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Posted by Guest November 28, 2015
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Building a Strong Retirement Plan That Works

Retirement Planning

Photo Credit: aag_photos via Compfight cc

Everyone should be prepared for retirement, yet only few are actually aware of how they should go about it. Based on the recent Retirement Income Strategies and Expectations (RISE) survey, 93% of Americans are anticipating their retirement, but only 52% of them are concerned about managing their retirement income. Although they look forward to retiring, most of them would rather invest their money in traveling (59%), spending time with their families (56%), and pursuing their hobbies (46%), or neglecting other expenses that might drain their retirement money.

But, how can we manage our retirement finances properly? The answer is by creating a retirement plan that works for your specific needs. Here’s a post to help you out in building your retirement plan effectively:

 · Maximize 401 (k) contributions

If your current employer offers a traditional 401 (k) scheme, then leverage it for your retirement. This plan allows you to contribute your pre-tax money for your retirement income, which drops your take-home money by only $85. Thus, you are investing more of your income without feeling the burden of it on your monthly budget. Some employers offer a Roth 401 (k) plan. Compared to the traditional option, it uses the amount of income after tax deduction. But, we suggest that you first know your retirement income tax bracket to assist you in deciding the best option for you.

 · Choose the best investment plan

The best way to ensure that your retirement money is still earning like a regular income is through investments. But, there are various investment opportunities available on the market, which can be overwhelming for first-timers. Mitchell Tuchman wrote in a Forbes article some highly recommended investments that retirees can take advantage of including annuities, mix of stocks and bonds, forex trading with long term goals, and a balanced portfolio of six to eight investment types.

But, as an investor, you have to know the smart way to invest. This means understanding the industry and market you are dealing with, building realistic goals and expectations, taking calculated risks and preparing for loss, as well as knowing the elements that can affect your investment and asset’s value. To be more effective, FXCM suggests ‘moving averages’ by evaluating price history to interpret price fluctuations and trends. You will only be able to do all of these if you are equipped with the right knowledge and background about the investment you are about to consider.

 · Set an asset mix

There is plenty of information available for retirees regarding investing; often it’s overwhelming and it can discourage people instead of instilling them with confidence. New comers can easily get the impression that the best way to go about it is to pull out their stocks or investments when the chance of loss is high. But experts at CNN actually suggest that the best approach is to diversify your portfolio by mixing stock and bond funds.

“As you get older, however, you’ll want to take greater care in protecting your savings from severe market downturns, which typically means moving more of your savings into bond funds to dampen your portfolio’s ups and downs,” states Money CNN.

Apart from your retirement plan, soon-to-be retirees must also avoid some common investment mistakes to ensure they are putting their hard-earned cash to good use. Bankrate listed some of the top retirement investment mistakes you should avoid, which include:

• Not taking full advantage of tax breaks
• Not saving enough or any at all
• Unknowing the high fees associated with retirement plans or investments
• Focusing on a single risk
• Investing aimlessly without proper goals and expectations
• Retiring immediately without any plan for income
• Keeping a “hoarding mentality”

Your retirement should be the best part of your life, where you are rewarding for your many years of hard work. But, splurging it all on traveling and shopping is not the right way to go about it. Retirees must know where to invest their money to cover unanticipated bills while sustaining growth over time – thus investing is the best option. Are you prepared for your retirement?

 · About the Author

ThriftyJ has been guest blogger for several reputable websites online. She specializes in business, financial, and technology. She has been assigned to various country to cover international events. With a wide range of knowledge and specialization, she is the go-to person of various websites. Watch out for her own blog soon!

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All Dividend Investing,  Options Trading,  Personal Finance

October 2015 trading, investing, and dividends results

I cannot believe October is gone already. I was so busy lately that I even haven’t noticed that we are approaching mid-November already and I haven’t posted my monthly review of my trading and investing effort.

Although October was spectacular as far as the market moves I wasn’t able to adjust my positions successfully. Let’s take a review of my October though.


You may be interested in:

A quick visit to the country of the middle class at the Aldeburgh Food and Drink Festival By Ermine with Simple Living in Suffolk

What Happened To Make Our Grocery Bill So High?! By Thousand Days with Thousand Days to Retirement

A Richer Understanding: Living and Eating Well By SavvyJames with Retirement Savvy

Understanding the Power of Compound Interest By Mr. Utopia with Personal Finance Utopia

How Safe Are Your Dividends? By AAI with All About Interest

Are You Contrarian? By FI FIGHTER with FI FIGHTER


 · October 2015 trading results

Trading can be frustrated and I must admit that the whole 2015 year was a disaster for me. Whatever trade I made, it went wrong. No matter how I adjusted my positions to be on the right side of the market, it went wrong. I was losing money the whole year and I am not able to stop it.

In October 2015 we saw a spectacular recovery of the market coming up from the lows of 1900 to 2100. At some point we saw the market reaching 2115 level. All call spreads I had open and which were safe and making me money suddenly turned up to be a loser. I tried to close them or convert them intoi a bullish trade to protect myself and as soon as I finished, the market stalled and now is turning back down. Now I have bullish spreads which are working against me. Should I leave them and wait them out or convert them back into call spreads? As of now I will wait and see how the price moves. I have a plenty of time in those put spreads, they are all expiring in December.

However, this is being frustrating that I am really so close to give up on trading. It was my dream to be a trader. I wanted to be like some of the traders you read on the internet who turned their tiny accounts into millions. Like Karen the Supertrader who turned her $10k account into $300M in about 5 to 10 years. Apparently, I am not gifted to be like them.

I will give it a bit more time and if this trading continues to be a roller coaster losing game I will stop it for good and continue investing in dividend stocks only.


You may be interested in:


7 Do’s and 7 Don’ts for a New Forex Trader By Adam with Modest Money

HAPPY BE A MILLIONAIRE DAY! By Teenygreen with The Pursuit of Green

Money moves for graduates: How to set up a budget By Honey Smith with Get Rich Slowly

Planning a Trip?! By Bryan with Income Surfer

Rethink Retirement – Create Your Own Target Date Fund By Jason Fieber with Dividend Mantra

Scripps Network Interactive By Dennis McCain with Denis McCain Investing


At least, I learned a lesson which may be helpful to improve and that is that I was overtrading again. That is a behavior I must stop. For this reason, I am adjusting my trading strategy to trade only one trade at a time and opening a new trade only when the old one is closed. I will be opening only 1 trade per each $5000 of account value. Let’s see if this helps to reverse my record and if not, I will be forced to say good bye to my trading as I am not willing to put more money into my trading account.

Here is my trading result for the month:


October 2015 options trading income: -$395.00 (-3.37%)
2015 portfolio Net-Liq: $4,697.03 (-20.44%)
2015 portfolio Cash Value: $6,843.03 (-14.07%)
2015 overall trading account result: -60.29%


Here are the results of my options trading:

Options Income
(Click to enlarge)

Here are the results of my new options strategy:

Options Income
(Click to enlarge)

Here is the entire account value from the beginning of tracking it up to today:

TD Account Value


You may be interested in:

Why Is Investing So Hard? By Michael Johnston with ETF Reference

Money Smart Giving By Daniel Graff with Well Kept Wallet

Learning How To Survive On A College Budget By Michelle Schroeder-Gardner with Making Sense of Cents

Stretching Your Remodeling Dollar By Brian with Long Term Mindset

Pursuing My Dream – Remortgaging My House By Mike with DivGuy


 · October 2015 dividend investing results

This month, I added new shares of KMI to my holdings and continue reinvesting dividends via DRIP reinvestment program. In my ROTH I also downsized my trading effort and focus only on dividend investing. As of now, dividend investing still wins over my trading results. Although, my stocks suffered during the recent correction dividend reinvesting is upholding the entire account value. It is down, but still above the 2015 year’s starting value.


Dividend stocks added or removed from portfolio:


October 2015 dividend stock buys: 20 shares Kinder Morgan (KMI) @ 29.24
October 2015 dividend stock sells: none


I decided to add KMI although it is now a hated stock due to the Keystone pipe line refusal from Obama. But Obama will not be in the office forever and one day the company will be able to build the infrastructure. I am not following this much, but I think in the next 20 years this will not be an issue and since the stock lost almost 40% of its original value (my average cost was at $41 a share, now the stock trades at $25 a share) I see it as a good deal. So although analysts are downgrading the stock (they did the same with JNJ a few years ago too), I considered this a buy.


Dividend stocks DRIP:


October 2015 DRIP: PPL


This is my first month applying DRIP and I am happy for it. I can feel that this is adding the desired speed to my dividend investing. I should have done that a lot earlier and not today. But I thought I was smarter than others who already did it and recommended it in the past.

I was actually using DRIP in my Scottrade account (I am not listing it in here) and I can see the snowball rolling faster and faster down the hill. Hope I will soon see the same result in my ROTH IRA account.

Here are my ROTH IRA trading/investing results:


October 2015 dividend income: $83.01
October 2015 options income: $0.00
2015 portfolio value: $16,054.84 (-2.35%)
2015 overall dividend account result: -8.00%


Here my dividend income:

ROTH IRA account value

Here is the entire account value from the beginning of tracking it up to today:

ROTH IRA account value


You may be interested in:

101 Dividend Investing Tips from the Experts By Jimmy Atkinson with Dividend Reference

Dividend Income Log: September 2015 By Alex with Zero to Zeros

Financial Benefits of Apartment Living By Sarah Greesonbach with Suburban Finance

Is Contentment The Enemy of Progress? By RETIREBYFORTY with RETIREBYFORTY

Playing the Probabilities By Ben Carlson with A Wealth of Common Sense


Below is my dividend income review for the entire year:

Dividend Income
My ROTH IRA dividend income breakdown per month and per company.

 · All accounts

Besides trading and dividend accounts I also have 401k account, emergency savings account, etc., which I do not report in detail. You can review those accounts in my “All Accounts Value” table at the bottom of My Trades & Income page.

My accounts dropped from previous month and are losing -1.61% (up from previous month) for the year. Considering how bad my trading was this month I think, this is not a bad result.

What do you think?

How about your investing or trading result?

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All Dividend Investing,  Options Trading,  Personal Finance

Dividend Investing For Wealth Preservation

This is a guest post from Ben Reynolds of Sure Dividend. Sure Dividend is dedicated to helping individual investors find high quality dividend growth stocks suitable for long-term holding.

If you read the Strategy page on Hello Suckers Investments, you will Martin’s thoughts on dividend investing (emphasis added):

Dividend investing is a great strategy, but now I look at it slightly differently. I no longer consider the dividend growth strategy my main investing or trading goal. I however look at it as my wealth preservation.

I have seen some traders investing their proceeds to other instruments or investments. Some invest the proceeds to gold or silver, some buy land, others real estate. I want to do the same. Or similar to be exact. I want to be buying dividend stocks.

I understand that at some point in my life I will no longer be able to actively trade options. Dividend stocks will be here to subsidize trading. My options trading is here to create an income now. Not 20 years from now. Now I want to trade, grow my account and enjoy income from trading. Once I will not be able to trade (maybe 20 or 25 years from now), I will have my dividend stocks to take over.”

When most people think about investing, they think about wealth creation, not wealth preservation. After all, it’s more fun to think about getting rich rather than protecting your wealth.

Warren Buffett is one of the richest men alive; today he is worth around $63 billion. Clearly, Buffett knows a thing or two about generating wealth. Interestingly, his focus is on not losing money. Warren Buffett has just two investing rules:


“Rule number one: never lose money.
Rule number two: never forget rule number one.”
– Warren Buffett



Warren Buffett invests primarily in high quality dividend growth stocks. Take a look at his top 6 holdings, which make up about two-thirds of his portfolio:

• Wells Fargo (WFC) – dividend yield of 2.8%
• Coca-Cola (KO) – dividend yield of 3.1%
• IBM (IBM) – dividend yield of 3.7%
• American Express (AXP) – dividend yield of 1.5%
• Wal-Mart (WMT) – dividend yield of 3.3%
• Procter & Gamble (PG) – dividend yield of 3.6%


Prior to the Great Recession of 2007 to 2009, Wells Fargo had paid steady or increasing dividends every year since 1972. After the recession, the company began paying rising dividends again.

Coca-Cola has paid increasing dividends every year for 52 years. It one of only 17 Dividend Kings; stocks with 50+ years of consecutive dividend increases.

IBM has paid rising dividends every year since 1999.

American Express has paid steady or rising dividends since 1999 as well.

Wal-Mart has paid increasing dividends for 42 consecutive years.

Procter & Gamble is also a Dividend King (like Coca-Cola). The company has paid rising dividends for 58 consecutive yeas.

 · Dividend Investing for Wealth Preservation

Clearly, Warren Buffett practices dividend investing for wealth preservation. Investing in high quality dividend stocks is an excellent way to protect and grow your wealth over time.

By owning shares of businesses with strong and durable competitive advantages, you can reap the rewards of their steady, predictable growth.

Businesses that have long histories of paying rising dividends have proven that they can reliably and consistently growth their business under a wide variety of economic conditions. This makes them ideal candidates for wealth preservations.

 · Inflation Destroys Wealth

If you do not invest your money, and leave it to sit in a bank account, it will lose its purchasing power through the effects of inflation. Inflation in the United States has averaged around 2.3% a year over the long run.

If your money isn’t growing by 2.3% a year, then you are actively losing purchasing power – that’s not a good thing. This forces people to invest or suffer the consequences.

High quality dividend growth stocks preserve wealth by counteracting the effects of inflation. If prices rise by 5% tomorrow, what do you think Coca-Cola will do? It will raise its prices by 5%, and people will still drink just as much Simply orange juice, Honest Tea, Vitamin Water, and Coca-Cola as they used to. Excellent businesses can pass off the cost of inflation onto their customers.

 · Wealth Preservation Mindset

You can make money investing through active strategies like trading. Martin does a great job of tracking and explaining his options strategies on this site.

Investing in dividend growth stocks is a passive strategy after you’ve identified the business to invest in. All you have to do is hold a high quality dividend growth stock, and you will be rewarded with rising dividend income. This makes dividend growth investing much easier to practice than more advanced trading strategies.

Of course, the stock prices of dividend stocks are volatile – they go up and down just like any other type of stock. By focusing on the quality and growth of the underlying business (and its dividend payments), investors can learn to not worry about stock price advances or declines. Dividend investing is not a short-term strategy. It works best when one invests for the long-run and holds stocks for years or decades, not days or months. This means you have to fight the urge to sell when a stock sees temporary price declines.

 · Final Thoughts

Wealth preservation is an integral part of investing. Dividend investing in general, and investing in high quality dividend growth stocks in particular is an excellent way to practice wealth preservation while simultaneously building a passive income stream.

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All Dividend Investing,  Options Trading,  Personal Finance
Posted by Martin October 21, 2015

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Great dividend yield misconception

Since I started investing into dividend growth stocks in my IRA account some time ago I thought people know how dividend stocks work. To my surprise many people are unbelievably lost in understanding how dividends work.

Recently, I read a post at Yahoo! The 401(k) crisis is getting worse about a man who started working at 14 and now at his 56 he has nothing saved.

Besides a liberal propaganda in the article trying to convince us to be sorry for the guy and how the system is wrong, which actually it is not, it is people who are wrong, because who prevented him from opening an individual IRA account and saving even $50 dollars a month since he started working when he was 14? I bet no one forbid him to open an individual retirement account but his poor choices.

If Tim (as his was name) started investing $50 dollars a month into his IRA and bought 1 share of (JNJ), Realty Income (O), or Coca Cola (KO), and reinvested all dividends, then after 20 years, his account would be worth little over $100,000 dollars and his dividend income would be $3,000 per quarter. If you add benefits from social security to this number, you would be receiving approx. $2,200 monthly which is enough to retire in some cheaper states of the US (commissions and taxes are not included, so for sake of this example you may want to wait 5 more years and retire 25 years later and not 20).

The shocking part of this article was the discussion below it. When I mentioned my numbers in the discussion (and of course, these are very rough numbers of calculating how DRIP would look like after 20 years) a few people asked me where anyone could pay me 12% in dividends per year and thus my numbers are totally unrealistic and off because there is no company out there who would pay you such yield and if so, it is too good to be true.

When I was reading those responses I was surprised realizing that the author of the comment had no idea how dividend growth stock investing works. If so, you would know right away that good dividend growth stocks would actually pay you a lot more than 12%. Of course, not today nor tomorrow.

And that is the greatest misconception about dividend investing. People take a look at the dividend yield today and think that 3.05% yield is nothing (although in zero interest rate environment, it is a great unbeatable yield), or yield of 1.45% is nothing to cheer about.

People make the mistake at looking at the yield today and not what the yield will be 20 years later.

If you look at the yield future, you will see a lot different story. Here are some examples what your dividend would look like if you bought 1 share of a stock 20 years ago and reinvested dividends:


Stock Total annual dividend Yield on Cost (YOC)
(JNJ) 20 yrs ago $1.81 3.12%
(JNJ) today $22.30 38.46%
(O) 20 yrs ago $1.86 4.89%
(O) today $28.24 74.31%
(KO) 20 yrs ago $1.37 3.24%
(KO) today $28.48 67.35%


In the table above I used today’s prices and yields as if it was 20 years ago, eliminate adding new shares, and no capital appreciation was included. The results are only to show how powerful dividend growth investing is over time and not to provide exact numbers.

Yet the example shows that after 20 years of diligent and patient investing your dividend yield will be a lot higher than it is today. Over time those great numbers will be smoothed a bit due to investing new money, but as you can clearly see, your yield can easily exceed 12% and be somewhere in the 20 – 30% range.

Yet people look at today’s yield and consider it not worth the effort.

I read claims that they can get better yield investing into bonds and be better off and safer.

It is no longer true that bonds are safer than stocks. They are exactly same volatile these days as stocks, you can lose money, but the biggest difference between a bond and dividend growth stock is the growth.

From the example above you can see, that your 1 share of Coca Cola would yield 67.35% 20 years from now, while the bond will still yield the original 4% (for example) yield. There is no growth in it. And you bought your bond at par, you actually lose money.

Investing into dividend stocks is not about yield today, but yield in the future.

As soon as I explained this concept, I got slammed with an argument, that it is impossible to get a safe stock and predict the future knowing what the stock will do 20 years from now.

While the argument of predicting future is valid, it is not so when reviewing dividend growth stocks.

Of course, in the market, everything can happen, yet history can be a good guidance to us when evaluating stocks. Therefore jumping directly at yield may be a suicide. Looking at the dividend history can tell you, what the future may look like.

Let’s compare two companies again:


Johnson & Johnson (JNJ)
The company pays dividends since 1944 (71 years)
The company increased the dividend for 52 consecutive years!


What is the probability that this company will continue perform so well? Although it is not 100% the stake is quite high.

Atlas Resource Partners, L.P. (ARP)
The company pays dividends since 2012 (3 years)
The company increased the dividend for 2 consecutive years!


What is the probability that this company would continue paying its dividend in the future and keep increasing it?

See the difference?

Although I am not saying that ARP is a bad investment, if I was to choose which stock to buy, it would be a JNJ. There is a higher chance that they will pay dividends in the next 20 years and continue increasing it.

To add more stress on the power of dividend investing here are one more powerful and interesting numbers. If you start investing and reinvesting dividends via DRIP, you will literally double your dividend income every 5 years for the first 20 years. If you wait longer, it then spikes into unbelievable levels.

To illustrate my point I used data from my ROTH IRA account, normalized them and here are the dividend results at different years:


Year dividend income YOC holdings value
Year 1 $699.68 4.66% $15,699.68
Year 5 $1,042.98 6.95% $19,303.34
Year 10 $1,828.86 12.19% $26,657.49
Year 15 $3,500.04 23.33% $40,284.33
Year 20 $7,489.10 49.93% $68,290.71
Year 25 $18,472.96 123.15% $134,014.93
Year 30 $54,599.50 364.00% $316,782.35

As you can see, once you go over 20 years, your dividend income more than doubles every 5 years from $7,489.10 annual dividend at the end of the year 20 to $18,472.96 at the end of the year 25 and to $54,599.50 at the end of the year 30.

Also your account value almost doubles every 5 year once you get over 20 years!

And this doesn’t take into account capital appreciation of your stocks and the fact that over the course of that 20 years (if not more) you will be saving and adding more money to your account growing your dividends faster.

The numbers speak for themselves. Give your investment time to grow, reinvest all dividends, invest into good dividend companies even if you can afford only very little every month, and start very early. Start as soon as you learn counting numbers. I teach my kids investing, I started an account for them and every time they get an allowance, they invest it and reinvest dividends. They are 10 and 13 and I hope one day, when they see their little accounts growing, they will appreciate this strategy even more.

And everybody has this same opportunity even Tim from the article at Yahoo! the only thing you have to do is to be willing to do something for yourself, learn and avoid the liberal propaganda of dependency. That will always keep you in the poor house.

Do you have any questions about dividend investing? I am always open and free to help or provide my experience. Do not hesitate to ask. Even $50 dollars monthly savings can make a huge difference in your life. I can see it myself and the only thing I regret is that I haven’t started early.


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All Dividend Investing,  Options Trading,  Personal Finance

September 2015 trading, investing, and dividends results

Another month is over and it is time to summarize it and review how my trading and investing did. This month wasn’t good for me from the trading perspective. In June 2015 I created my new options trading strategy, but I was overconfident about so I neglected defense.

I didn’t expect at all that the market could drop 390 points in three days and stay low. I thought that if it drops this fast, it would also recover fast, similar to October 2014 when we saw a huge drop but even bigger V-shape recovery.

The drop left me with a few trades in bad shape and I tried to manage them into closure with a minimal loss. This month I wasn’t successful and one trade ended at almost a full loss.

So I learned my lesson. The hard way.

And I also adjusted my strategy a bit.


You may be interested in:

Investing Shouldn’t Just be for the Rich By Brian with Debt Discipline
The grass is always greener syndrome By TFS with The Firestarter
GETTING A GOOD DEAL : IF YOU DON’T ASK YOU DON’T GET By Fibrarian with The Fibrarian
How to Cut Your Grocery Bill in Half – Week Four Report By M with There’s Value
Is this the end for “old media” ? By Integrator with Get Financially Integrated!


 · September 2015 trading results

During the violent days I realized that it was inconvenient for me to manage two accounts with many trades. I was trading on my regular trading account and ROTH account. I had a hard time to manage my ROTH account and be fully focused on my trading account.

I decided to reduce my ROTH trading to have open only one or two trades at a time in my ROTH IRA account. I will be opening a new trade only after the old one is closed.

I also created a stop loss order system using OCO order (one cancel other). I will be capturing 50% of the credit or close the trade if my stop loss gets hit.

To set a trigger price, I will be using an underlying price in lieu of the multiple of collected credit. I will set the trigger price 1% below the short call strike or 1% above the short put strike. When the stop is hit, the touched spread will be closed and I will move on. I may roll the opposite spread down (or higher) to collect more credit, but that’s all. Then I will move on.


You may be interested in:

Develop A Financial Plan For Your Life Already By Financial Samurai with Financial Samurai
Living For The Moment – Not Spending It By Sam Lustgarten with Frugaling
How Student Loan Interest Works By Debt Hater with From Debt to Dreams
Good Money Habits as an Evolutionary Advantage By NMW with No More Waffles
A Not so Frugal Opportunity By Weenie with Quietly Saving


Here is my trading result for the month:


September 2015 options trading income: -$1,325.00 (-11.32%)
2015 portfolio Net-Liq: $5,903.77 (-5.36%)
2015 portfolio Cash Value: $7,963.77 (-16.13%)
2015 overall trading account result: -49.57%


Although September wasn’t my worst month it definitely contributed to it. My new trading strategy is now showing a loss. I have three months until the end of the year to improve my results, but I expect this year to be a losing year.

Here are the results of my options trading:

Options Income
(Click to enlarge)

Here are the results of my new options strategy:

Options Income
(Click to enlarge)

I still hold a trade against AGU, but I decided to deal with this trade later and either close it or move it. Besides that trade I now only trade options against SPX.

Here is the entire account value from the beginning of tracking it up to today:

TD Account Value

I hope that my next trading month will be a lot better than those last two months which literally erased all my gains this year. But it happens and it will be happening. You need to be ready for situations like this that you will have a drawdowns at some point.


You may be interested in:

Millenials are (April) Fools By Matt with Rising Returns
Downshifters! Avoid to get a Rich but Boringly Selfish Person! By Mrwoodpecker with Good Day to Live
Home By Stoicinvestor with The Stoic Investor
Defining my uniform By Leigh with Leigh’s Financial Journey
Avoid Becoming Small Minded About Money With These 7 Lessons By DEREK CHAMBERLAIN with Money Ahoy


 · September 2015 dividend investing results

My dividend investing strategy has been adjusted too this month. I decided to add DRIP to my ROTH IRA account and reinvest all dividends. Before, I used dividends for trading in my ROTH IRA account and after that use trading proceeds to buy new dividend stock. But this process showed up slower than what I expected. And I didn’t want to miss some stocks which are now fairly cheap after current selloffs. And if the market continues selling, many dividend stocks will offer great entry price. With DRIP I could participate on this and be buying good quality dividend stocks as they go down.

I use the DRIP strategy in my other accounts such as Scottrade where I use FRIP dividend reinvesting program. This time I am using DRIP in all my investing accounts and from now on I will be also reporting my DRIPs here.


Dividend stocks added or removed from portfolio:


September 2015 dividend stock buys: none
September 2015 dividend stock sells: none



Dividend stocks DRIP:


September 2015 DRIP: none


Here are my ROTH IRA trading/investing results:


September 2015 dividend income: $70.27
September 2015 options income: -$866.00
2015 portfolio value: $16,442.20 (8.87%)
2015 overall dividend account result: -5.78%


Here my dividend income:

ROTH IRA account value

Here is the entire account value from the beginning of tracking it up to today:

ROTH IRA account value


You may be interested in:

August 2015 YTD Progress Toward Goals By Stocks and options

End of the Month Summary – August 2015 By Alexander Fotopoulos with My Trader’s Journal

Dividend Stocks Do Worse By DivGuy with The Dividend Guy


Below is my dividend income review for the entire year:

Dividend Income
My ROTH IRA dividend income breakdown per month and per company.

 · All accounts

Besides trading and dividend accounts I also have 401k account, emergency savings account, etc., which I do not report in detail. You can review those accounts in my “All Accounts Value” table at the bottom of My Trades & Income page.

My accounts dropped from previous month and are losing -4.36% (up from previous month) for the year. Considering how bad the market was this month I think, this is not a bad result. I believe, that this is just a temporary drop which in 6 months nobody will remember.

What do you think?

How about your investing or trading result?

We all want to hear your opinion on the article above:

All Dividend Investing,  Options Trading,  Personal Finance
Posted by Martin September 26, 2015
Comments Off on To Raise, or Not To Raise,

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To Raise, or Not To Raise,

When Will The United States Federal Reserve Tell Us?

The world awaits. To raise or not to raise interest rates, that is the question for the United States Federal Reserve. For months now, forecasters and traders all around the globe have been reacting to the hint that the United States will enact their first interest rate hike in nearly a decade. Seven of Wall Street’s top banks were expecting a hike in September. According to a poll conducted this week by Reuters, forecasters were betting on a sixty percent chance that the Federal Reserve was going to raise rates. Now according to a poll taken this week by Reuters, 72 of 93 forecasters have chosen December as the month the prices will lift off. Those that are certain about the hike were also as confident about a rate hike forecasted to occur last June.



According to Fed Chair Janet Yellen, both the global markets and China’s vast stock market selloff were solid reasons to take the wait and see approach. Just weeks earlier she was urging the US Central Bank to raise rates. Now it seems she is making long strides in the opposite direction. So what exactly is Yellen waiting for?

Think of it this way. The United States full growth economy is at around 2.2%. U.S. unemployment has improved by almost 50 and held at 5.5% in February. If the United States had specific financial goals before enacting a rate hike, it looks like most fiscal goals have been met. So why does Janet Yellen keep the cost of borrowing money at virtually zero in her country?

Janet Yellen

What The Federal Reserve might be skittish about is the falling prices of commodities. While China became one of the largest importers of world commodities, their inflation ran sky high. Still China didn’t want to adjust their currency. The truth is the problem for China was exacerbated by the Chinese government trying to hold currency low and fastening it to the American dollar. As Chinese stocks have begun to rally slowly these recent weeks, limp Chinese manufacturing data released Wednesday triggered a drop in U.S. markets. Obviously worries about the state of the global economy are being given more weight than realized.

Increasing U.S. interest rates, will also raise rates on U.S. government borrowings. When this happens there is plenty to be concerned with if you are Yellen. A study done this year by the Center for Economic and Policy Research estimates that increased interest rates it will add $1 trillion to $2 trillion dollars to the U.S. debt factored over the next decade. Naturally, a debt increase of this magnitude could lower infrastructure spending or require raising taxes or cutting government programs. The result would have a negative effect on the U.S. economy.

As Yellen sits in her wait and see holding pattern, fiscal scholars are blogging about how her inactions will cause additional global instability. In some cases, her indecision has prompted outright condemnation. None of the pressure seems to have had any effect on her. As it stands now, The U.S. Central Bank will continue to loan cheap currency at rates of zero to .25 percent.
If you take a look around the globe, it seems many economies are slowing down. Europe is deep in recession. China was not able to make their GDP estimate. Low oil prices spell a coming disaster for Middle East countries, and also Russia and Brazil. Not so in America. The low price of petroleum has helped to keep inflation rates down in the U.S… With inflation held low, the Federal Reserve does not have to rush to raise interest rate at the moment. So they haven’t. If the Federal Reserve moves interest rates higher, it will surly strengthen the American dollar. The higher cost of money, on the other hand, will make it more difficult for the United States to export their goods. It’s a quandary for certain.

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Posted by Martin September 26, 2015
Comments Off on How to create options spreads using delta

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How to create options spreads using delta

When I started trading options a few years ago I used all sorts of analysis, predictions, chart reading, but mostly my trading was based on direction prediction. It was all wrong. No one could ever predict where the market or any particular stock will go nor ends up in any particular day in its life span.

There are many traders out there who use all sorts of analytics to enter a trade. Some use unusual options activity others volatility value, or technical analysis only.

In the past I always struggled with one task, how do you choose your strikes when trading options? You do not want to be too close to the underlying price and you do not want to leave money on the table to be too far away.

I wanted my trading simple and easy. I wanted a process which could be simply defined and repeated every day, week, or month. A system, which has given rules or steps and it is easy to implement.

Lately, I finally created such system. It is so easy that I always question myself why it took so long to create this strategy.

Here is my way of trading Iron Condors or spreads against SPX. It can be used against any optionable stock, not just the index. I trade index only because I want to focus on one trade, one market, be in tune with it and not be distracted by other trades.

Here are my steps.

 · Find Delta

To find delta to trade I use my Cash management strategy. Deltas used in the table are arbitrarily chosen. I simply decided to trade 0.10 delta when the market is closer to all-time high, for example 5% – 10% below all-time high. You can choose your own level. If you want to be more aggressive, you can trade delta 15 or delta 20!

But I look at it this way, if the market is at all-time high, the risk of a decline or crash is higher than after the crash and the market is for example 20% below all-time high.

The table showing deltas I decided to trade is on the Cash management page. If you go there, the spreadsheet inserted in there tells you the current delta I will be trading (see “Traded Delta” line). As of this writing it is Delta 0.10.

 · Example of creating a put spread

  1. Once you know the Delta you will trade, the process is very simple. Go to your trading platform, find the delta you want to trade for the short put strike.
  2. When you find delta 0.10 you want to trade, it will tell you its corresponding short put strike price.
  3. Sell the put option from the Bid column of that strike.
  4. Determine how wide spread you can trade.
  5. Let’s say you can afford to trade 10 dollar wide spread, subtract 10 dollars from your short strike to get your long strike.
  6. Now you know your long strike, go and buy that option in Ask column.

Now you are done. Because pictures are worth thousand words, below is the above described process shown:

Creating put spread

The picture above shows how to create a put spread. You can follow the exact same steps to create call spreads, or if you do both together, you create an Iron Condor.

 · How to choose selling price

Once you build your Iron Condor or spread, you need to choose the selling price. When you create a Condor or spread in your platform, it will offer you a price you most likely will not be able to get. So I typically lower the asking price. For Iron Condors I usually want 6% – 15% of the spread width.

For example, if I trade 10 dollar spread or $1000 wide spread, my selling price will be between $100 – $150 dollars. I start with $150 (1.50) and if it doesn’t execute I lower it a bit, let’s say to $130 (1.30) all the way down to $100 (1.00), etc. This also depends on the delta you are trading and time of expiration. The lower the delta and longer expiration the harder it will be to get the desired price.

If you only trade separate spreads, then I usually go for 5% of the spread width, but not less than $30 dollars (0.30) per trade. The $30 dollars premium is my absolute minimum I am OK to trade for. If I cannot get it, I skip the trade whatsoever and wait for the next week.

 · What to do after you place an order?

After you are done, send the trade to your broker and if it executes don’t forget to place your stop loss order and 50% credit capturing order (OCO order) to protect your trades or collect gains as soon as they occur.

You can place your stop loss order based on the underlying price or spread value. The goal is to get out of the trade quickly before you get trapped in never ending battle with the market.

Hope this helps you to start trading. Let me know if you have any questions or need help. You can also subscribe to my free newsletter and follow my trades I trade in my account.

Good luck!


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Posted by Martin September 25, 2015
Comments Off on Money For Nothing: Inside The Federal Reserve

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Money For Nothing: Inside The Federal Reserve

I knew that FED was messing up our economy, but didn’t know the extend of it.

This movie is worth watching. It takes 1 hr 45 min but I recommend seeing it. It makes me think that I should trade call spread and omit puts untill all this crashes.



Money For Nothing: Inside The Federal Reserve is an independent, non partisan documentary film that examines America’s central bank in a critical, yet balanced way.
Narrated by the acclaimed actor Liev Schreiber, and featuring interviews with Paul Volcker, Janet Yellen, Jeremy Grantham and many of the world’s best financial minds, Money For Nothing is the first film ever to take viewers inside the world’s most powerful financial institution.

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Posted by Martin September 21, 2015
Comments Off on Cash Management section added

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Cash Management section added

For easy trade setups I decided to add a new section to my menu > Cash Management. This section can help me (and all of you following my trades) to quickly assess how much cash and what metrics to use to create a new trade.


My trading in the past was based on “coulda, woulda, and shoulda”, mostly. You can guess what impact it had to my results. Yes, I was making money, but I was also losing them. Not in the far time ago I doubled my account from $11,000 to $21,000 and as of this writing, I lost it almost all, and I am back to $9,000 level. I am slowly working it back up, but this roller coaster way of trading made me think, how to change my trading to eliminate emotions and make the trading automated or at least semi-automated.

To get better in trading and achieve a consistent winning trading, I worked hard to shape a strategy and set of rules which would eliminate my second guessing, wishful thinking, miracles, prayers, or obituaries from my trading.

I came up with a new strategy of trading options, set rules how to defend my trades and cash management.

This post is based on my cash management post and placed here as a quick reference on how to trade my money in an account. I created this table:


Market off all-time high Money invested Delta Strategy
<5% 40% 0.08 Iron Condor, Call Spreads
5% – 10% 50% 0.10 Iron Condor, Call Spreads
11% – 20% 60% 0.15 Put Spread
21% – 30% 70% 0.30 Put Spread
31% – 40% 80% 0.45 Put Spread
41% – 50% 90% 0.55 Put Spread


It basically tells me how much cash I can use at any time whenever I want to open a new trade and what delta I should use for my short strikes.

For example, if the market is 8% below all-time high price, based on the table above I can use up to 50% of all my available cash in the account for trading. The rest must stay as reserves. I can then create Iron Condors or Call Spreads with short delta at 0.10 (or less of course). The goal here is to automate that process of creating a trade. No second guessing, no predicting, or no opinions.

When you know what to trade and how to trade it, then even a caveman can do it.

If you know that you can trade delta 0.10, you just go to your options chain, find that delta, and that tells you the corresponding strike. Easy!

And of course, after you create a trade, you must follow with your protective order and 50% credit capturing strategy to eliminate emotions while waiting for results. It then all works by itself and you can have a good night sleep.

The chart at the very top is an automated spreadsheet calculating all this for me based on the table above. So all you want to do (if you want to use this as your reference too) is just come here and see how much of your cash and what delta you can trade.

Good luck!

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Posted by Martin September 15, 2015
Comments Off on How to manage and defend SPX Iron Condors

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How to manage and defend SPX Iron Condors

I created a great strategy for myself and I thought that the strategy was completely invincible. And it was running great and I was making money.

I also created a defense strategy in case something would go wrong however, I never expected to use the defense.

Until the recent sell off and market crash.

Then I realized how weak my defense was and how vulnerable I was. I decided not to believe in the crash, not to react and take a small loss. By doing so, I decided to swap a small loss for an even bigger loss I am dealing with now.

I found out, that the biggest enemy during violent markets was myself. Thanks to my emotions I was unable to react or reacted at the wrong time and wrong price.

How many times have you heard or read that a trader must eliminate emotions? Dozen, right? How many times have you heard or read how to do it?

I haven’t heard of any great advice. All was just a gravy beating around the bush and no advice was applicable.

The recent market moves made me to sit down again and think about my defense strategy to make it bullet proof and eliminate emotions, so all trading would happen automatically and without me.

And here are my findings and adjustments to my strategy.

 · 50% credit capturing

This is nothing new. Many experienced traders use this strategy. Tom Sosnoff from Tasty Trade advocates very strongly this strategy of taking profits off the table. Tasty Trade even performed a study which proved that when you take 50% of the original credit, you will be better off. You will hold a trade shorter period of time and you will eliminate a negative gamma effect as the expiration approaches.

Within the same period of 45 days cycle if I capture 50% credit, I can make 2 to 3 trades for about the same credit as the first trade and actually make more money. Look at it this way, if I make a trade #1 and get 1.50 (or $150 dollars) credit, then I can close it in 15 days for 0.75 (or $75 credit) and immediately open a new trade, again for $150 dollars credit, close it again in 15 days for $75 dollars, I still can open another $150 dollar trade for the remaining 15 days in the entire 45 day cycle. If all goes well, I can actually make $225 dollars instead of the original $150. And reduce risk.

Of course the projection above is theoretical and the best case scenario which may never happen. For example Tasty Trade results show average holding period 27 days instead of my 15 days. I could close a trade in 15 days due to a recent drop in volatility. Also the premiums may differ and will not be same in all three trades. But the point has been made. It is safer, you may make more money, and your probability of success is larger.

50% profit capture

In the picture above you can ignore the first column as we do not use that strategy and pay attention to the column 2 and 3. As you can see, we hold shorter period of time, make more money ($1,235 dollars more than in unmanaged trades) while our risk is same.

That’s what we definitely want.

 · Protecting Iron Condors against downside risk

The next step is to protect our trades during sell off, crashes, panic, freak-outs and similar disasters Wall Street time to time suffers. As of this writing, we are heading towards a possible interest rate hike in 7 years. Next Thursday the FED will hold an FOMC meeting and may or may not announce a rate hike or not. Nobody knows. And market may react violently to this event.

It may crash again or it may spike up. If I had a crystal ball I would reposition all my trades accordingly. But I do not have one. I can postpone my new trades after the meeting, but what about the running trades? Close them with a loss? Let them run and risk even bigger loss?

A crash would be nice. I can open many new put spreads collecting fat premiums. But what to do with the existing trades and not to repeat the same mistake of being inactive when I was supposed to act?

There is a strategy to remove the put spread if the price to buy it back doubles the credit received. For example, if we open a new trade and receive 1.50 or $150 premium. I would close the put spread if its price gets to 3.00 or $300. I will limit my loss to $150 dollars only. I can then use calls and roll them lower to collect another credit to offset this loss a bit to make it even smaller.

Now we know, what we want to do. We want to take profits if the trade goes with us and close it quickly if it goes against us.

But how to do it to eliminate emotions?

 · Create closing orders to eliminate emotions

There are three methods known to me how you can protect your downside of a trade – be it just a put spread or the entire Iron Condor.

You can hedge the Condor by adding more long puts to your short puts (for example to each one short put you add another long put, so you will have 1 short and 2 long puts). But with SPX hedging with long puts can be quite expensive and in many cases you may end up with no profit at all.

The second method is to buy VIX calls, but VIX not always acts rationally and in correlation to the hedged index, so I actually see this as adding risk or worsening my risk/reward ratio.

The third method is to take the put portion off the Condor out when the value of puts reach two and a half of the received credit. I like this method better and I am going to use it.

Why puts only and not the entire Condor? The risk to the downside is bigger than to the upside. I have seen the market crashing down violently many times but never to crash to the upside. There is a saying that the market takes stairs up, but elevator down. If we close puts only for a small loss, we still have calls to play with and by rolling them down, we can make the loss even smaller.

Therefore, we want to place an order with our broker to achieve the following strategy:


  1. Right after a new trade executes we want to place an OCO order (One Cancels Other).

  3. The order will consist of two parts – one closing the entire Condor, the second closing put spread only.

  5. If the price of the entire Condor drops down to 50% of the original credit, the first part of the OCO order executes and the second part is canceled.

  7. If the price of puts rises to two and a half of the original credit the second part of the order executes and the first part of the order is canceled.

  9. If only call spread are left, we lower them to collect more credit.


Since picture is worth 1000 words below are screen shots of how to create above described order in Think or Swim application. If you trade with a different broker at a different platform, you may contact your broker and ask them for help how to create such order. If a broker you trade with doesn’t support OCO orders, then you have to watch your trades mentally and act manually. But that’s something I failed to do myself in the past, so I like to place those orders after opening each trade and forget about it. If you are like me, I would change a broker which allows OCO orders.

The pictures below are based on actual trades I had in place. It was against trade #13, trade #14, and trade #15.

1. Cancel the original closing trade

SPX cancel the original trade

Originally, I had a 50% capture order in place. Such trade couldn’t be replaced with an OCO trade, so I had to cancel the old trade order first.

2. Select the trade to be closed for profit or loss

SPX selecting all legs

Then go to the “Monitor” tab, select the trade you want to close for a profit or a loss, highlight all four legs of the Iron Condor (yellow highlight), right click on the selection and from the menu select “Create closing trade > select the top option to buy back the entire Condor”.

3. Modify the closing ticket

SPX ticket modification

The closing order is added to the trade ticket. Change the “Single Order” to the OCO in the lower left drop down menu. Also change the limit debit price to 50% of the original credit. If you originally received $80 premium, change the price to 0.40 limit or $40 debit. In the example above I has a trade which I wanted to close for $10 only as this was a 5 dollar wide spread only. Change TIF (time in force) to GTC (good till canceled).

4. Add put spread to OCO

SPX puts closing only

Go back to the “Monitor” tab and go to the same trade. This time, instead of selecting all four legs, select (highlight) puts only.

5. Create OCO closing trade on puts

SPX puts closing only

Right click on your selection and from the menu select “Create closing order” and select the top line to buy back vertical spread. This is a similar step as in number 2 above.

6. Modify the added closing trade

SPX puts closing only

The new vertical spread closing trade is added to the order ticket as shown on the picture above. Now, change the limit price to the double of the original credit. In the example above I originally collected 0.50 or $50 premium, so my trade above is set to 1.00 or $100 debit (Note, I changed this to 2.5 of the credit, so it should be 1.5 or $150 in my next trades). Change the LIMIT order to STOP order from the drop down menu. Also change the TIF (time in force) to GTC (good till canceled).

Now you can send the order to the broker.

7. Final result

SPX puts closing only

If you did everything as described above, your order should look like the one on the picture. You should have two orders linked together. For example the highlighted Iron Condor is currently trading at 1.474195 (see the price next to the “WORKING” tag. The highlighted order says, that if the price drops down to 0.70 the entire Iron Condor will be closed and the put spread order will be canceled.

If the price of the put spread rises at or above 2.80 the put spreads will be closed and the first order to close the entire Iron Condor will be canceled.

 · Rolling calls

When the puts spread is taken away from the trade at a loss I roll down my calls. If the puts are taken off with break even or gain, I just place a buy order on the calls to buy them back for the desired 50% total gain.

For example, I had a trade where I received $140 credit. My 50% credit capturing strategy would dictate to buy back the entire Iron Condor for $70 dollars. During the volatile market my puts happen to be closed for $35. So I placed a buy to close order for calls for the remaining $35 dollars.

If my puts are taken off for a loss instead, I then lower (roll down) call spread to collect additional credit. I roll calls down with the same expiration and I do it a week prior to expiration (usually on Monday/Tuesday). This allows me to collect additional $40 – $50 dollars to offset the loss.

For example, if I originally collected $140, my stop loss is placed to 2.5 times (updated) of the credit higher, thus to $350 (or 3.50). If the stop loss trade executes, my loss will be $350 – $140 = $210. If I lower my calls down and collect additional $50 dollars, my loss will be $160 or 18% (860 total risk). Instead of losing the entire risked amount of $860 dollars, with this strategy I could limit the risk to $160 only.

What if the SPX price slices thru both put strikes?

This is tricky to deal with, in this case you have to assess whether the market recovers or not. Hard to say. If it does recover, all your adjustments will go against you. If it doesn’t you salvage your trade. So you decide what you want to do.

If that happens and there is no prospect of recovery, All you can do is lower you calls to match your puts. It is called an Iron Clad trade. Let’s say you have the following put spread:

– 1950 puts
+ 1940 puts

You ten roll your calls lower to the following strikes:

+ 1960 calls
– 1950 calls

With this strategy you collect more premium. You may collect 50% or more (if done in time) to offset majority of your loss. I had a trade where I risked $1,500 dollars total. With the original credit and Iron Clad adjustment I could collect additional $980 dollars, the trade recovered a bit and closed with short put ITM only leaving the long puts OTM for partial loss of only $200 dollars. With all the collected credit the trade was a winner ($980 – $200 = $780 profit).

 · Conclusion

With the closing OCO orders as described above I will be able to capture profits if they occur and close potentially losing trades when the losses are still small before they become big. Remember, there is a saying, “if you are not willing to take a small loss now, you will take a mother of all losses later.”

The protective trade above will eliminate my guessing whether the market recovers or not. It will eliminate my emotions, hope, wishful thinking or prayers from trading. With those order I take a small loss compared to the entire risk. I trade 10 dollars wide spreads, thus I risk $1,000 dollars for the entire trade. With the closing order I limit the risk to approx. $100 – $150 dollars per trade. And that is something what we can afford if the market goes against us.

We can take the released cash and sell a new Iron Condor with better strikes and offset the loss. If we lose $500 or even $1,000 in one trade, we basically liquidate a year of profits. So why let our guesswork and hopes whether the market returns back up or not ruin our trades, right?


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