Thursday, March 22, 2012

Portfolio Objective Update

Project $3 Million ... Primary Objective:

Income replacement. The goal is to build an income stream that is reliable, predictable, and increasing. The income goal is $10,000 per month in retirement. A portfolio value of $3 Million with a 4% yield will accomplish that objective. Hence the title of this portfolio.

Strategy:

To contribute $500 per month to the portfolio and look to earn 8.25% compounded annually, over 40 years.

In order to be on schedule for Project $3 Million, the total value of the portfolio at the end of 2012 needs to be $74,355.59.

As of yesterday, March 21, that objective is already achieved!

The portfolio value is $74,355.96.

Portfolio Update

At the end of February, the taxable account had $792.35 in cash. Another $300.00 has been added to this account providing enough cash to make an add-on position to BP. Today another 23 shares of BP were added at a cost of $45.29 per share. The account now holds 61.088 shares of BP.

There is now $40.69 in cash left in this account.

It will take two months to generate enough cash for the next purchase. At this time, the thinking is about opening a new position in SBUX. The summer months usually see equities sell off some, so I'm hoping to see the price come down a little by the time there is enough cash in the account to purchase the SBUX shares.

Friday, March 9, 2012

Learn From Your Mistakes

I recently sold FTR at a loss in this portfolio. My reasoning for that is in the previous message.

FTR was not a company that was initially purchased based on the metrics I use for stock selection. The original shares in FTR were the result of a spin off from VZ. Those shares are still held in the taxable account.

I purchased the additional shares in FTR after seeing an interview on Cramer with the CEO of FTR. She said they were committed to the dividend and that the company also wanted to be a high yielding company. I bought her speech and decided to open a speculative position in FTR. I was willing to give FTR two years to make the properties they received from VZ successful.

There is nothing wrong with opening a speculative position from time to time. Where I made my mistake was by placing the speculative position in a Roth Ira. I should have placed it in the taxable account.

Why?

Simply because any losses you take in the Roth cannot be claimed on your tax return because you don't pay taxes on anything in a Roth. If the position had been held in the taxable account, the loss could have been used as a deduction on the 2012 tax forms. I could have recouped a small portion of the loss back.

In the future, any speculative position will be held in the taxable account, not a tax deferred account.

Lesson learned!

Monday, March 5, 2012

Portfolio Update

I decided to cut the losses with FTR in the ROTH IRA.

It wasn't the cut in the dividend that bothered me, it was management's constant lying about how safe it was. Time to let it go!

The only shares still held are the shares provided in the spin off with VZ in the taxable account.

Thursday, March 1, 2012

Project $3 Million - February Results

PRIMARY OBJECTIVE:

Income replacement. The goal is to build an income stream that is reliable, predictable, and increasing. The income goal is $10,000 per month in retirement. A portfolio value of $3 Million with a 4% yield will accomplish that objective. Hence the title of this portfolio: Project $3 Million.

STRATEGY:

To contribute $500 per month to the portfolio, look to earn 8.25% annually, compounded over 40 years. The beginning value at the time of establishing these goals was $42,205.00.

http://www.planningtips.com/cgi-bin/savings.pl?amt=42205.00&dep=500&cmp=annually&int=8.25&yrs=40&Calculate.x=26&Calculate.y=12

STATUS:

The portfolio is ahead of schedule! In order to stay on schedule, the 2012 year end value needs to be at $74,355.59.

As of February 29, the portfolio value is $73,303.61.

YEAR END PORTFOLIO VALUES:

2009: $42,205.42 ..... 2010: $54, 949.87 ..... 2011: $70,221.20.

FEBRUARY RESULTS: Dividends received:

Taxable Account: (Dividends Reinvested)

GIS ... $15.22 ..... Bought 0.383 shares
EPD ... $35.94 ..... Bought 0.755 units
NUE ... $19.40 ..... Bought 0.441 shares
KMP ... $38.89 ..... Bought 0.436 units
MMP ... $31.29 ..... Bought 0.449 units
ABT ... $26.03 ..... Bought 0.468 shares
CL ... $14.05 ..... Bought 0.151 shares
================
Total ... $180.82

Symbol ... Shares ... Mkt Value ..... Gain/Loss

ABT ... 54.704 ... $3,096.79 ..... 15.73
ADP ... 37.479 ... $2,035.86 ..... 23.23
BP ..... 38.088 ... $1,796.23 ..... <12.01>
CL ..... 24.38 ..... $2,271.73 ..... 17.75
CVX ... 22.034 .. $2,404.35 ..... 41.28
DEO ... 28.774 ... $2,749.64 ..... 40.58
EPD .... 58.717 ... $3,046.24 ..... 36.69
FTR .... 18.66 ..... $85.37 .......... ***** (Shares were received in a spinoff from VZ)
GIS ..... 50.283 ... $1,926.34 ..... 13.37
JNJ ..... 41.824 ... $2,721.91 ..... 5.02
KMB ... 25.491 ... $1,857.78 .... 10.18
KMP ... 33.965 ... $3,022.88 .... 23.09
KO ...... 53.033 ... $3,704.89 .... 48.58
LMT .... 33.574 ... $2,968.28 .... 10.72
MCD ... 23.193 ... $2,302.60 .... 39.30
MMP ... 38.846 ... $2,842.36 .... 37.60
MO ..... 99.255 ... $2,987.58 .... 47.75
NUE .... 53.594 ... $2,332.95 ..... 7.26
PEP ..... 32.247 ... $2,029.63 ..... 1.96
PM ...... 31.673 ... $2,645.33 ..... 16.50
SO ...... 43.427 ... $1,919.04 .... 20.34
SYY .... 69.078 ... $2,032.27 ... <5.02>
Cash ..... $792.35
=======================================
Account Value ... $53,572.40

Roth Ira: (Dividends Reinvested)

VZ .... $54.97 ... Bought 1.456 shares
PG .... $17.48 ... Bought 0.269 shares
O ..... $11.20 .... Bought 0.305 shares
HCN ..$29.60 ... Bought 0.533 shares
============================
Total ... $113.25

Symbol ... Shares ... Mkt Value .... Gain/Loss

D ....... 46.29 .... $2,336.26 ..... 12.35
FTR ... 250.932 .. $1,148.01 ... <47.82>
HCN ... 40.533 ... $2,206.82 ... <1.82>
O ....... 77.305 .... $2.851.78 .... 2.95
PG .... 33.56 ....... $2,269.33 ..... 7.49
VZ .... 111.39 ..... $4,245.07 ..... 2.28
Cash ..... $9.29
==============================
Account Value ... $15,066.36

Thrift Savings Plan (TSP) ... (Version of a 401K)

All Index Funds:

Individual Fund .... Portion of account held

F Fund (Fixed Income) ... 4.44%
C Fund (S&P 500) ......... 35.31%
S Fund (Small Cap) ........ 32.00%
I Fund (International) ...... 28.25%
=============================
Account Value ... $4,664.85

Total dividends for February was $294.07, a record month.

Feb 2010: ... $98.91
Feb 2011: ... $246.16
Feb 2012: ... $294.07

The next purchase in the Taxable account is going to be BP. The transaction should occur mid March.