I separated the investment report from the monthly report, mostly because I have been so focused on debt reduction and I forgot to include them together. The monthly report includes all of the financial metrics I’ve decided to track to tell me how I am doing with my financial health. Well, investments are part of that financial health. I just forgot to include it.
The other reason I separated the two reports is because I have viewed them as two sides of the budget ledger…income and expenses. I’m not sure whether I will put them together into one report yet. We’ll see.
Investment Summary for 2016
I began working on investing again in 2016. I had empty investing accounts and started funding them again in December 2015. I’ve been investing in stocks since I graduated college, but through a series of financial mishaps, I haven’t had anything to invest in for years. I had liquidated my accounts and needed to start over. Frustrating, but I have no time to look back, only time to look forward. Need to start somewhere, and this is my starting spot.
I have two Scottrade accounts (one regular taxable account and one Roth IRA account), a Fidelity account (it’s a rollover IRA, soon to be moved to the Roth IRA), and a Lending Club account.
The Roth IRA and Fidelity accounts have no returns to mention for this month. I began investing with them in July, so I should have something to report in August or beyond. All the numbers this month are coming from the Scottrade taxable account and my Lending Club account.
You can see all of the companies I use for investing and links to them on my Resource Page.
Investments for July 2016
I earned a total of $10.55 for July 2016. That includes the following:
• Dividends = $7.21
• Options Premiums = $49.60
• Stock Returns = -$60.81
• Lending Club payments = $14.55
• Total = $10.55
Here is the breakdown on each category…
I received dividends from two stocks this month, GPT and GNTX. I currently own five stocks that pay a dividend.
• Earned $7.21 with a yield of 0.6% for July
• Earned $62.64 with a yield of 1.5% for YTD
• *My yield is based on dividends collected divided by total amount invested in the stocks.
My primary objective with the taxable account is to buy dividend paying stocks in lots of 100 shares, and then to sell covered call options on those stocks. I may wind up holding these stocks for months or years, or they may get called away before I even collect a dividend. I’m buying them with instant profit in mind, using the strategy to build up my account.
In the Roth IRA, however, my objective is to buy dividend stocks and hold them for longer. I will look to use covered calls down the road, but I will likely choose out of the money strike prices in order to collect premiums and hold onto the stocks.
I currently hold the following options, all covered calls on the underlying stocks, and all roughly in the money strike prices…
GES SEP 16 2016 16.00 C
GPT SEP 16 2016 10.00 C
NOK SEP 16 2016 6.00 C
NOK OCT 21 2016 6.00 C
MHLD FEB 17 2017 15.00 C
• Earned $49.60 with a return of 2.3% for July
• Earned $103.50 with a return of 2.2% for YTD
• *My return is based on option premiums collected divided by total amount invested in the underlying stocks.
You can see that three expire in September, one in October, and one in February. The goal with the taxable account is to have one option expiring per month. That will take some time for me to build up the necessary funds.
I view these returns as similar to dividends, where it is income received without any consideration for stock appreciation. The covered call strategy is very conservative and I will continue employing it wherever possible.
Here I am cataloging any closed out stock positions, any realized gains or losses for anything that I sold in the month of July.
• Lost $60.81 with a return of -5.8% for July
• Earned $506.33 with a return of 12.6% for YTD
• *My return is based on profit/loss on sold stocks divided by total amount invested in those stocks.
I did well to buy at the end of December and in January for most of my stocks. Many appreciated well with the rising market. I sold off my winners in order to free up funds for my dividend stock and covered call strategy, which began in June.
I also sold off some losers in July, accounting for the $60 loss. I had invested in CMG (Chipotle) after the salmonella scare, but didn’t account for continued losses. I sold it on a small bounce up and put the funds to use in my new dividend/options strategy where it can do more good.
I don’t get emotionally invested in stocks, at least not that often. I view them as a means to an end, like players on a fantasy baseball team. I might like how many home runs the guy hit in June, but if he can’t hit anything in August, he’s likely getting dumped.
I’m also quicker with the trigger pull to dump losers when I have a smaller account. I’m not day trading or anything, but my patience is measured in months and not years right now.
I began investing in loans with Lending Club, known as peer-to-peer lending. The basic idea is that there are members who join Lending Club. On one side are members seeking a loan for various uses (eg. Debt consolidation, home improvements, medical expenses), and on the other side are investors who are willing to fund those loans for other members. I am currently an investor.
I had heard about Lending Club years ago, but only took the dive into investing in loans this year. I have a total of $700 invested in 28 loans at $25 per loan. My exposure to any one loan is minimized in this way, meaning I am diversified and have reduced my overall risk if a loan were to default.
The plan is to invest a minimum of $25 per week, allowing me to buy into a new loan every week. I will look to increase this amount as my monthly cash flow is freed up. I invested a total of $275 in July.
• Earned $14.55 with a return of 2.1% for July
• Earned $56.50 with a return of 8.1% for YTD
• *My return is based on payments collected (principal and interest) divided by total amount invested in loans.
Total Investing Returns
Overall, I have a deposited $525 to investment accounts for July, and a total of $4,250 year-to-date. Everyone starts somewhere and this is my start line. Onward and upward from here.
• Earned $10.55 with a return of 0.6% for July
• Earned $728.97 with a return of 15.4% for YTD
• *My return is based on total income divided by total amount invested.
I’m very pleased with my overall returns to date at 15.4%. I have squeezed enough cash flow from my monthly budget to invest and will squeeze out more over time.
For my Scottrade accounts, I expect August to be a mostly quiet month as my stock funds are tied up until September, waiting for options to expire or execute. Right now, it looks like two of my three option positions will execute, meaning they are nearing their strike prices. But there is still more than 30 days to go on them, so who knows.
While I wait on the options, I will continue making small deposits to the accounts and collect dividends. I will also have funds available to invest in my Roth IRA account once I move my Fidelity account over, but they will go into dividend stocks and take time before they begin paying out.
For Lending Club, my monthly returns continue to rise as new loans start payments (takes a couple weeks for loans to fund, then a month for payments to start). I will continue investing in one loan per week for now. That will give me another 22 loans to my account, a total of 50 for the year, or $1,250.
So that’s my story and I’m sticking to it. Investing will evolve over time for me, especially when I have funding available to start buying real estate. Then I really hope to pull in some income.
Check out my Resources Page for more on all the companies I mentioned.
Leave me a comment and let me know what you think. Or join me on Twitter for more of my financial ramblings. Thanks for reading…this was a long one!