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 It is not necessarily the amount of saved money, but ability to generate cash which can be withdrawn without jeopardizing the accounts’ ability to continue generating cash.
My goal is not to reach a certain amount saved or a certain account balance, but make sure all my portfolios can safely generate enough cash flow every month no matter how big the accounts are.
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