BUYING ON THE DOWNSIDE

We had a tumultuous week with the stock market to say the least.  However, I was able to take advantage of the lower stock prices to add to my positions in Clorox, EVEP, LGCY and SGU.  These are all long term holdings in my taxable portfolio.  I also managed to get things moving with work so I'll be able to take advantage of the generous 401k plan there.  They offer a dollar for dollar match up to 5% of my salary.  While I've always looked at my current job as a place to ride out the economic downturn, meaning I hope not to be there much longer, I figure I might as well take advantage of the opportunity to build on my investments while I'm there.  I can always do a rollover on the 401k when I leave.

I doubt we've seen the last of volatility in the market, so I'll be looking to add more to my current investments in the coming weeks and months.  As long as the market is down I'm looking at it as a sale on future dividend income.  So I'll be buying as much as I can afford.  Let's face it, volatile or not, with interest rates in the toilet for the foreseeable future, the stock market is still one of the best games going.

TAX TIME!

I finally got the last 1099 form I was waiting on and sat down to do my taxes yesterday. It took about 5 hours to complete, but I was surprised to find I actually have a small refund coming. I'm already planning on putting that to work by investing it in additional shares of one of the limited partnerships I currently hold.

This year's taxes were a little more difficult than usual to prepare. I had several stock trades to report, dividend and partnership income and foreign taxes. Then I had unemployment compensation, which I had never collected before last year, so that was a first for me as well. I used an online tax preparation program and everything went smoothly. It really helps to have all your records together before you begin the process. Toward the end of each year, I always set up a file to collect all of my tax paperwork in, so when it comes time to prepare my taxes, it's all right there. Really simplifies the process.

I received an email notification that my return has been accepted by the IRS, so now it's just a matter of time before the refund rolls in. It's nice to actually get a refund for a change, instead of having to pay in. It will be even nicer to put the money to work and generate additional income for 2010 and beyond.

ONLY INVEST IN THINGS THAT MAKE MONEY!

About 15 years ago I worked as a certified dietary manager in a nursing home that catered to quite a few well-to-do seniors. My head cook and I had been discussing stocks and investing quite a bit and he took it upon himself to ask one of the retired businessmen in residence the secret to his retiring as a millionaire. His reply was, "Only invest in things that make money."

When he related the story to me later in the week, my genius response was, "Well Duh!" However, having had a great deal of experience with investing since then and lots of time to study making money work for you, I think I've come to understand just what he was trying to say. He wasn't being cryptic or putting my fellow co-worker on, he was sincere in his advice. I believe now that what he truly meant was to buy assets that generate income. Or only to invest in things that put money in your pocket.

This could be just about anything really. Buying equipment for your business that will generate a return beyond the cost of the purchase. Investing in rental property with positive cash flow. Or, as in my case, investing in dividend paying stocks. I choose to invest mostly in dividend stocks, rather than growth stocks, for the simple fact that dividends are money in your pocket. A stock may or may not go up in price, but a well chosen dividend stock can generate cash flow for years to come.

So his advice was much more valuable than it seemed at the time. It just took me a while to figure it out.