Another season, another post.
We're halfway into the fall academic term. I am 10 1/2 months past full time surgery practice. Time has passed, efforts have been underway for some months now, the season is turning towards winter and I am still looking for the upswing in business. Start-ups are hard work, need plenty of working capital and need to be nurtured like infants, to adulthood. I'm 250k into it, need another 50k at least to get over the hump. The easy money has been spent, now I have to dip into slightly less "ready" reserves.
Simply stated, tap some Roth IRA funds. Ow, that hurts! I worked really hard to build up meaningful balances in my Roth accounts when they became available. They are not the majority of my retirement holdings, but are the most versatile, in my opinion. However, all other withdrawal of assets come with penalties, or taxes plus penalties for some time into the future, so the Roths are in the spotlight. I rarely sell an equity once I've bought it. However, I have held onto some positions that have not performed all that well. So, for the first time, I am selling companies that; pay dividends but have not appreciated in value adequately, pay dividends but have lost value for one reason or another, pay dividends below my 3% threshold for core positions and have had substantial capital gains, but are not my core holdings. One has 59 days to reverse a withdrawal of contributions from a Roth IRA, after which one can only contribute at limits prescribed by law. It's highly unlikely that my fortunes will change dramatically in 59 days, so I have to face the equivalent of a 2.5-3% reduction in the value of my retirement assets to mobilize what I need to take me past the new year.
What takes the sting out a bit is that I have resisted pruning the portfolio of laggards in the total return category because what I value most is cash flow created by dividends and dividend reinvestment. Provided there aren't dividend cuts, I'll hold an attractive dividend paying stock even if it is not appreciating to expectations, because I know that the reinvestment produces compounding regardless of what is happening with valuation. So the need to tap into contributions represents an opportunity to weed out the holdings. It means that a smaller corpus will continue to generate dividends and the portfolio will appreciate at a greater rate, even if from a reduced basis.
So, I used my charter life membership access to FASTGraphs and weeded out the most overvalued, those with the lowest dividend and those whose growth in valuation had stalled or turned negative.
That pruned the portfolio by about 1/3. I have done that in the most recent of my Roth accounts that holds mostly contributions and the lowest fraction of earnings. I double checked the cost basis to assure that I didn't approach the threshold of accessing earnings to avoid penalty. Since I won't be able to replace that cash, I'll need to start contributing, both I and the wife, so we can replace those contributions as soon as possible.
We all know a correction is coming, sooner or later. Generally I just ride them out and wait for recovery. While we're not at the market peak (that was a few weeks back), we're still richly valued and its not a bad time to "take profits", taking care not to dip into earnings.
now it's late, and there are other things to do, so enough said on the first raid on retirement assets. May it never be needed again. ptui!
Sunday, October 21, 2018
Saturday, July 14, 2018
Well into transition
Here it is, already July. I looked back at the pre-termination post, realized that things have turned out pretty much like I hoped with the transition. Not that it wasn't stressful, mind you. Leaving early and coming home late papered over a whole raft of deferred maintenance on relationships and exposed some character traits in me and my family that we hadn't experienced from one another before.
So, how is this transition going from the standpoint of ultimately planning for retirement?
Well, I am about to open my laser scar practice; grand opening in about a month. I found the space in April, and starting a solo practice has a lot of details in it; fortunately former coworkers have come alongside to help, in whom I have a great deal of trust, so that's a feel good thing. My oldest and bestest friend agreed (he must be as foolish as I am) to uproot himself from a comfortable existence in the bay area and become my partner in a start-up maker design/prototype business. He gets a modest stipend, free lodging, equity stake and space for his own engine shop. I get a ton of help, motivation, enjoyment and the ability to leave town and earn money, knowing that he's minding the store. This summer we have 5 young employees; 3 alumni from student projects and two new students. They're humming along making stuff, a sight to behold. The ground floor remodel is about to begin. A 20ft yurt has been erected under the trees on my property. A studio/cottage/tiny-house on a double-axle trailer is under construction. Money is flowing like water. I am now actively working remotely, a week or two at a time, at fine wages, the only drawback being that I can't be at home where all the excitement is ongoing. I'll do this about half-time until local businesses require my full time attention. Hopefully they will supplant the income I produce on the road as well.
I'm thinking that another 9 years is my working horizon, many less. By then, my boy Alex should be approximately through with college. By then, hopefully we'll have completed a renovation of the entire place, and we'll have the main residence, ADU, garage-over studio and the tiny-house, plus the yurt. My wife and I can move into smaller digs and let someone else utilize the larger dwelling space. We may be able to garner enough income to cover the entire cost of the mortgage, or I may cash out some assets and pay it way down. Life happens while you make plans, so it's all speculation.
With no new money flowing into my retirement accounts, I have been sitting on my hands. I am thinking about increasing the "quality" of my portfolio. It's pretty wide, could possibly be a bit deeper. I have a large-cap bent in the bigger accounts, a small-cap dividend-paying value bent in the smaller accounts. cash flow is growing moderately. in all of those accounts, I may have as many as 75 different holdings. They are distributed between Roth and traditional IRA accounts, with one little qualified plan ticking along with TIAA CREF for nearly 25 years now. My wife has a qualified plan and two supplemental plans that we have not converted, purely due to the inconvenience of having to figure out how to do it. Valuations have eased, meaning the portfolio's value is being driven by dividend reinvestment primarily. I'm going to keep my eye on that number; growth in cash flow, as the primary indication that I can reach the amount of income I need by the time I'm really done with working for wages. I'm a total return investor with a dividend focus; I want my holdings to pay me now and I will decide what to do with my cash. Right now, I'm happy to turn each company's payments back into a larger stake. Later, some of it will pay the bills.
As the pain of a deteriorating experience in hospital-based surgery begins to fade into the background, I can say that all the work of discernment was worth it. I made it out alive, through the valley of the shadow of death and back up to a place where I can see the horizon again. I'm still mourning the loss of a few relationships, but those that matter most are either intact or dormant and will emerge at some point down the line.
I think that's about enough summation for now. The shadows are getting longer and I need to get on the bike and ride a bit.
So, how is this transition going from the standpoint of ultimately planning for retirement?
Well, I am about to open my laser scar practice; grand opening in about a month. I found the space in April, and starting a solo practice has a lot of details in it; fortunately former coworkers have come alongside to help, in whom I have a great deal of trust, so that's a feel good thing. My oldest and bestest friend agreed (he must be as foolish as I am) to uproot himself from a comfortable existence in the bay area and become my partner in a start-up maker design/prototype business. He gets a modest stipend, free lodging, equity stake and space for his own engine shop. I get a ton of help, motivation, enjoyment and the ability to leave town and earn money, knowing that he's minding the store. This summer we have 5 young employees; 3 alumni from student projects and two new students. They're humming along making stuff, a sight to behold. The ground floor remodel is about to begin. A 20ft yurt has been erected under the trees on my property. A studio/cottage/tiny-house on a double-axle trailer is under construction. Money is flowing like water. I am now actively working remotely, a week or two at a time, at fine wages, the only drawback being that I can't be at home where all the excitement is ongoing. I'll do this about half-time until local businesses require my full time attention. Hopefully they will supplant the income I produce on the road as well.
I'm thinking that another 9 years is my working horizon, many less. By then, my boy Alex should be approximately through with college. By then, hopefully we'll have completed a renovation of the entire place, and we'll have the main residence, ADU, garage-over studio and the tiny-house, plus the yurt. My wife and I can move into smaller digs and let someone else utilize the larger dwelling space. We may be able to garner enough income to cover the entire cost of the mortgage, or I may cash out some assets and pay it way down. Life happens while you make plans, so it's all speculation.
With no new money flowing into my retirement accounts, I have been sitting on my hands. I am thinking about increasing the "quality" of my portfolio. It's pretty wide, could possibly be a bit deeper. I have a large-cap bent in the bigger accounts, a small-cap dividend-paying value bent in the smaller accounts. cash flow is growing moderately. in all of those accounts, I may have as many as 75 different holdings. They are distributed between Roth and traditional IRA accounts, with one little qualified plan ticking along with TIAA CREF for nearly 25 years now. My wife has a qualified plan and two supplemental plans that we have not converted, purely due to the inconvenience of having to figure out how to do it. Valuations have eased, meaning the portfolio's value is being driven by dividend reinvestment primarily. I'm going to keep my eye on that number; growth in cash flow, as the primary indication that I can reach the amount of income I need by the time I'm really done with working for wages. I'm a total return investor with a dividend focus; I want my holdings to pay me now and I will decide what to do with my cash. Right now, I'm happy to turn each company's payments back into a larger stake. Later, some of it will pay the bills.
As the pain of a deteriorating experience in hospital-based surgery begins to fade into the background, I can say that all the work of discernment was worth it. I made it out alive, through the valley of the shadow of death and back up to a place where I can see the horizon again. I'm still mourning the loss of a few relationships, but those that matter most are either intact or dormant and will emerge at some point down the line.
I think that's about enough summation for now. The shadows are getting longer and I need to get on the bike and ride a bit.
Wednesday, February 7, 2018
Where's the love?
Let me avert my eyes for a few precious moments from the horror show that is our public discourse.
Why can't we simply label the swamp of all swamps to be too toxic to enter at this juncture and simply turn away.
I'm glad to see someone has finally pricked the balloon that was not a bubble, according to my sources.
I am 5 weeks into the "in between". Somewhere in between the chronic downer that was the last few years and the fear and excitement of what may come next. Mainly I am tired. I wonder how long it takes for the mind to heal after years of overdrive? probably more than 5 weeks, I'm finding.
the crazy upswing and the recent downdraft left me feeling, um, not much at all. I'm glad to see prices moderate a bit. No new money to invest, so the DRIPS are the whole show at the moment.
I checked last year's overall results; My valuation is up 15%, not nearly in sync with the market valuation, and I'm happy with that. More exciting is a 13% increase in cash payments in my IRAs. I haven't done the comparison on the 401k. I think what matters more is performance during a bear market. I don't have to rely so very much in capital gains; I will continue to focus on the rate of increased dividend payments as a means to project my date of emancipation from daily labor for wages.
no inspiration other than to say, I'm sitting on my hands once more...
time for bed...
Let me avert my eyes for a few precious moments from the horror show that is our public discourse.
Why can't we simply label the swamp of all swamps to be too toxic to enter at this juncture and simply turn away.
I'm glad to see someone has finally pricked the balloon that was not a bubble, according to my sources.
I am 5 weeks into the "in between". Somewhere in between the chronic downer that was the last few years and the fear and excitement of what may come next. Mainly I am tired. I wonder how long it takes for the mind to heal after years of overdrive? probably more than 5 weeks, I'm finding.
the crazy upswing and the recent downdraft left me feeling, um, not much at all. I'm glad to see prices moderate a bit. No new money to invest, so the DRIPS are the whole show at the moment.
I checked last year's overall results; My valuation is up 15%, not nearly in sync with the market valuation, and I'm happy with that. More exciting is a 13% increase in cash payments in my IRAs. I haven't done the comparison on the 401k. I think what matters more is performance during a bear market. I don't have to rely so very much in capital gains; I will continue to focus on the rate of increased dividend payments as a means to project my date of emancipation from daily labor for wages.
no inspiration other than to say, I'm sitting on my hands once more...
time for bed...
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