Another month has passed. No big additions have entered the 401k, so I haven't been in the buying mode. Thus, I also haven't liberated any cash in the IRAs. The recent correction has re-corrected. Not having cash, I couldn't take advantage of it. That is the eternal dilemma; hold cash for opportunities, or invest it so it's at work; I can't have it both ways.
This month has been characterized by sitting on my hands. I've thought about liquidating the few bond funds I have held for several years. They have performed miserably over the last few years. I don't see much reason to assume it'll be better any time soon. I think the best thing going is the DRIP programs. If I weren't DRIPing, I'd have about half a position worth of cash every 3 months to take advantage of price corrections in stocks I own or want to own. On the other hand, I wouldn't be growing each position. I still like the fact that each position grows by 2.5-5% yearly through the DRIP.
I don't have any intention to sell stocks, so fluctuations in their valuation doesn't concern me as much as the growth and safety of their dividends. Another interesting feature of the DRIP is that the dividend DOES grow every year, even if the dividend per share doesn't, because reinvestment is increasing the share count by the percentage yield every year. Fortunately, the dividend per share does grow yearly for almost all of my holdings, so the compounding is accelerated by that fact.
I see conditions in my profession continuing to deteriorate. I see stressers tearing at the fabric of our mutual goodwill. I'm still almost 12 years from eligibility for full social security. I'm looking for another pathway; one that replaces dread with anticipation. There are still a few things in the world of work that charge me up. I'm ready to jettison everything else. Unwinding the last entanglements is the hardest task, as these are the most entrenched entanglements of all.
I guess it's getting to be time to figure out exactly how much it will take to live, so I can begin to zero in on that target date for retirement.
Monday, March 28, 2016
Thursday, March 10, 2016
March Madness
Crazy; spring came a month early. There's a bar fight going on at the highest level of politics, the presidential election. The pundits calling for the sky to fall amongst the world's economies. There's a super-regional disaster continuing to evolve in the middle east. The Arab spring has turned into a nightmare. What is it about those tribal peoples that makes them want to gouge each other's eyes out and worse?
I'm trying to keep my equilibrium in the midst of instability at work, a desire to make big changes in our financial footprint at home, a serious process of re-evaluating priorities about work and life in general. In the middle of that, I'm continuing to attempt to make progress for our long term income security with retirement investments.
My wife has about 12% of our liquid assets in company retirement vehicles. These are tax deferred, invested in mutual funds. We don't have a lot of choice in choosing funds, so they are deployed to broad market index funds. I think they are loaded up with fees, because they haven't performed particularly well, but perhaps better than a savings account. That means 88% of the liquid assets are in my IRAs and 401K accounts. I am as deeply into Roth vehicles as I can get at the moment. I am not converting pre-tax to post-tax, but I did roll 401ks to IRAs when my business merged and changed it's tax ID.
I have written about the dividend production and it's growth. That continues. At the moment, values have recovered to a point that we are about 2% off the all-time high for the portfolio. Dividends are also near their high point. A couple of melt-downs in the energy sector have produced a temporary setback, but I think it will be temporary, as most of my companies are continuing to raise dividends and I am reinvesting dividends. Nothing new there.
So, what IS new? Well, I'm thinking of doing some "asset swapping". My 401k account is a self directed account, but it has some restrictions. The plan policy prevents me from using options or a margin account. I don't have any desire to trade on the margin. I would like some "overdraft protection" in case I make a market rate purchase and the price rises beyond my cash position between the order and the execution. I don't have much desire to trade options, but I wouldn't mind creating some additional cash returns on my assets. If I purchase shares in the 401ks and sell the same shares out of the IRAs, I'll create some cash in a place where I can use it differently.
There are companies I'd like to own at lower prices. I could collect put premiums while waiting for my price. There are companies whose price doesn't move all that much. I could consider selling some calls. I'd need a new strategy for selling calls, as I don't own companies at the moment that I'd like to have called away. It's never a good strategy to make a decision you'll regret if things don't go exactly as you desire. If you sell a call, it should be ok to have the call exercised. If you sell a put, you should want the shares at the strike price. So, it's easier to use options to buy shares that you don't own, since the price at which you'll receive them should always be better than the alternative; buying them outright, at the time you deploy the cash one way or the other.
It may be that what's really happening is that I am getting itchy fingers. I know one thing; As I deploy new contributions, I have a very hard time simply holding cash. I tend to invest it in the best opportunity I can identify, then wish I had some cash when prices drop. Selling cash covered puts would play directly to the problem and the desired strategy; put cash to work AND get shares at lower prices.
I'm going to think about this one a little more...
I'm trying to keep my equilibrium in the midst of instability at work, a desire to make big changes in our financial footprint at home, a serious process of re-evaluating priorities about work and life in general. In the middle of that, I'm continuing to attempt to make progress for our long term income security with retirement investments.
My wife has about 12% of our liquid assets in company retirement vehicles. These are tax deferred, invested in mutual funds. We don't have a lot of choice in choosing funds, so they are deployed to broad market index funds. I think they are loaded up with fees, because they haven't performed particularly well, but perhaps better than a savings account. That means 88% of the liquid assets are in my IRAs and 401K accounts. I am as deeply into Roth vehicles as I can get at the moment. I am not converting pre-tax to post-tax, but I did roll 401ks to IRAs when my business merged and changed it's tax ID.
I have written about the dividend production and it's growth. That continues. At the moment, values have recovered to a point that we are about 2% off the all-time high for the portfolio. Dividends are also near their high point. A couple of melt-downs in the energy sector have produced a temporary setback, but I think it will be temporary, as most of my companies are continuing to raise dividends and I am reinvesting dividends. Nothing new there.
So, what IS new? Well, I'm thinking of doing some "asset swapping". My 401k account is a self directed account, but it has some restrictions. The plan policy prevents me from using options or a margin account. I don't have any desire to trade on the margin. I would like some "overdraft protection" in case I make a market rate purchase and the price rises beyond my cash position between the order and the execution. I don't have much desire to trade options, but I wouldn't mind creating some additional cash returns on my assets. If I purchase shares in the 401ks and sell the same shares out of the IRAs, I'll create some cash in a place where I can use it differently.
There are companies I'd like to own at lower prices. I could collect put premiums while waiting for my price. There are companies whose price doesn't move all that much. I could consider selling some calls. I'd need a new strategy for selling calls, as I don't own companies at the moment that I'd like to have called away. It's never a good strategy to make a decision you'll regret if things don't go exactly as you desire. If you sell a call, it should be ok to have the call exercised. If you sell a put, you should want the shares at the strike price. So, it's easier to use options to buy shares that you don't own, since the price at which you'll receive them should always be better than the alternative; buying them outright, at the time you deploy the cash one way or the other.
It may be that what's really happening is that I am getting itchy fingers. I know one thing; As I deploy new contributions, I have a very hard time simply holding cash. I tend to invest it in the best opportunity I can identify, then wish I had some cash when prices drop. Selling cash covered puts would play directly to the problem and the desired strategy; put cash to work AND get shares at lower prices.
I'm going to think about this one a little more...
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