A Review of Investments

I know I've extolled the virtues of investments and if you do not have any consumer (think credit card) debt, you should seriously consider investing any of your excess money. I jumped back into the stock market in 2021 and have a number of years to look back upon to see how well I did. I also know that past performance is no guarantee of future returns. However it can serve as a rough estimate.

This past week I have reviewed my investments and have come up with a pretty good metric to determine how well it is doing. I encourage you to periodically do this as well. Investing can be logic based but there is also a lot of emotion and so it is good to have a consistent metric to help leverage logic over emotion.

Rather than talk about specific stocks, I want to focus on investment genres. I will provide some examples but leave it up to you to try this with your own investments. My ultimate metric is how long it takes me to double my money. Using a well-balanced portfolio, financial experts will tell you that you should be able to double your money in 10 years with no additional investment. Let's see how well my investments stack up.

Dividend Stocks

I've mentioned before that I like the passive income offered by dividend stocks. My investment portfolio consists of two different dividend stock genres: high dividend stocks and strong company dividend stocks. In the first I have a Real-Estate Investment Trust (REIT) stock. It is required to pay 90% of profits in monthly dividends. Every month I am paid a few dollars that I can reinvest. I am currently seeing about 13% annually that gets compounded monthly. It is not bad but the value of the stock always seems to remain around the same price. Looking at my own portfolio, this stock takes between 6 to 7 years to double my money. That is a good starting point.

My second dividend stock group is with two companies that pay quarterly dividends but are large corporations with solid financials. They don't pay as much as my REIT but the value of the stock has gone up over time. I have seen one company go from $35/share to $40/share over the course of 2 years. Factoring in the quarterly dividend payouts, it only takes this category about 6 years to double my money. As I am investing for the long term, this seems to be a slightly better investment strategy than REITs.

Whole Life Insurance

At the age of 23 I recognized I needed to provide for my family in the event I died. I picked up a whole-life-insurance policy that had a cash value I could borrow against. On occasion I did and then repaid the loan to myself to build back up the cash value. The premiums for the life insurance part of the investment started small and so it turned into a great value should I prematurely pass away. Now that I am older, very little that I pay into the policy is reinvested. Most of it is now going to really expensive life insurance that I no longer need, thanks to my other investments. Reviewing this is what helped me come up with the double-your-money-time metric.

I've had my life insurance for over 30 years and when I calculate how much I have put into it and the cash value now, I have barely doubled my money. Yes I know it is not fair as I am constantly putting more money into the investment and yesterday's payment should not be expected to be as far along as the one I made 30 years ago. However, 30 years is a really long time and so I am looking at options as to what to do with the policy.

Buy and Hold Stocks

This is what most people think of when they think of buying individual issue stocks. You buy a stock and hold onto it until you need the money. If you pick a solid company with sound financial practices, you should see the stock price climb over the years. Back in 2021 I wanted to invest in Berkshire Hathaway and so I bought a few shares of BRK-B, the less expensive of the company's stock. I wouldn't say the company has done exceptionally well compared to other investments I could have made but it hasn't lost money either. It has taken only 4 years for me to double my money. This seems like the clear winner and where I should put all my money, right?

Unfortunately you have to go back to my original statement that, "Past performance is no indication of future returns." It is also best to have a diversified portfolio and there are a number of investment options I have not even covered. While some of them are guaranteed to stretch my double-your-money-time metric to the 10-year average, they do help preserve my net worth even when the stock market falls like it did on Monday.

What's My Plan Now?

So how will this latest exercise change my investments? Well first I think I need to dump a number of my emotional stocks. You know, those favorite companies that you want to do well but aren't. I'm definitely going to invest that money in BRK-B. I'll probably keep my dividend stocks as they are not doing too badly and it is fun to reinvest those dividends when they show up. The big question is where to park all the money from my whole-life insurance. I'm still trying to decide.

My Personal Dashboard

I do a bit of volunteer work using my amateur radio skills. Sometimes this allows me entrance into community emergency operations centers or EOCs. They tend to look like NASA's mission control or at least what we see of it in movies. There are generally large screens showing all sorts of information that is helpful for dealing with an emergency that might be taking place.

Lately I have been thinking about information I find useful as I go about my daily routine. After all, I generally spend most of my day at my computer for work and have my personal computer next to my work one. I thought I would give a rundown of what my personal dashboard looks like in the hopes of giving others ideas of what might help them.

I would say that the most often visited application on my personal computer is my e-mail. About 90% of the e-mail I get is immediately deleted and so while I spend a lot of time looking at it, the information isn't that useful. 

Next I have my web browser open and have 4 tabs that I constantly view. It doesn't matter if it is summer or winter, I am always looking at 4 websites. One of those is weather.gov. This is where most news organizations get their information and so instead of picking my favorite local site, I just go to the source. In the winter, I focus on the forecast for Alta ski resort. In the summer, I shift down to my own neighborhood.

The second website I check is for my stock portfolio. Right now the market is pretty depressed and so I only check it daily. When the market is up, I probably check it 3 or 4 times a day. Naturally when I am looking to invest, I spend a lot of time here.

My third website is that of my YouTube channel. I like to see if I have any comments to respond to as well as see how many people are viewing any of my videos. I don't have a lot of daily views but it is interesting to see trends and how the weather effects the number of views. Let's just say that in May of this year I was seeing 8,000 views in a single day.

Finally I have this blog in the 4th tab of my browser. I don't check to see how many views a post is getting. Instead I keep the window open to remind me to post something every few days. I only get about 10 reads of each post and I never get any comments. This is in sharp contrast to my YouTube channel where I average around 150 views every day.

Inventorying what I have in my personal dashboard has me thinking. Are there any other tidbits of information I should be reviewing on a daily basis? Perhaps traffic? As I work out of my home, I don't see the need to keep a traffic map open. It is nice to know it is there if I need it though.

An Update on my Online Investments

The past few weeks have been unkind to the stock market in general. I have slowly watched my unrealized profits shrink and shrink. A week or so ago, the number actually went negative. That means putting the money in a low-interest savings account would have made more financial sense. Fortunately I know that my investments are solid and it is just a matter of time before that number goes positive again. The trick is not needing any of that money immediately to pay bills. That is why they recommend not investing any money you will need in the next two years.

I generally check my stock balances daily and so I cannot say the drop was unexpected. I watched the numbers fall over time and the optimist in me hoped the market would recover. I still believe that and so I won't be liquidating my investments quite yet. Had I been a bit more pessimistic, I could have put in stop-loss orders and I would be way ahead of where I am now. The only trick is to knowing when the market hits complete rock bottom and when to jump back in.

It should come as no surprise that the stock market is in the toilet. We are still fighting various strains of COVID-19. There is a war between Russia and Ukraine that should never been allowed to happen. This created drastic increases in gas prices. Then the government also handed out tons of money and is now wondering what caused such drastic inflation numbers. Fortunately some of these issues will eventually be resolved and the stock market will begin a steady upward rise. It always does, even after the great depression. The trick is to not panic. Sometimes that is easier said than done.

A Year of Stock Trading

At the beginning of 2021 I decided to get back into the stock market after a decade absence. As it has been a full year, I thought I would report on my results so far. I have to confess that the stock market is down today. Creating this post on Monday would have yielded much better results.

When I created my online trading account, I really had one goal: do better than a regular savings account. So far I am up 33% which blows the savings account interest out of the water. I don't guarantee this result for everyone. In fact, I got quite lucky with on of my early stock picks: Ford (F). It is a funny story and worth repeating.

There are a number of stocks the provide additional benefits instead of just owning a piece of the company. If you own a single share of Disney stock, you can send them something like $30 and they will send you a gold-looking stock certificate worthy of framing. Ford has the benefit of if you own a minimum of 100 shares and hold them for at least 6 months, you can call investor relations and they will give you employee pricing on any of their vehicles. Last year the stock was at $8.52/share. So for the meager investment of $852, I could save thousands off a new car. I have yet to use that benefit but today the stock closed at $22.45/share. My original investment is up 163%. This is an anomaly and not all of my investments have done so well.

When originally looked at investing, I read that indexed funds can be a good way to diversify and that Russell 3000 (VTHR) fund was doing something like 15% over a 6-month period. That seemed promising to me and so I invested a few shares at $171.15/share. Today it closed at $203.84 for an increase of 19%. That isn't as good as 15% over 6 months but it is still pretty good.

I have also lost money on several stocks. My wife got excited about Redfin (RDFN) and Pinterest (PINS). At her urging I purchased 3 shares of each. In all fairness to her, the stocks were exciting at the time and were at all-time highs. Remember the adage about buying low and selling high? Well I keep waiting for the stocks to rebound before I sell them. Needless to say I am down about 65% for each of them. Fortunately those are the anomalies in my portfolio and I am ahead, as mentioned at the beginning.

Unfortunately past performance is no guarantee of future and so I can't rely on another 33% for next year. Having made a bit of money in the past year though makes it easier to keep my money in the stock market. I've definitely beaten my original goal.

Online Stock Trading

Many years ago I worked on the personal management merit badge as a Boy Scout. One of the things I remembered is answering the question of what to do with $100 or some similar amount of money. I had to describe the various places to put that money and the expected outcome. The two choices that stood out most at the time were keeping it under your mattress or putting it in a savings account. The idea was to get the young boy to think about interest and that putting money in the bank is much better than putting it under a mattress. Last year I looked at my bank statement and noticed that I am not getting very much interest on my savings account and so one of my New Year's resolutions is to take a more active role in investing my money. There are lots of places to put your money and I remember them from my Boy Scout days.

My merit badge counselor was a life insurance salesman and he extolled the virtues of various life insurance products. I took his advice right after getting married and I have a great policy that allows me to borrow against the cash value in the event I need some extra money. I also have life insurance through my employer and so I don't want to transfer my savings into more life insurance.

I have toyed with the idea of purchasing a vacation home and renting it out on AirBnB or VRBO when I am not using it. Unfortunately I don't think I am quite ready for that. In looking at the various places I want a second home, I realize the giant commitment it would take and know I would soon become a slave to the vacation home. I might be able to handle that after I retire but not right now.

Ultimately I decided that I have had significant luck in the stock market and it is time for me to re-enter the world of online stock trading. Now the first thing anyone will ask you about investing is, "What are your goals?" I really don't want to actively monitor my stock portfolio and trade frequently. I really just want to put a little extra money out of each paycheck into something and let it grow over time. I don't want to lose any of that money and so I want to invest in solid companies that will be around for years to come. Sure I may miss out on some huge potential growth but I also don't want to worry about equally high risk.

My oldest son suggested that I set up a Webull account. One of the selling points is that they immediately give you 4 shares of random stocks: 2 when you create your account and 2 more when you put at least $100 into it. My son also received several shares of free stock just by referring me. If you click on the link above and create your own account, I will also get referral stock shares and so I really want a lot of people to create accounts for themselves. Don't worry, I won't feel bad if you don't. It would be nice though.

The real reason I created my Webull account is because there are zero commissions on purchases and sales. I can buy and sell stock at will and as long as I follow specific rules, I don't have to pay any fees. One of the rules is that I can't deposit or withdraw more than $50,000 in a single day. I can only hope that it becomes an issue in the future but for now, that is way more than I need to deposit or take out. Should I need to pull out $100,000, I will just have to plan ahead and spread the transaction across 2 days instead of 1.

There are many strategies for investing in the stock market and I don't pretend to know them all. I also don't want to give anyone ideas about where to invest as this is something I am doing to make more than the annual 10 cents per thousand dollars in my savings account that I currently am getting. Already I am up 10 dollars per thousand after only 2 days. No it is not enough to quit my day job but it significantly beats everything I earned last year in my savings account.

I must make one final note about online stock trading. I am not guaranteed to make money. I could do worse than my savings account. If you need money in the next several months, it is best to keep it in your savings. Only invest with money that you don't need for a year or more.