State of the Stock – February

This February we got quite a bit of money from our tax return. As discussed, I took that return and invested quite a bit of it. The idea was to minimize the commission fees, by investing hundreds at a time using the 3 Months to Profit formula. So I did. Granted, it’s a bit of a misnomer calling it that, because it doesn’t guarantee anything. As you can see here, stock prices fluctuated, and profits are all negatives.

Another reason why you’ll notice a change between INTC and INTC from January, is because I realized in doing my math that I was figuring the profit incorrectly. I had been “re-adding” the commission to the value of the profit field, but I re-added about 200% more commission than I needed to, thus initially creating a false profit. This is why I don’t pretend to be an expert, or that anything you see in my portfolio is solid gold advice.

That said, I also let it be known when I make a mistake, and when it’s fixed. So here are the updated numbers as of this morning. End of day values may change, but as of 11am these were accurate within a few pennies.

STOCK TOTAL PURCHASED TOTAL SOLD PROFIT
TEU 126.4225 65.0221 (-$5.98)
BAB 13.682 4.0772 (-$26.11)
INTC 3.0778 3.0778 (-$9.94)
O 11.6080 1.5408 (-$8.27)
PGH 40.7213 0 (-$10.95)

Automating Passive Income

In The Passive-preneure I talk a lot about automation, and you’d know that if you’d picked up your extremely inexpensive copy today. One of the ways I’ve gone about automating my own passive income streams is by using one to fund another, automatically. I’ve discussed ShareBuilder in the past, and how I utilize their automatic investing options to “set and forget” my investing plan. Well, I also utilize their direct deposit option to help this along.

In my Kindle Direct account I have directed all income to my ShareBuilder account VIA direct deposit. This lets me move all my money into investing, and never have to worry about accidentally spending it. Then, once the threshold is reached my automatic investments kick in. Then I’m able to keep track, and get my dividend reinvestments from these. Thus, one passive income stream (my eBooks) funds another passive income stream (my Dividend investing) which I’m also utilizing to build up the capital to purchase yet another passive income stream (my rental properties).

You can see from this that it’s a domino effect, and if you have multiple streams, such as eBooks and membership fees on a website, for instance, you can direct multiple streams into the same account, and build those streams faster. Turning them from a passive stream, to a passive river.

Pictured: Your income

Pictured: Your income

ShareBuilder and the Capitalist Cares Google Doc Don’t Agree. Here’s Why…

I’ve known for a while that there was a discrepancy between what ShareBuilder says my portfolio’s profit is, and what my personally designed portfolio says. You would assume one of us is wrong.

You’d be wrong.

See, the thing about numbers is that numbers never lie, but sometimes they bend the truth. ShareBuilder is a business, and in their business you need to be making money, or at least not losing a lot of it. So if you happen to sell off every share of stock that you own–or even just one share–they remove it from the calculations. Poof. It’s gone. Does not exist. Cannot be used to calculate a loss.

In the Capitalist Cares Stock Portfolio I keep a running total of every single trade that I’ve ever made. I do this to know exactly how my portfolio has performed over a lifetime. That means that the value you see in my portfolio doesn’t just include stocks that I currently own, but stocks that I have ever owned. So when you see that portfolio in the green, you know that the profit is lifetime, and not just this one time thing.

I do this portfolio wide, but I also do it individually for each and every stock symbol I purchase. This lets me know which stocks are performing, and which aren’t. I know which stocks I need to start cutting my losses on, and which stocks are holding up the value for the entire portfolio.

So if you happen to use the same portfolio for your own trading and you see this discrepancy, don’t worry, you’re right. The numbers are different.

But they’re also both correct.

Alternate Forms of Investing

On average my dividend paying stocks return a yield of around 6%. In plain English, that means for every dollar I invest in, I earn $0.06 per year. Sounds like a lot, but there are a few things you don’t think of. First and foremost, stock price changes. So if price goes up, value goes up, if price goes down, value goes down, so I never know exactly what the return is, unless I want to sit down and do the math.

Ain't nobody got time fo dat

Yea…what she said

I’ve started looking out for different ways to invest my hard earned cash. First I swung by the race track, and quickly realized that doesn’t work. The next step was a guy named Tony out behind a bar, but his eyes were just a bit too red and twitchy for me to trust my cash with him.

Then I looked at Kiva, again. Kiva is a great program, and if you’re the altruistic type, like I am, you should sign up and join the Capitalist Cares Kiva Team. Together we can help many, many, people. But the thing is, you won’t be making a return on your investment. So, it’s more of a donation that you end up getting paid back. Which is great, don’t get me wrong, because I can drop some spare cash into the account, send it out into the world, help people out, and get it back to help someone else. That’s fine.

But I want investments. But looking at Kiva, I knew I had Microplace that I could fall back on. Or, so I thought. Turns out Microplace stopped doing new investments in January.

You and me both...

You and me both…

So what was I supposed to do? No interest from Kiva, no Microplace to fall back on…of course I went to Google. You know me too well, digital reader. You little scamp.

So I hit Google with the very narrow search “microlending platforms” and, of course, it returned a gazillion results that meant absolutely nothing to me. So I hit it again with the better term “microlending platforms that will make me a millionare” and Google laughed at me. Audibly. Through the speakers. (This may be an exaggeration.)

I eventually stumbled across LendingClub.com, which, obviously I wouldn’t be allowed to join, because Maine is run by a fucking idiot. But when I stumbled across that, I also found Prosper.com[?], which I did a little research on, and it is a microlending platform that allows you to purchase portions of debt, or notes, from borrowers. They even have a trading platform which lets you trade said notes with other lenders. All this for the minimum investment of $25. Sounds a lot like Kiva to me.

Squirrel-lelujah!

Squirrel-lelujah!

So I’ve got an account all setup now, and I’m waiting to get my account verified so I can deposit some cash and get to investing. I’ll let you know how it works. If it does work, though, the yields are promising. They narrow down each account type by it’s risk, with the lowest risk having lowest reward, highest risking having highest reward. Lowest risk also has the lowest rate of default, with highest risk obviously having the highest rate of default.

I think I’ve found the sweet spot right in the middle, though. Their yield after expenses and defaults for their C rating (ratings are AA, A, B, C, D, E, and HR) was around 11%. Which is much higher than that money would be making in dividend paying stocks. Don’t get me wrong, I’m not replacing my stocks with this, but I might use it as an alternative, possibly take a portion of the money that I would be investing and deposit it to my Prosper account, and see how that works.

For now, though, I’m risking $25, and seeing how the entire process works from start to finish.

Another note, just for some transparency, I’ve also signed up to become a Prosper affiliate. I’ve not yet been approved, but if I do get approved, and I fall in love with the service, you can be sure that there will be a link to click, a link that will let you sign up for them, and give me some money for the trouble. Don’t worry, if I don’t care for the system, or find it too risky to suggest, you will not see that link. That is my promise to you.

Make George Washington Work For You

If you work, you most likely get a tax return. If not, I feel sorry for you, now go stand in the corner and feel shunned.

Kidding.

Anyway, what I’m doing this year with my tax return is this: Making it work for me. I worked my ass off for that tax return, and now I’m going to give it the same treatment it gave me. Hard work, and a bit of flogging.

I’ve taken $1,000 of my return and sent it up to my stock portfolio. That’s about 10 times the amount I invest on a normal basis, but that’s the point. Investing is long term. Which means, if you’re doing it a little at a time, even fucking longer. I love it though. I love to watch the little numbers go from little numbers to big numbers, growing up and spitting out little numbers of their own.

Yes…I did just refer to my dividend paying stocks like they were children. And that’s how I treat them. I watch over them, I make sure they’re growing and doing the things they should, and I guide them as needed, but for the most part I let them do what they do, and live their own lives.

You can expect that this month’s portfolio evaluation will be greatly in the negatives, but don’t let that fool you. Negatives are fine. Negatives below cost-basis are not. And that’s the idea.

What’s cost-basis you ask, oh digital reader who I can apparently hear?

Cost basis is the price that you paid for those stocks. Meaning, if you dropped $1,000 on stocks, your cost basis is $1,000. Now, if you’re smart like me (which you are, because you’re here) you know that you need to also figure in commission. So, for this $1,000 investment I’m losing $4 per trade, on 4 trades that totals $16. But the total amount I’m spending is $1,000 for that cost-basis, meaning only $986 of it is going towards actual shares of stock.

So if you decide to go ahead and use the Capitalist Cares Stock Portfolio as your way of tracking stocks, you’ll need to know a few things. When you look at cell B3, you’ll see it’s labeled Portfolio Profit. You might believe that’s simple cost basis with current value subtracted. That is not the case. That is all expenses subtracted from Current Portfolio Value. By all expenses, I mean I include future expenses into it. The value there is the dollar amount that I would have as profit if I were to sell every share that I owned at the current prices without any change. It sounds hard to calculate, but really all I did was add the sell commission to the cost basis. I did that by subtracting that from the value for each row. You can see that figured in on the F row. The part of the formula that reads “- $E$2” is the defining calculation for removing the sale commission.

This post has gotten a bit long and boring. So here is a picture of a cow. Because, you know…cow.

Moo, bitches...

Moo, bitches…

Getting Serious About Credit

For the longest time I haven’t cared about my credit. This is stupid, a very stupid mistake, that I have made. Not that my credit is irreparable, it’s simply bad. What happened was simple. I moved out on my own as soon as possible, at 18 years old. I had no practical experience handling my own finances, and didn’t know how to save money. Worse yet, I didn’t know how to keep up on bills. So, I defaulted to just not paying anything. As you can imagine, this became bad really quickly. I became very far in debt, and I am still digging myself out of that a little at a time.

But it’s time to get serious.

Here I am nearly 10 years older, a wife, 2 kids, and dreams of owning my own home one day. Initially I had hoped to pay for that home with cash. And if I wanted to wait another 10 years to buy a house, I probably could. Thing is, I don’t want to wait. Neither does my wife. Nor my children.

So over the course of the next year I’m getting extremely serious about paying off all of my debts, including both my wife and I’s student loans, totaling approximately $78,000 on their own. Can we pay them all off in a year? No. But we can get the rest of our debts paid off, and get current on student loans, and hopefully improve our credit scores to the level that we can get a mortgage, thus saving ourselves even more money per month which we can devote towards our student loans.

It’s time to start focusing on the future.

This year we’re set to receive approximately $8,500 in tax returns. A large portion of this will be used to completely pay down my wife’s credit card, as well as my own, which we will then strategically use to transfer past due debts to current debts. The trick is to not transfer too much at once, and pay it off quickly. This way we can improve our credit by maintaining a good standing with our credit card company, while at the same time removing previous debts from our history. It’s my assumption that we can not only pay off all of our past due debts within the next year, but by doing so this way we can begin down the path towards credit score recovery.

Another part of the process is going to be growing my investments. As you’ve seen from my previous pasts, my portfolio is not that large. I plan to use this tax return to increase my holdings ten-fold, all with my dividend investing plans for 3 months to profit. The plan for my stock portfolio at this point is to develop it into the down payment for our mortgage. Allowing the dividends to work for us, and collect gradually while we improve our credit, so once our credit is to the level that we can potentially get the approval, we’ll have the down payment ready to go.

Obviously this is the start down a path which I have not yet completed. I bring it here so you can see how I do, and see if this strategy works for me, or maybe even if it doesn’t, it might work for you. I’m not an expert–if I was, I wouldn’t be so far in debt–I just have been forced to teach myself ground-up the financial world, and enjoy spreading my self-learned lessons when I can.

If you have any suggestions on how to quickly pay off past due debts without incurring even worse results, leave them in the comments.

Robinhood – A New Trading Platform

So a friend of mine sent me a link today for a new trading platform called Robinhood. I’m a skeptic, but I thought I’d detail a bit of what it’s supposed to be here. Commission free stock trading. They don’t really have a clear explanation on how they’ll make their money without commissions, but they’re venture funded by Google and others, so I’m giving them a bit of leeway there.

I signed up to become one of the first adopters, and I’m hoping to get my link before long. If you’re interested, sign up yourself. I’m not going to be putting much faith in them until I see for myself what to expect. I’ll probably gamble $100 on trades.

I emailed their support email an hour ago, but haven’t heard back yet. I’m looking to find out if they’re going to support automatic investing like ShareBuilder does, which would be one in their favor. If they do, then my previous posts about 3 months to profit would not be required at all, since they’re all about limiting the commission fees.

They’re working currently on implementing Margin trading, which I would never use because I find it insanely risky. I’m a much more conservative investor. I like to have my money work steadily for me, not do crazy shit and expect it’s going to come back rich.

Happen to know about Robinhood? Leave your knowledge in the comments so we can all bask in the glory that is your hubris.