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My investing Strategy – part 1

I am finally kicking myself into writing this long overdue post about my investing strategy. I started many times and have several drafts but I haven’t liked any of the versions. Most of them became too complicated and I could see that this would be very confusing and boring for my readers to read. So I never got into posting it.

I decided to split the strategy post into a few small parts which would be easier to read and follow. At least I hope. I will be posting this series into one post under Strategy in the main menu where all posts will be combined together.

So what is my investing strategy?

In order to set a proper strategy, an investor needs a clearly defined goal. You need to know what you want to achieve. But that is only a part of the whole picture. Besides the goal, you also need to know what your time horizon is. In other words, how much time you have to build a solid strategy to get to your goal.

What is my goal?

My goal is to build a few retirement accounts capable of generating enough cash to replace my expenses and my wife and I can retire. It is not necessarily the amount of saved money, but ability to generate cash which can be withdrawn without jeopardizing the accounts’ ability to continue generating cash.

What is my time horizon?

Unfortunately, I am no longer in my 20s or 30s anymore. In order to retire in reasonable time I must be aggressive in my investing. I only give my investments 20 more years from now to grow and for me to learn how to generate cash safely. After 20 years, I will be 62 years old and I want to retire.

If I will be able to retire earlier than that, it will be considered a bonus to my effort. But I want to stay realistic.

First 10 years will be dedicated to highly leveraged accumulation of wealth, the second 10 years will be dedicated to deleveraging my accounts. (I will write more about this in money management).

My strategy outline

Over several years of my investing and trading career I tried almost everything possible (some say it was a mistake and I somewhat agree). I was a swing trader, advanced options trader, CAN SLIM trader, buy and do not know what next investor, and now I ended up as a dividend investor combined with basic option strategies.

All my previous endeavors didn’t work for me and didn’t make me money. Except dividend investing and basic options strategies such as covered calls and put selling. These are the strategies I want to base my strategy on.

My strategy is:
 

  1. buying dividend growth stocks, collect and reinvest all dividends
  2. selling covered calls – partial returns strategy
  3. selling covered calls – total return strategy
  4. selling puts
  5. buying high potential growth stocks

To implement the strategy I will be using several accounts and tools:

Accounts:
 

  1. TD Ameritrade account – taxable
  2. TD ROTH IRA account – deferred
  3. Scottrade account – taxable
  4. Motif Investing – taxable
  5. 401k account – deferred

Each account above has its own purpose and strategy. Unlike some investors I like to have different strategies separated so they do not mix and I know which account is profitable and which needs adjustment.

Tools:
 

  1. money management with margin
  2. money management w/o margin
  3. screening and stock picking
  4. options management

Conclusion

In this part I outlined my goal, time horizon and main tools and accounts I have at my disposal for building my wealth. In the next parts I will be writing about each specific account or tool which I will use in my overall investing strategy to achieve my goal.

If you have any question or need clarification, do not hesitate to ask me.

Happy new year!
 





10 Responses to “My investing Strategy – part 1”

  1. WOW! You’re journey to your investment strategy is almost identical to mine. Man that CAN SLIM strategy sure does have a nice sales pitch but it never worked for me either.

    I honestly feel dividend growth stocks, reinvesting the dividends, and selling options is the best strategy out there. And I’m not just saying that because it’s what I’m currently doing, it’s because I’ve tried everything else and failed miserably. The funny thing about it though, I don’t know if I would have become so successful in stocks if I hadn’t of had those failures.

    • Martin says:

      Nice! I agree, selling put options against dividend growth stocks and own dividend growth stocks and reinvest dividends is the best strategy I could come up with so far!

  2. Martin,

    Good summary of what you are all about. And writing it down is empowering. I’ve been thinking about a post like this too outlining everything. But I think I’m still refining some things. Getting close though once I consolidate some accounts.

    -RBD

    • Martin says:

      RBD, it took me some time to figure out how I want to write it down. And still I do not know how the entire series will look like at the end. I have so much to say, but do not know how. So I decided to split it into parts which may be easier to write about.
      Thanks a lot for stopping by.
      Good luck in your investments in 2014!

  3. Moneycone says:

    Looks like you have a plan! Personally, I would be uncomfortable with options, but then I know a few who make big bucks with options. Good luck!

    • Martin says:

      Hi Moneycone, I have been trading options for some time, so I know what they can do to me and I am very comfortable with it. Thanks for stopping by! Good luck to you too!

  4. Looks like a solid plan. I think the hardest step is figuring out where you want to be and when and then coming up with a way to get there. Now you just need to fully implement the plan. I’m hoping to get back into options more during 2014, but that really depends on what Mr. Market wants to do. I was able to generate over $1,500 in added capital during 2013 from options which is great considering I really put them off to the side the second half of the year. Best of luck in 2014 and for the next 20 years! It’ll be interesting to see the kind of development/progress that you make.

    • Martin says:

      Best luck to you too and thanks for stopping by and commenting. I agree that it is not easy to come up with a solid plan. No one teaches it and people do not know where to start. I am also planning on implementing options strategies as much as possible in this new year. It is a great cash generating tool and when done against dividend paying stock I think it is safe. Good luck in your 2014 goals!

  5. Fast Weekly says:

    Hello Martin. That looks like a fairly succinct outline of where you are and where you’re going. Here’s to a great 2014!

    -Bryan

  6. I am exactly in the same position!

    In May I´m going to be 40 years old.

    My time horizon will be 20 years.

    In the age of 60, I would like to stop working!

    However, I get my state pension at 67!!!

    This means I need a lot of dividends,

    because I have to live seven years ONLY from dividends!

    Will reach only with very hard work!

    Best regards!

    Michael



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