Saturday, September 28, 2013


Dividend income from my investment portfolio fell short of expectations, due in large part to my mistakenly counting 3 extra dividends for the month which are actually payable in October.  I've since corrected the payout dates, however I only collected 12 dividend payments for the month instead of the original 15 I had expected.  The bright side of all this is, monthly cash flow for the last month of the third quarter still beat out the corresponding months of the first and second quarters.  Not only that, but for the month of October, I'm now set to receive 11 dividend payments instead of the 8 payments I had originally expected.  

December is looking like the best month of the year.  For the month of December I should collect a total of 15 dividend payments and an additional 7 capital gains payouts from the funds I've invested in.  As I've mentioned before, all payouts will be reinvested to generate increased monthly cash flow and reduce investment costs.  Since my biggest goal for 2014 is reducing investment costs, I was pleasantly surprised when it occurred to me that keeping my monthly cash investments the same while monthly dividend re-investments are increasing, will lower investment costs all on its own.  Re-invested dividends are commission free and as dividends increase on a monthly basis, the percentage of commission free investments compared to total dollars invested will reduce investment costs. 

There is a lot of uncertainty in the market due to the showdown in Washington and a possible government shutdown.  There is also the possibility of a correction in the bond market as some are predicting and possibly the overall market.  However, I intend to look at any corrections as buying opportunities and move forward.  I'm really looking forward to 2014. 

Friday, September 27, 2013


Since my basic portfolio will be completed by November of this year, I'll be making my first investment for 2014 in December.  Meaning, instead of purchasing shares in something new, I'll be building my positions in stocks I already own.  

I've decided Cornerstone Strategic Value Fund (CLM:NYSE) will be my first investment for 2014.  After reading their recent semi-annual report, I've decided that their investments are in line with the companies I want to be invested in.  Not to mention they have a 17.01% dividend yield on their recent price of $7.25 per share.  While this is somewhat of a high flier, higher returns equaling higher risk, I'm willing to accept the risk for the possible rewards.  I'd highly advise doing your own research before following suit.  This fund may not be suited to your particle investment objectives.

Wednesday, September 25, 2013


If you asked most people what the cost difference would be between buying a $25,000 car and a $15,000 car, most people would answer $10,000.  That answer is only partially correct.  The difference in payments on the two cars would amount to over $200 per month.  If you trade cars every four years, that $200 plus per month adds up to a great deal of money over time.  
Let's say instead of buying the pricier car, you chose the less expensive one instead and invested the difference.  If your investments averaged 8% per year over a 30 year period, you would accumulate over $500,000!  I know several people who purchase vehicles every four years and pay $25,000 or more.  The point is, making a few changes in your spending habits can produce dramatic differences in the amount of wealth you accumulate over time.  

It's not just cars or trucks, you can apply the same principle to all of your spending habits.  I've done this with groceries and saw my weekly spending go to $20 or less per week.  I've been using the money I've saved to rebuild my investment portfolio and reduce debt.  Once the small amount of debt is gone, it will all go toward building my investments.  It's really a matter of deciding what you really want.  Do you want a little more luxury now, or would you like to create an income to afford all the luxury you desire later on?

Wednesday, September 18, 2013


As I mentioned in an earlier post, I'm faced with some risk from rising interest rates due to investments in bond funds which could suffer from higher interest.  However, I have taken steps to reduce the risk involved in some of my higher yield investments by investing in individual stocks with a history of raising dividends.  While these stocks currently have a lower yield, they are not in much danger of going out of business and should hold up much better than some of the high fliers during any market downturn.   Stocks with a history of raising dividends usually fair much better in market setbacks, since investors tend to hang on to issues when they're expecting an upcoming dividend payment.  

Then too, when investing in stocks with rising dividends, the yield on your original investment can grow quite dramatically.  Say, for example, you paid $10 per share for a stock with a 5% yield.  You would earn 50 cents per share during your first year.  Let's assume that this particular stock has a history of raising its' dividend each year and continues to do so by 10 cents per year for the next 10 years.  At the end of 10 years, you would be earning $1.50 per year in dividends on an original investment of $10 per share, which works out to a whopping 15% yield on your original investment!

So if you have higher yield and higher risk investments in your portfolio, it would be wise to balance out some of the risk by investing in stocks with a history of increasing dividends each year.  That's what I've done with my investments.  While I have some very high yield, higher risk funds, I've balanced that out with investments in lower yield low risk stocks with a history of raising their dividends each year.  While you can't avoid risk with the stock market, you can greatly reduce risk by balancing out your investments.

Tuesday, September 17, 2013


Although it might seem like a no brainer, the first step toward building wealth is to begin accumulating money for investing.  No matter how great an investment idea you may have, it does you no good unless you actually have starting capital to invest.  So as simple as it may seem, the first step toward building wealth is to dedicate a portion of your income for this very purpose.  

While you may feel that every penny you earn must go toward necessary expenses, often what we consider necessary is more of a want than a need.  In my case, my income dropped dramatically in the past couple of years, so it was imperative to correctly identify wants and needs.  I want high speed internet, but I do not need to pay for it.  Since it is available in my area for free at the local library and several restaurants around town, it is a want and not a need.  Eating out is a want for me.  I do not need to eat out, although I've spent countless thousands of dollars doing so over the past 10 years.  I am an excellent cook and have saved a great deal of money by preparing my own meals at home.  

It's small things like this that will help you save money to start your investment account.  Better to decide on the amount you'd like to start with and then figure out how you're going to save that amount.  It's also best if you "pay yourself first" before you pay anything else.  If you have the idea that you'll try and hold the money back, inevitably something seems to come up that prevents you from doing so.  Taking the money right off the top alleviates this problem.  

So if you're really interested in building wealth for a better life now and in the future, there's no better time than the present to start.  It's always best to start saving and investing when you're young, but no matter what your age or situation, it is sure to be improved if you build a residual income through saving and investing.  

Monday, September 16, 2013


While the majority of my total dollars invested are in stocks, I do have some exposure to the bond market through fund investments.  This being the case, you can understand my concern over the recent media frenzy regarding a supposed looming crash in the bond market.  While this may very well come to fruition, since rising interest rates have an adverse affect on bond investments, I've decided not to panic and take a wait and see approach.  

I'll keep reinvesting dividends in the bond funds I currently hold, however, I'll deploy my cash investments elsewhere.  So in effect I'll be limiting exposure to any bond market crash, should one occur.  A crash in the bond market may very well precipitate a correction in the stock market as well.  In that eventuality, I intend to look at it as a buying opportunity.  With prices down, my investment capital will go much farther.  

It's really a matter of learning to make money no matter where the market is going.  The key is not to panic.  I didn't panic when the market crashed during the "Great Recession" and I don't intend to panic now.

Saturday, September 14, 2013


As 2013 is winding down, I've been giving a lot of thought to my investment strategy for 2014.  While my main goal for 2014 is to reduce investment costs, I'm still quite focused on improving monthly cash flow and compounding.  To that end, I've been reviewing current holdings and the final issues I'll be purchasing for the remainder of 2013 to see where my capital might be put to best use.

I've decided to deploy the majority of my investment capital in 2014 in the following three funds.

1.  CRF  

CRF has a current dividend yield of 16.64% and has paid dividends for the past 25 years.  Some of their top twenty five holdings include investments in Johnson & Johnson, Google, Verizon, Coca Cola, Apple, Home Depot, American Express, Amgen and Nuveen.  

2.  CLM

CLM's current dividend yield is 17.02% and they have paid dividends for 11 years.  Some of their top twenty five holdings include JPMorgan Chase, GE, Microsoft, Chevron, Berkshire Hathaway, Visa and Wells Fargo.

3.  PFF

PFF currently carries a dividend yield of 5%, which is well below the other two funds mentioned, but still a respectable amount and I chose to include them in part to help reduce risk.  Some of PFF's top twenty five holdings include GM, Barclays Bank, CitiGroup, Deutsche Bank, Metlife, Goldman Sachs, Arcelormittal and ING Groep.  

Each of these funds provide monthly high yield payouts and invest in companies in which I own, or would like to own shares.  While this approach is right for me at the present time, I would advise doing your own research before investing in any of the above mentioned funds. 

Tuesday, September 10, 2013


Got a great offer from my Discover card!  They gave me a $50 bonus for opening a cash back checking account tied to my Discover card.  I'll get free checks, free debit card and ten cents cash back for purchases and bill payments and for each check I write.  While I don't write many checks anymore, I do use my cards and make online bill payments, so I should benefit greatly from cash back checking.  I'll use this account for my bill paying and spending money.

Added to my housing fund with proceeds from a recent garage sale.  The sale was fairly successful and we're planning on having another in a couple of weeks.  It's nice to see the balance in my housing fund going up.  Trying to figure out more ways to add to the fund.

Collected two great dividend payments from LLY and CNP today.  Both were reinvested helping to build positions in each stock.  It's nice to see escalating dividend payments from reinvested dividends.  The dividend from CNP remained the same as my last payment, but my dividend from LLY increased!  I'm seeing a pattern of increased dividend payments through reinvested dividends that is quite encouraging.  As my positions are strengthened through further dividends and cash investments, this trend is sure to speed up.  It's exciting to watch!  Kind of like getting a raise every single month of the year.

Monday, September 9, 2013


During the rebuilding phase of my investment portfolio, the investment costs exceeded dividend income for the first 5 months of 2013.  This being the case, as I look forward to adjusting my investment plan for 2014, I'll be concentrating on cutting costs.  

Two ways to accomplish this come readily to mind.  First, I'll continue reinvesting dividends for both accounts through 2014, since there are no commissions on reinvested dividends.  Second, I'll increase the dollar amounts of my investments and make fewer transactions.  I'll save on commissions this way because my investment company charges the same amount whether you invest $25 or $2,500.  

Controlling costs can add a great deal to the bottom line in business and investing.  So cost controls will be a major part of my investment strategy for 2014.

Tuesday, September 3, 2013


The month of September is off to a fantastic start with 6 dividend payments credited to my accounts during the first 3 days of the month!  This includes my first dividend from Wells Fargo (WFC), so I'm pretty excited about that!  I had originally expected a total of 15 dividend payments for this month, but I had incorrectly added RRD to the month of August, so I'm now expecting 16 payments in all.  This means I'll receive a dividend payment every two days for the month of September!  Can hardly wait for the grand total.  This will be the best month of the year for my newly rebuilt stock portfolio, although I'm expecting December to be the best month overall.  

By December I'll have added positions in at least 2 more stocks and one preferred stock fund (PFF).  So I'll have a final tally of the total number of dividend payments I'll be receiving each month.  Then it's just a matter of adding to my positions and monitoring my portfolio.  It's been great watching dividend payments go up every month from reinvested dividends, so I'll probably keep that up for the foreseeable future.  At some point, I'll switch dividends from my taxable account to be paid in cash in order to rebuild my cash position and help in purchasing a home, if I haven't already bought a place.  

I'm exceedingly pleased with the way my new investment strategy is working out, especially given the fact that I have so much less in earned income to work with.  Hopefully that will change before the end of this year as well.  But it's nice to know that I can accomplish my goals no matter what my income is, I just have to work with what I've got.