28 May 2008
Let’s talk about stock
Does the chart above look familiar to anyone? That’s the S&P 500 over the last several years. Maybe we’re headed back up. Thankfully, the last few months really hasn’t scared me too much. I’m one of those young people that finance people always say should be in risky investments because we have longer to recover. Well, I’ve bought into that: hook, line and sinker. I have no fear…yet.
It’s about time I started discussing stock investing as well on this blog. I always knew that I would never have enough material to maintain an interesting blog if I only focused on a very specific subject, so I chose to make this blog about all types of investments. That’s a broader subject than you might think.
Before I was even in my twenties, I was very interested in stock investing. At the time, I didn’t even really consider real estate. It seemed a bit over my head and involved holding “inventory” which just seemed like a lot more trouble. To be honest, that’s true. For a novice investor, or someone who just doesn’t want the day-to-day trouble of dealing with houses and other properties, stock investing is probably a great hobby to pick up. I worked for a fairly large corporation at the time that had stock options for employees. So there I was, 18-19 year old and making a salary and picking up stock options. That was well and good, but when I got married and we decided to buy a house, we cashed those options out for around $7,000 to help with a down payment on our house. That’s one of those things that I wish I still had sitting around. It would have been worth a few thousand more now and I have missed out on over $100 a year in dividend payments. It all worked out though; I recently sold that house and walked away with a nice check that I will now be rolling over into my next investment. At another company, I had a 401(k) plan, which upon leaving the company, for some reason, I chose not to roll it over into an IRA but accept the penalty for early withdrawal. Since then, I’ve wisened a bit. I now have a self-directed IRA, a 401 (k) at my current job, and another discount brokerage account that I just set up for buying individual stocks essentially just for fun.
Granted, none of these accounts are huge yet, but managing these can be an entertaining diversion at times. In both my IRA and my brokerage account, I defy the most common recommendations and I invest in individual stocks, not the index funds that so many finance blogs demand. I don’t do this because I necessarily think it’s the best investment, but it provides a bit more excitement. Every day some of my stock prices go up and some of them go down. Overall they tend to go up. I do have a couple of dozen different stocks, so I am somewhat diversified. I also know that with my 401 (k) at work, I am investing in a fund, so I don’t have to manage it on a day-to-day basis and hopefully it’s a little closer to a guaranteed return for the long run.
Recently, I have not been investing nearly as much in these pure stock accounts, but as the dividends build up enough to make another purchase, I’ll be sure to purchase a new stock now and then. If you’re wondering why I don’t have the dividends automatically reinvested, I’ll discuss that in a later post. Also, I have a credit card that instead of giving me points towards rewards or cash back, it automatically deposits my cash back into my brokerage account so that I have a little cash to play with. While remodeling our house recently, I put everything on this card (and of course paid it off at the end of the month…usuall)y, so I would often get a $25 reward monthly. Unfortunately they are discontinuing this card, so I will be going back to cash back or rewards. Maybe it would be a good idea for me to work towards cash back that I can continue to put into these accounts.
I’ll be the first to admit that my portfolio is quite erratic and also a little bit risky, but most of the time, I actually had a reason for purchasing it, whether that reason was good or not. Here is just as sample, if you’d like to see what I mean: JAVA, CLN, GLK, HD, HPQ, HRB, IBCIQ, ICF, JNJ, KKD, MSFT, NTDOY, S, TEF, TGT, TM, WM, ZZ, CSG, DNA, DSV, GE, GOOG, MCD, PEP, WMT, ADELQ
Let me know what you think. Also, if you have any questions about the stocks that I’ve bought or how I’ve done with these, post in the comments.
If you like, or can at least stand to read what I write, make sure you add my RSS Feed to your list so you don’t miss a single post. If you have no idea what I’m talking about, read this.
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If you like, or can at least stand to read what I write,
make sure you add my RSS Feed to your list so you don't miss a single post.
If you have no idea what I'm talking about, read this.
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