Scott’s Goals for 2014
2013 was a blockbuster year. Largely thanks to a loose Fed policy and low interest rates, stocks were again the best place to put your money. While I can’t expect such substantial gains (up over 30% in 2013), I will continue to invest 100% in stocks for the foreseeable future. I’m young (30) and am just at the start of my career. My income is decent but relatively small compared to what it will be in the future. While I enjoy my job, I would like to retire young to enjoy the activities that I really love. (I also would love to have enough to help those less fortunate or who are going through difficult times. Educational scholarships would also be very cool to start!) See: Selfish Anonymous Donations
I’m of the mindset that I will invest in stocks that I feel are fairly or cheaply valued and then if these stocks drop, great, I will just invest more. I am not relying on the income that my portfolio generates. In fact, while I love seeing huge gains in the market, a correction would be welcomed since it would allow my money to go farther.
I am fortunate to be in a residency program for radiology that is hard work (especially my recent studying for a board certification exam) but does provide a stable bimonthly salary. For these reasons, I have an aggressive investing style per common terminology. By this I mean that I am solely invested in stocks (and a little bit waiting in cash). I am not invested in bonds or even in index funds. I hope to invest in enough individual stocks to provide adequate diversification. If taking a look at my portfolio, you will see that it is anything but risky. While there are only a few smaller cap stocks thrown in there (Bemis), I am mostly invested in larger, stable dividend paying companies.
While nothing in life is guaranteed, the chance of these companies going bankrupt is low. And, even if a few of these stocks don’t pan out, if diversified into enough stocks, even bankruptcies won’t completely dismantle the long term outlook. (What If You Only Make One Good Investment Your Entire Life?)
For 2014, my strategy of dividend growth investing will continue. I will continue to devote a large percentage of my available cash into dividend paying growth stocks. I am looking at a few REITs (O, OHI, and HCP). Basically, these have been hurt recently by concerns of higher interest rates, but they continue to perform strongly and pay consistently increasing dividends. These will be placed in my Roth IRA because the dividends they pay are not qualified and are taxed as ordinary income.
I will be maxing out my Roth as soon as possible.
I will also be changing the focus of some of my portfolio from entirely dividend paying stocks into small cap non-dividend paying stocks. These stocks will be placed into my taxable brokerage account. Due to their more risky nature, smaller amounts will be purchased at a time. If need be, I can always sell these appreciated stocks if more income is needed in the future. Who knows, maybe some of these smaller cap stocks may turn into dividend payers or be the target of future acquisition! Again, I can only do these more risky investments because of my steady income.
As time allows, I may also seek the advice of my blog cofounder, Johnny, to learn how to get started with options trading.
Goals for 2014:
1) Max Roth IRA ($5,500) as soon as possible
2) Generate at least $2,400 a year in dividends
(My 2013 goal of $1,000 has been surpassed and my portfolio will now currently generate nearly $2,000 without any additional contributions. I am looking at putting at least $10-13,000 into dividend paying stocks with an average yield of 3-4%.)
3) Contribute at least $3,000 into 2-3 small cap growth stocks.
4) Begin experimenting with options trading as time and financial resources allow.
5) Improve content and reach of Two Investing, our new investing blog.