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 It is not necessarily the amount of saved money, but ability to generate cash which can be withdrawn without jeopardizing the accounts’ ability to continue generating cash.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:
- buying dividend growth stocks, collect and reinvest all dividends
- selling covered calls – partial returns strategy
- selling covered calls – total return strategy
- selling puts
- buying high potential growth stocks
To implement the strategy I will be using several accounts and tools:
- TD Ameritrade account – taxable
- TD ROTH IRA account – deferred
- Scottrade account – taxable
- Motif Investing – taxable
- 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.
- money management with margin
- money management w/o margin
- screening and stock picking
- options management
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!