seadrill (SDRL) down 3.93%. I’ve only had this a few months and is my smallest holding. I know I bought high but with a dividend yield of 8.99% I will continue with Seadrill dollar cost average while it is down currently

My biggest winner of the year was Sempra Energy (SRE) which was up a nice 33.45% for the year. I have not put to much more into this stock as the price has taken off and I know from history (I owned this one before) that it will have a down cycle. For this year I will watch it and do small buys on the dips.

The other two stocks in this account are AT&T (T) and GE (GE) which were up 19% and 16% respectively.

For 2013 I plan on continuing to add to each of these holdings by making 2 purchases a month (to use my 2 free trades) at least. I’m also going to be looking for at least one more stock to add to the account as well.

How did your investments do in 2012? Any recommendations for 2013?

Filed Under: Investing

November Wealth Report – Looking Ahead

December 2, 2012 by Jeff Davidson Leave a Comment

End of the YearHere’s a phrase you will hear often the next couple days “wow its already December?” Yep it is and means time to loosen up the budget and credit cards right? Well I do tend to splurge a bit for the holidays but this year will be a little tighter than past. To me December is a time to start looking at what has happened this year, recap on goals and to see what needs to be done before the end of the year.

Nov 2012 Report

November was actually a very good month! Looking at the bank statements its hard to see but according to my income report on Mint.com it was almost double the previous month, lets hope this is a trend. Had some great portrait sales this month and couple black friday sales helped as well. Also stating up the web design business again contributed a bit.

Adsense has been trickling along, well call it lunch money right now. Thanks to google almost all my nuche sites have disappeared in the rankings and not sure if its worth the effort to try and revive them. Still have a couple ranking and think Ill just concentrate on those.

Spending was up over last month due to sales tax paid, take that out and it was about the same as last month.

Income

Earned Income$14,609
Expesnes$9,767.27
Cashflow$4,841.73

Assets vs Debt

Cash Accounts$37,933.88
Vanguard$24,091.51
BuyandHold$4,444.42
House$325,238.00
Debt$289,381.64
Net Worth$108,726.17

The biggest change has been the house value which has shot up, which is good news as we are trying to refinance the house right now. This has also shot up my Net Worth so I take that value with an asterisk, actually money has not gone up much and my portfolio has taken a beating since August especially because of Intel.

Whats ahead for December

So looking where I am at against my year goals Im in ok shape except a couple of them. The big loser will be the credit card debt thing, actually went backwards a bit there and no way to recover before the end of the year.

The other one one to focus on this month is the investment portfolio as I’m just about there. So I will be looking at dumping some money somehow into my dividend portfolio or the IRA. I’m $1,500 short right now and dont think I can put that much in hard cash so I’m praying to the market gods as well. December is also a big dividend and capital gains month for vanguard so that should help and I am scheduled to have a little over $300 in auto deposits made. So it is with in reach 🙂

I am also getting a new computer (hey its one of those business things) mine has been draggin lately and its a early 2008 macpro. figured better to go with latest tech and get a maxed out iMac. Hope to get it on order with the next few days to save on sales tax (If you’re not from California, somehow a sales tax increase got voted in that starts Jan 1) even though it wont be released or delivered till after the 1st.

Finally as mentioned we are working on getting the house refinanced. Its currently at 6% and I have been putting off doing it for ages mainly because there is always an out of pocket expense. I then realized that I have my VA benefit I can use. So went ahead and started the process and hope we get approved and close before Christmas! We are going to try and take a little cash out, but the main purpose is to improve cashflow. We currently handle taxes and insurance separately which is a little of a pain. So if everything gores right we will go back to an impound account and have a monthly payment, including taxes and insurance, for just a bit less than the current mortgage alone.

How does your year goals look? Any last minute tasks to try and make them?  

 

Filed Under: Budgeting, Debt, Income Reports, Investing

In With Seadrill

July 28, 2012 by Jeff Davidson 1 Comment

seadrill dividend stocksA while back when discussing my dividend stock portfolio I had mentioned that I was looking to add a new company to the portfolio. Yesterday I finally pulled the trigger and started my position in Sea Drill (SDRL). Not much but it’s a start.

Seadrill is a company that builds and aquires, operates and lease out various oil rig platforms and ships, currently sporting 66 vessels for operations in shallow to ultra deep water. Each rig earns upwards to $500,000.00+ a day for the operations of these rigs and with demand increasing worldwide more rigs are being added and daily rates increase. All pointing to increased revenues for shareholders.

 

Get Off The Fence!

One thing that was hammered home agin with this decision is that if you are buying for the long haul, don’t wait or worry about price. Just get in and dollar cost average. When I was first looking at this stock it was in the low 20’s, I was still reading up on them so was waiting. Then we had a little belt tightening and I wasn’t putting anything into the dividend portfolio. By the time I was ready it was up to $34 so I thought to my self  “self, let’s wait and I’m sure it will dive a little in the next couple days”. It didn’t, even on down days for the Dow it still went up. It did have a little dip on Thursday but I decided to just jump in. If it goes down a bit from here I’ll just buy more and lower my average cost. So I got in at $39 and at the end of the day already showed a profit 🙂

The Yield

As the past few weeks show that this stock has potential for some good growth. They are at the top of their field with contracts at least 10 years out. In fact just today they received a new contract worth 4 billion (and thats just for 3 rigs). Of course I wouldn’t be adding this stock if it didn’t have a dividend and it sure does, bouncing around 8-10%! With a yield like that I am kicking myself that I didn’t get in when I was first thinking about them.

I’m now in though and look to keep building my position while dollar cost averaging my share cost.

Have you considered any new investments lately?

Filed Under: Investing

Timing Market Bad, Get Your Money In and Off the Sidelines

March 20, 2012 by Jeff Davidson Leave a Comment

dollar cost averagingThose out there that consider themselves ‘traders’ can move along as you will not agree with this post at all. Those that have the time to watch the market most of the day and spring on buys and sells as soon as the stock reaches your price. This is for those of us that really have other things to do or just dont want to deal with the work (or stress) with timing the market.

Yes when you try timing your market purchases you often end up just losing one way or another. The biggest way is that your money is just sitting on the sidelines instead of having that extra time in the game. With my Vanguard I dont have that problem, it is all on auto pilot (I do check in once in a while). Every Monday $80 goes in rain or shine. It buys shares of my funds no matter if the fund is up that day or if its down. Over time with these purchases it will average out and smooth those highs and lows and my money will be working instead of sitting in my pocket.

This is dollar cost averaging and along with a buy and hold strategy the best way to be investing. Best way to do this is like I do above and put your money on a auto schedule and just put it in regardless off what the market is doing.

Now I have deviated from this a bit in my buyandhold.com account. Here I have my dividend portfolio where I like to play a bit more off auto pilot. I have mentioned that I make purchases each month based on ex-dividend dates and who is paying a dividend next month. For instance Next month (April) SRE and GE are paying their dividends so I have to purchase more of these before end of March (roughly) for those new purchases to be able to pay a dividend in April. Typically sometime during the first few weeks of the month I will see a down day and buy then, like I did with SRE this month. With GE I decided to actually wait for a ballpark price, under $20, before I made my purchase. Now I dont stare at the screen waiting for that moment, I just check once in awhile and thats where I made a mistake for me.

As mentioned in my review of BuyandHold.com I mentioned that for the monthly fee you get 2 free trades. I make a point to use those trades each month otherwise I am just throwing money away, something I dont like doing. This is where I lost out as my renewal date for Buy and Hold appears to be on the 20th and in my wait for the sub $20 GE I forgot this and missed out on the second free trade for this month.

So I have made a decision that regardless of price I will be making my 2 trades a month by the 15th regardless of price, just get the money in there. If you are a fellow buy and holder this is the best way, dollar cost averaging and dont worry about the day to day price of the stocks you are buying. Get your money in to the market so it has more time to work for you.

Your milage may vary…

Filed Under: Articles, Investing

Attack on Dividend Investors?

February 23, 2012 by Jeff Davidson 2 Comments

dividend tax

Used again cause it fits

Well President Obama submitted his budget proposal last week. I know its mostly campaign gimmicks and doubtful much of it will pass, but there is something in there that hasnt been talked about much that scares me. You see President Obama is asking for a tax increase on the wealthy, no suprise there huh, but it hurts just about everyone else even more.

We are talking about the tax on dividend payments which is currently at 15% for everyone and which he wants it raised to 39.6% and on top of that there will be a investment surcharge tax of 3.8% and a reduction in exemptions and deductions making the effective tax rate 44.8% starting in 2013. Now you may be thinking, wait isnt that only for the filthy rich people (a status I aspire to be in). Yes it apparently is only for those making more than $200k which effects alot of small businesses and entrepreneurs. But it is still going up for everyone, instead of the max 15% your dividends will be taxed at your regular tax bracket as of 2013. Oh and your taxes are going up as well in 2013 unless something changes, but we are talking about dividends in this post.

You see it has been shown that dividend payments have a correlation to the dividend tax rate. When the tax rate is up dividend payments are down. When President Bush passed his evil tax cuts (I guess you can tell Im a bit biased here) dividend income tripled in the first few years. Increase the tax rates and it stands to reverse. Its not just the rich that will get soaked with the tax increases but the rest of us that depend on dividend income in our retirement accounts that will ultimately be hurt?

Besides in my mind dividend money has already been taxed several times. More often then not you are using after tax dollars to by dividend stocks. Dividends are also paid out profits that are left over after the company has paid taxes. So they are then taxed again when given to you…

Im tired of hearing the answer for every thing is to raise taxes, or tax the rich more. It’s been proven over and over that an increase in taxes does not always equal an increase in revenue. In fact often the case when you try to do targeted tax increases and fees it finds a way to trickle on down to the rest of us and it’s the lower brackets that end up paying.

So get ready to start seeing your returns dwindle again on your dividend payments , that is if dividends continue to be paid…

Filed Under: Investing

BuyandHold.com for your Dividend Investing

February 10, 2012 by Jeff Davidson 4 Comments

Buy and HoldA while back ago I gave a short little mention on BuyandHold.com in the article about DRIPs and such. I think the time has come for a little lengthier piece on this great company. First off I do not hold stock in them, they have no affiliate plan that I can find (and I’m looking). I  am not getting compensated for this post, I just love the site and use it myself. It makes me feel good if I can share something like this and others use it.

Dividend Investing

The main thing you do when dividend investing is you want to purchase good stable companies (no real risk taking) that provide a steady, albeit slow, growth. These companies of course need to provide a dividend as well, hopefully 3% or greater and should have a history of increasing their dividend or at least very few decreases. You buy these stocks and park them! Hence the term Buy and Hold.

When you fist land on BuyandHold.com you most likely will not be impressed. Their website is no frills and has looked the same for the past 10 years that I know of. They dont have mobile apps (the one thing I would like to see) or fancy web 2.0 gadgets everywhere and Im ok with all that. All that costs money and without it they can pass the savings on. They do still provide you with all the research tools you need. One such neat thing I like is their top 10 list where you are able to shop from a list of the top 10 holdings over all (dont use it, just fun to see what others like)

Its All in the Fees

Fees are the enemy of any healthy return so you have to be sure the brokerage you choose has low fees and any they do have you can justify. All fees will eat away at any dividend payments or growth you see. There are many brokerages out there and they will all charge you some sort of fee for purchasing dividend stocks. Some will give you some special deals as well but look at what the restrictions are.

 Brokerage Real Time Trade Special TradesDRIP
 ING Direct $9.95 $4.00 Special Rate on Tuesdays only, Scheduled ahead of time YES
 Scott trade $7.00 NO
 E Trade $9.99 YES
 TD Ameritrade $9.99 YES
 Buy and Hold $15.00 $2.99 3 Window sales a day YES

You can see by this chart that Buy and Hold does not have the cheapest realtime trades, but with a buy and hold/dividend strategy you do not need realtime trades. You are dollar cost averaging your stocks and shouldn’t have any worries about the minute to minute price of your stock. Being able to make your purchase in one of their 3 window trades times a day, 5 days a week is more than enough. Just place your order and it is processed at the next window so you should get close to the price you want.

With other accounts shown you have to pay about 330% more per trade or wait till Tues to have your order processed  (and still pay 33% more in fees). Why do that when all that fee money can be put to use earning you more!

Can’t Afford the Whole Pie

Time is a big factor in earning money for retirement and the faster you can get your money in the game the better off you are. Most brokerages you purchase stocks by the number of shares you wish. This can difficult for some especially if you are wanting to buy a stock like Apple (AAPL) which today closed at $493.42! You may not have the $986.84 to purchase 2 shares (let alone even 1 share) so you save up earning a whopping .02% or something in savings till you have enough. Mean while Apple may be even increasing even more.

Well dont wait! With Buy and Hold  when you purchase stocks they do not ask how many shares you wish, they ask how much $ do you want to put in! Yes you purchase partial shares of your stock interests. This works great so you can plan to just put in a couple hundred a month or whatever you can afford. Yes you are still earning dividends on the partial shares as well. So you are seeing growth and dividend yields right away!

You of course can also set up automatic payments to your Buy and Hold account and set up distributions as well. I currently dont use this as I like to decide each month how much I am putting in and to which stock, typically which ever one is about to pay a dividend next month. (you can see my dividend strategy in my last post).

What do I do with my Dividends?

The big thing is not to take your payments and buy more beanie babies (another post) but to sink those dividends back into your portfolio. This is why dividend investing is so much fun (and profitable). With Buy and Hold by default your dividends are automatically reinvested back into the same stock. No forms to fill out, no check boxes to remember to check off. You buy a dividend stock and its done. Thats not to say that when you reach that magic age and you want to start living off your dividends you can’t. It simple to go to ‘Reinvest Dividends’, select one of your stocks then change the yes to a no and you are done.

Yes as mentioned above you are still getting shares based on a dollar amount and not waiting till your dividend payments can buy a full share.

So What’s the Catch

Well if there is any real catch to this site it is that they do charge a $6.99 monthly ‘maintenance fee’. I see you now saying gotcha thats another fee! Wait though! Yes if you are inactive and dont do monthly investing this is another fee to weigh down upon your returns. The good thing is that with your monthly fee you do get two free window trades which is the equivalent of $5.98 so the monthly fee is $1.02 (or $12.24 a year). In the big picture I think this is just fine. If you spread that out with the 24 trades you get it makes those trades cost $3.50, still cheaper than the ING $4 Tuesday trades. Key is to use those 2 trades every month, even if you are just putting in $20 of ATT (T).

These are just the highlights that make BuyandHold.com a great place for you to invest if your strategy is one of buying dividend stocks for the long haul. It was not created for those that like to watch the market and trade shares on a daily basis.

So who do you use and why do you like it?

Filed Under: Investing, Streams of Income

Update on My Dividend Investing

February 6, 2012 by Jeff Davidson 3 Comments

dividend yieldsSpent a good deal on Adsense last month thought Id turn the page and do some talking about my investing for secondary income. Awhile back I did a post on Drips and Dividend investing so its time I do a little update. As of that post I had restarted my BuyandHold.com account and had started purchasing my stocks.

In this account I only purchase dividend bearing stocks and do so with the mindset I will be holding them for the long run. I am not a trader, I do not have the time to be and IMHO trading dosent really have the return for the effort (you can chastise me in the comments now on how I am wrong). When I finally purchase a stock I am looking for a couple things.

  • A strong and well established company that has been around for awhile.
  • A company that I know and most likely use in some way
  • A dividend yield of 3% or higher
  • A history of increasing dividends
  • When is their dividend payout. Not a great requirement but I am trying to build my portfolio so that I have a payout each month.

My Current Dividend Portfolio

Ok so where am I at now and what dividend stocks do I own now?

  • GE (GE) – This company is everywhere! Im sure you use something made by a GE company everyday in your life. They have been around for ever and their dividends have been increasing every year. They are also cheap 🙂 in my way of thinking. Currently trading at about $19 and with a yield of 3.2% it makes it a great buy
  • Sempra Energy (SRE) – This an energy company here in San Diego that owns our local utility SDGE as well as others. SO it passes the know and use requirements (sucking up energy from them as I write this post). Back when I did investing the first time they were my best performer, buying in at $18 and finally selling at $80 when I closed my account. This time around not so lucky as I started out in the $40’s. They are currently trading around $58 with a yield of 3.29%. I still like them even though they are expensive in my book, but I tend to increase on their down days. They have also been good as a growth stock as well as dividends.
  • Intel (INTC) – We all know Intel, again they are everywhere in the computing world being the number one company for CPUs. They may have not been along as long as GE but since they have been they have been increasing their dividends each year as well. Currently trading at  around $26.50 and close to the 52 week high of $27 with a yield of 3.03%. Again I look for the down days to increase position here but I think they do have room to gro beyond that $27.
  • ATT&T (T) – Yes the mighty T. They have been around a long time in one form or another, currently as one of the top 3 wireless providers. Ok lets be honest there are really only 2 in the top and T is one of them. Dividends again increasing over time and being a solid company I believe will be around for quite some time (at least in my lifetime). Currently trading at $28 with a dividend at a whopping 5.78% it is definitely one that belongs in any dividend portfolio. Not much in growth but I do expect some perhaps later in the year. Trading right in the middle of the 52 week trend I think it will start to go up after this T-Mobile mess gets far behind us.

My Top Secret Strategy

Well its not a secret really and and it may be foolish to some but here is what I do. I mentioned that I look at the payout months for the dividends so that I have them spread out throughout the year, giving me a monthly payout. Currently I do have that with the four stocks above. With Jan, April, July, and Dec having two of them payout. So fo future purchases of new stocks I would like to get the other months another payout to balance a bit. Not the biggest criteria but im looking at it anyway.

Now that I have the months covered I will be increasing positions in these 4 for a bit most likely before I bring on a newbie. I look at each month coming up and see who is paying out. In todays case it is March and that would be Intel. I look at when the dividend record date is (they date you must own shares by to receive dividends on the next payout date) and be sure I do that months purchase by that date. So for Intel their record date is Feb 7th (yikes thats tomorrow!) to receive dividends on March 1st.

Like I said may be foolish but hey its my game and I’ll play by my rules!

Whats Next

Well I will be increasing my positions for the next couple months I believe. I am looking at a newbie for the next addition, and I owe the discovery to Cash Flow Mantra as he mentioned it on his blog. The company is SeaDrill (SDRL) which makes and operates Oil Drilling rigs and ships. Now this one may break a couple of my rules as I dont know them and they are in a sometimes volatile industry. They do not have a long history of dividends as they others I own and the amount has dipped a bit in 2009 but is now rising again. Analyst have been rather up on them but have seen some concerns (that seem to get tossed aside) they are currently trading at $38 which is right about at their 52 week high. Some think they are over bought and think they may come down a notch soon and that might be when I get in. Afraid if I wait to long though I may miss the boat.

Now why would I take a chance on SeaDrill? Well tis for the one thing I haven’t mentioned yet, the dividend! Its at a even more whopping 8.28%! (oh and they payout March, June, Sept, Dec perfect!)

Finally here is my performance chart for this account. Not as big as some yours but just started late last year and making small monthly contributions where I can.

So there is my dividend account update. This is the account I actively manage as I also have regular payments going to Vanguard Index funds on auto pilot. Funny thing is that this account is currently outperforming the Vanguard. All you experts out there try not to beat me up to bad. I am not an expert and dont take my advice as such. I just share what I have been doing good or bad so maybe you can learn from my successes and even in my mistakes.

 

Filed Under: Investing, Streams of Income

Rolling the IRA: Step 2, Allocating the Money

December 14, 2011 by Jeff Davidson 2 Comments

vanguard fundsIn case you missed it this started with the closing out of my Waddell account and transferring to Vanguard which i discussed in t a previous post Rolling the IRA: Step 1. Now the money has arrived! It really was a quite painless process. Vanguard did all the work, I just signed some paperwork that they emailed to me. The whole process took about 3 weeks till I saw the funds in my account. Still had to wait a few days after that for the check to clear, but they allow you to start allocating the money to the stocks/funds you wish.

That is the big dilemma once its all moved, where to put it? The easiest thing to do would be to park it in one of Vanguards target Retirement Funds. These are funds based on when you plan on retiring and you let them do the asset allocation for you. Over time as retirement approaches they will automatically reallocate your assets best suited for you. Adjusting the percent held in bonds and stocks to give you less risk as you get closer. All you have to do is keep investing. For the most part it looks like you are just invested in two index funds, all stocks and all bonds. This is great for those that really don’t want to take to much of an active role and like it all to be handled for you.

Me, I like to have a little more active role, just a little. Along with a little more diversification and a little more risk (not to much). In that case you can invest in several different index funds and then once a year rebalance yourself. Every couple years change your asset ratios to reflect your risk factor as you get closer to that retirement date. This is the approach I’m taking based on what I read in Ramit Sethi’s book where he suggested to follow a formula based on Swenson Model of Asset Allocation. His formula is this

  • 30% Domestic Stocks
  • 15% International
  • 5% Emerging markets
  • 20% Real estate
  • 15% Goverment Bonds
  • 15% Treasuries

The problem I had with doing this with index funds was Vanguard requires an initial $3k buy in to any fund and I didn’t have enough money to start this out right so my ratio and funds are as follows

  • 40% Vanguard Total Stock Market Index Fund
  • 20% Vanguard Total International Stock Market Fund
  • 25% Vanguard REIT Index Fund
  • 15% Vanguard Inflation-Protected Securities Fund

As time goes by of course the balance will get out of whack so each December I will move money around to rebalance everything out. In a couple years I can syphon off $3k from a fund or two and start up the bonds.

Next step Im doing this week (just keep forgetting to add my bank to my account) is to set up automatic investments. Now with an IRA I can only contribute a max of $5k a year, which equates to about $96 a week. Im actually going to do $80 a week and have it automatically split to the above funds in those percentages. Each December I can then look at my finances and hopefully be able to put in the remaining $840. I can then also put it where it needs to go to help balance the assets.

So where is your retirement investments parked? Auto pilot or do you take an active role?

 

Filed Under: Investing

Dividend Investing: AT&T

December 5, 2011 by Jeff Davidson 1 Comment

att_stocksI have my IRA now with Vanguard and will be putting that money into index funds and onto auto pilot. But I still like to ‘play’ in the market a bit on my own, so I put a little money each month in to my Buy and Hold account. In this account I only purchase dividend stocks with the goal of generating a nice income bearing account. Hopefully in 20 years it will produce a decent monthly income to cover something like food or my comic book habit (need something to do in retirement). I’m being realistic that I don’t think it will cover all living expenses, but who knows.

I may be weird or even wrong to do so but along with all the usual stuff to look for (price, growth, yield) one of the things I look for in the stock is the payment day of the dividends, or more so the month. Dosen’t really help if they all pay in the same month, then I would only see income quarterly. I also practice the thought of invest in what you know. I don’t go looking for the next big thing, but rather well know and established companies.

ATT

ATT as most know is a wireless provider, in fact number 2 among the US wireless carriers. I have been using ATT as my wireless phone service since 2001 (back in the cingular days) so they are a company I know and use daily.

Now if you are a trader or looking for a growth stock this may not be the one. It has been hovering in a tight 52 week zone of only a couple dollars, currently right in the middle. With the recent troubles with their attempt to purchase T-Mobile they may even be looking bleaker to some, with some saying the buyout is the only way for them to really grow. If the buy out dosen’t go through it will still cost them $4 billion and that may scare some investors away. I say good! With a cheaper price I can pick up even more shares. You see what I am looking at is the rare 6% yield on the dividends.

Att is a sound company that has been around a long, long time and I feel will be around for quite awhile longer (hoping at least 30 years). ATT has paid a dividend as far back as I can see and best part is it has increased every single year. Even through this slow economy it has still increased (ok only a penny but thats still an increase) in good times it was a good increase as well. The stock is one that when it has gotten to high it has performed a stock split as well. Haven’t had one in quite awhile but I’m sure once the economy gets roaring back it can happen again.

With things the way they are now its a good time to start on this one and dollar cost average from now till retirement.Recently heard a statement attributed to Warren Buffet about his love for Coca Cola (the stock not the soft drink, and another I am considering) which he has been buying regularly just for the dividend. He said about 2015 or so he will being earning dividends form coke in the amounts greater than what he has paid for the stock! Now I can’t buy in the volumes that he can but this is my goal. To dollar cost average into divided paying stocks like ATT here so that when I retire they will be paying me a hefty monthly income.

I don’t own ATT at this time but it is one I think I will be acquiring next for the following reasons.

  • Sound and long established company
  • High dividend yield
  • Dividends increase each year
  • Currently very affordably for me
  • Pays dividends on a month that I currently have no payouts.

Little disclaimer if you can t tell I am not a professional broker and my reasons are my opinions. If you are considering investing please do your own homework and make your own decisions.

SO what do your think of ATT as an investment? DO you invest in dividend  stocks?

Filed Under: Investing

Rolling the IRA: Step 1

November 18, 2011 by Jeff Davidson 4 Comments

vanguard investmentsFinally did it!! I initiate the transfer of my IRA to Vanguard by sending in the paper work earlier this week.

The old busted…

I was in a SIMPLE IRA from my previous employment. It was great then, I was new to this and it got me started. I should have put more in, I wasn’t taking full advantage of the employer matching. While I am entirely thankful for the my employer for the program it wasn’t without its issues. In hindsight  The choice of Waddell might not of been the best (this is from my point of view as I don’t know all the ins/outs of setting it up, may have looked good from that perspective). For starters we were limited to Waddell mutual funds. I won’t go into all the history or how most funds under perform the market, lets just leave it at not a whole lot of choices.

The next  issues was that they were load funds, paying a commission up front, also the annual fees were quite high. This is one reason why they underperform, you have less money invested. Finally the big kicker to me, especially now that Im on my own, is they make it difficult in this day and age to add funds to my account. With the internet today they really need to improve here. I could set up automatic investments I guess but they don’t have any way to do this online so no way to control either. With no online set up I can’t make lump investments either, have to go to their office or mail in a form and check. How 20th century is that?

The new hotness…

So this week I talked to Vanguard and opened an account (online!), filled out the paperwork and mailed it in. Takes about 2-4 weeks I guess but that gives me time to determine what I will be investing in (part 2). One of the main reasons I went with Vanguard as opposed to an online broker like share builder (another I was considering) was the fees, or lack of 🙂 As long as Im doing Vanguard funds their are no commission fees, so all my money goes to investing. Also the annual maintenance fees are the lowest out there, averaging .21% compared to waddell’s 1.7%+.

I will be setting up an automatic weekly or monthly transfer in but the cool thing is Vanguard while being one of the oldest funds out there has welcomed the 21st century, I can transfer money in online! I can make changes online! I am in total control which a control freak like me really enjoys.

Whats next

While I wait for my money to arrive into my account I will be looking at Vanguard index funds and deciding where I’m going to a lot my money. Im leaning towards this instead of the target retirement funds again because I want more control. I have a good idea of what I’m going to do based quite a bit on what I read in Ramit Sethi book, made a lot of sense and gonna try it out. More on that in a future post. After I get that set up then I will set up an automatic investment each week or month. Each quarter or annual I will see where I am at compared to the max investment allowed and any extra money I have and do some lump investments.

Oh that brings up another point. I was un able to roll it over to another SIMPLE IRA because apparently there is an OCT 1st deadline to do one this year so I just did a traditional IRA which has a max contribution of $5K a year. This is ok because when I was first looking at doing this thats what I was looking at and I see no problem making it out. If by chance I start making even more money  and that 5K becomes to low I can then open a SIMPLE IRA with my business and have an additional $16.5k to work with.

How about you, where do you park your retirement money? are you paying to much in fees?

Filed Under: Investing, Savings

Rolling Over My Retirement Account – Where to Park it!

October 26, 2011 by Jeff Davidson Leave a Comment

Retirement savingsIn a past life when I worked as an engineer in a cubicle (it was a rather large cubicle) the company I worked for started a SIMPLE IRA program for us. I am entirely grateful to them for doing this as I was not preparing at the time for retirement and should have taken more of an advantage of the matching funds. The company they choose to use for the program was Waddell.com which in hindsight for me wasn’t the best of choices. With them you had to use one of their funds which were all Load funds (5.25%) plus the maintenance fees which were almost 2% annually. Fast forward to present time where I am ready to continue investing in retirement account and the only way to do it with them is to mail a check or hand deliver it to one of their offices. Pretty 1980’s isn’t it.

So for all those reasons I’m looking at doing a roll over to another brokerage. Its not a lot as when I quit I took out 30k to build up the business and to survive on while the business picked up. Yes I paid 10% penalty and taxes on it, maybe not the best of moves but I am on my own now. At first I was just going to do a traditional IRA but have found out that since I am self-employed I can do the typical business IRAs as well, each having their pros and cons.

The How

Solo 401(k)

Yes as self employed I can do a regular 401(k) for myself (and spouse). This does have the benefit of a large annual contribution. First I can contribute up to $16,500 as an ’employee’ then I as the ‘Employer’ I can contribute up to 20% of net profits as profit sharing. This can add up to no more than $49,000 a year but hey thats quite a bit, so much that I don’t think I would ever get near that. This kind of program as I understand it can also be limiting as to what you can invest in and their are additional fees and paperwork that really don’t make it worth it if you can’t get near that max amount.

SEP IRA

This one is much like the Solo 401k but the IRS makes it a little more complicated to figure out your max contributions. Its the lesser of 25% of your net earnings or $49,000. Ok sounds simple so far but you calculate your net earnings by subtracting your expenses from your income (well duh everyone knows that you are thinking, just wait) then subtracting…

  • The deduction for one-half of your self-employment tax
  • The deductions for contributions to your SEP IRA
But wait how am I supposed to know my contributions if I don’t know how much I can contribute? (scratching my head) Well the IRS is supposed to have some cheat sheets to help you out. Sounds like a formula to just get in trouble to me. You can invest in what you want in this one just like a traditional and has the same basic rules.

SIMPLE IRA

The Simple IRA is just that, simple. You can contribute 100% of your net earnings up to $11,500 plain and simple. Besides that it is just like a traditional IRA and you can invest in what ever you wish.

Traditional IRA

This is your run of the mill IRA for individuals outside or their businesses or work plans. You can only contribute up to $5,000 to this account per year but can invest in anything your broker has. As I understand it I may cable to have one of these and one of the above, still checking on that though.

Next is the where…

The Where

Share Builder

Share Builder is part of ING Direct, where I have recently opened a savings account for various purposes. I kind of like them as if I set up automatic contributions to be performed on a Tuesday then trades are only $4.00 with the option of real time trades at $9.95, $19.95 for funds. Real time trades are a little high for me but the object is not to time the market but to dollar cost average your investments over time. So $4 is not to bad and I can invest in funds, EFT or stocks. Gets down to $0 if I choose from about 5 family of funds.

Vanguard

Vanguard is on of those old time brokers that has been around awhile and has a good reputation. Unlike Waddell they have come around to the 21st century  and you can invest online with them. The big plus with Vanguard is if I choose their funds or EFT there is no trade commission! Vanguard also has some of the lowest maintenance fees for mutuals, about .2% compared to waddell’s almost 2%. If I do want to choose stocks its only $7 per trade.

Others

There are others like Scottrade, Etrade, Ameritrade, etc etc. They are all pretty much the same with small variations between their trading fees. I have in my mind narrowed it to the two above, one for the low for fees and other for the convenience.

The What

Ill save this for another post as it takes 4-6 weeks to complete the rollover so that gives me more time. If I go with Vanguard Im looking at either a target retirement fund or several sector index funds that will give me more control.

 

So for me Im leaning heavily towards a Simple IRA and if I happen to max it out then look at a traditional as well If I can. Still want to do some reading and at the least ill just do the traditional, I was prepared for the 5,000 a year. Im also leaning towards going with Vanguard, yes its another account but will have the least amount of fees so that puts more money back into the investing. Have some questions out to them as well but looking at starting the more this week or next.

I would like to hear from you and what you are doing and perhaps how you feel about some of the services mentioned.

 

Filed Under: Investing

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