I'm new at investing so please cut me slack re my stupidity. If wrong forum I'm sorry. So I tweaked my 50K portfolio to create a 2k buffer (what I'm willing to lose) to give me a little money to play with while I learn investing principals and how to be smart and how not to be dumb. I've made rules for my portfolio which I intend to follow and here they are: My Rules for Stock Account - No more than 10 positions allowed. - To buy a new stock I have to sell my entire position in an existing position - $325 minimum monthly dividend income - Positions in CODI, ABBV, SDIV, NLY, CSSEP, T, GLP, MPC, VLO will not be touched except in the following circumstances o Evaluate every 3-6 months § If stock drops below purchase price by 7-10% then sell § Rebalance if position > 15% of portfolio § Rebalance if sector (i.e. energy) > 35% of portfolio § Rebalance if dividend drops below $325/mo o $100 per month will be added to one or more of these positions whenever possible - 10th position (starting value $2043.78) o Position is mine to play with as I see fit o Never > than 5% of portfolio o Profit will be returned from position to checking account at the end of each month I saw a blurb that VTVT had spiked in trading and share price due to the release of data regarding a phase 2 trial. It got as high as $4.50 before dropping quite a bit. Without researching further, I bought 600 shares at 3.40 per share. I thought it would go back up or at least be stable around that price. it didn't and I lost almost $200. Had I researched before buying I would have known that a stock purchase by the parent investor was driving the price increase, not the phase 2 trial data. Live and learn but not a great start to my investing career
Good luck. We all take one on the chin from time to time. Especially when we just start out. Welcome and happy investing.
Its always good to have a written plan to help take the emotion (wishing, greed and fear) out of the trading. Your dividend goal would be 7.8% annually on a 50K portfolio to generate 325/mo, which is very aggressive. Remember with dividends, the yield looks better as the equity falls, so you can be tempted into a security that has falling income and cant keep up with the dividend payments. Also they are more sensitive to 10 and 30 yr interest rates so keep an eye on the bond rates and be careful if yields start to rise. Good luck with your investing
Thank you for the advice. I was with Edward Jones at the time and I asked them to create for me a portfolio based on dividends because my income has dropped from 10k/mo to 3.5k/mo due to a layoff and I needed the dividend income. We selected companies that had a good payout combined with stability over time. Sdiv was the exception to that but I thought of selling that anyway. Originally EJ had a position with Realty Income Corp which I replaced with CSSEP and Enbridge which I replaced with Valero. Enbridge had a nice yield but I got docked 15% on my 1st payout for the Canadian taxes so I switched to Valero. I just read https://www.investopedia.com/articles/investing/072115/do-interest-rate-changes-affect-dividend-payers.asp#:~:text=There are some notable exceptions,the economy is doing well. and I think I understand your point regarding rates. I looked at the prime rate and libor rates and they are extremely low right now. Since they have no where to go but up, any companies that have a lot of debt (i.e. AT&T) will likely have to reduce dividend payout. I think that is the gist of the article.
It's a good thing that you set up a strategy for your investment. That's cool. Reading over your post, one thing that stands out for me is the rebalancing. For owning individual stocks, I am not sure the rationale of rebalancing. I guess if you own ETFs then rebalancing makes some sense but why do it if owning individual stocks? One of your holdings might be on a breakout and might be going on a tear upward so bailing out early will cause you miss the potential great returns.
Thanks for the thoughts. I'm trying to create guidelines to prevent me from running off the deep end and making emotional/irrational decisions. I also though already feel the constraints the guidelines impose on me. For example, my position in AT&T is not doing well in the short term and I expect it to do worse in the short term following JP Morgan's downgrade of the stock. My gut instinct is to sell before the position is worth less than what I paid the rules are in place to keep me from making such a snap decision that could bite me in the long run.
