crushinginvesting-blog

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Failing to Stay the Course Investors can spend years following a simple solid investing plan. The plan can make sense and work in both great and terrible economic times. The steady returns and boring portfolio can sometimes make an investor begin looking at more dynamic investments thinking that they can achieve better returns. They hear about other investors making 100% on their money in months. They also begin to watch more financial news channels and they seem to push stocks that seem to be doubling every week. They hear endless talk of cryptocurrencies, gold, marijuana stocks, and the FAANG stocks. The slow straying begins with one investment, then two, then three. Eventually, the portfolio is made up of more speculative investments instead of the original long-term investments. The sudden gains in the portfolio lead the investor to lose focus and diversification begins to take a backseat. In addition, those investments are now centered in one or two sectors where previously he had been invested in no less than five sectors. The investor previously lost 20% of his portfolio in the last market downturn. The investor’s knowledge, diversification, and steady hand allowed him to confidently continue to add capital and accumulate shares at lower prices. His portfolio quickly turned positive reaching new heights. The investor’s current focused portfolio dropped significantly as other speculators sold their holding to take profits after news came out critical of the once high-flying investments. His mindset was completely different this time around because he hadn’t researched his new investments. Fear eventually took hold and the investor sold losing over half of the portfolio he had been building for several years. Realizing his mistake at the cost of tens of thousands of dollars, he undertook the task of remaking the portfolio that has served him so well for so long. Don’t buy into the hype. Educate yourself, put your plan in place, adjust as needed, and move forward. Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Boston, Massachusetts) https://www.instagram.com/p/BwR50y0nqVn/?utm_source=ig_tumblr_share&igshid=e0z74av3qyse

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Where do you see the market going for the rest of 2019? Flat, up, down? What sectors if any do you see outperforming over the next three quarters? Do you see a recession on the horizon over the next 18 months? Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/BwA6m3bnI4k/?utm_source=ig_tumblr_share&igshid=xj5tcp2q05yz

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There are no perfect investors. You will have stocks in your investing career that also fail to perform. You must harden your investing mindset. Companies that are known dividend growers are very reluctant to cut or fail to raise their dividend annually. With a track record of dividend growth over a decade, there are expectations from investors and any whiff of a dividend cut or no dividend raise in a year can send a stock down 20, 30, or 50% down. Companies with consistent dividend growth right their ship as soon as possible to get back on track. They do not want investors questioning whether their fundamentals are solid enough to get through downturns, recessions, and reorganizations. Dividend growth investors will flee in droves any dividend stock they feel has betrayed them with a stagnant dividend or a dividend cut. You will have to decide from what you know about the companies you are invested in whether you will ride out the storm or look for dividend growth elsewhere. Will you wait out a stock that doesn’t grow its dividend for 1, 2, or maybe even 3 years. A dividend growth investor will experience a dividend cut sometime in their investing career. No one will own 20-30 stocks that pay like clockwork and don’t surprise an investor with no growth or a dividend cut somewhere along the way. No one knows if a company will have missteps decades from now that they cannot recover from. This is why there are only 26 companies that have paid and raised their dividend for 50 plus years. If you are diversified into many industries and sectors, an investor can sleep well at night. No one stock will ever ruin your investment style or your portfolio. You will have stocks that grow their dividend 3%, 8%, and maybe even 15%+ a year. Your job as an investor is to keep track of your portfolio and make sure that your overall portfolio experiences dividend growth. Do not fall in love with your stocks, but don’t give up on the relationship at the first sign of trouble. Think every buy and sell through and decide. Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/Bv2c8zIHZnx/?utm_source=ig_tumblr_share&igshid=1ndi62nyp5o9j

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Dividend growth investors allow time, patience, and knowledge to get them through their 20-30 year investing career. Dividend paying stocks that raise their dividends on an annual basis will allow an investor in retirement to live off their portfolio dividends and NEVER HAVE TO SELL THE UNDERLYING SECURITY. Dividends will be the lifeblood that sustains an investor in retirement. Dividend growth will be the heart pumping that blood through their investment portfolio. Down markets will be the fear that make other investors panic and sell. You will not panic. You will continue to accumulate shares of great companies that have been through the Great Recession of 2008-2009, 9/11, the Tech bubble of 2001, the crash of 1987, the oil embargos of the 1970’s, the Vietnam War, World War II, the Great Depression of the 1930’s, World War I, and every other major and minor event of the last 100 plus years. That compounding of dividends along with regular additional contributions will propel a young investor in his twenties into a net worth of millions in his forties or fifties; those late investors in their forties into millionaire status in their sixties or seventies. The keys will be time, patience, and knowledge. The time to allow the reinvestment of dividends to compound, and go from 100 shares to 150 shares, then 250, then 500 shares. The time needed to allow for the fluctuations in the market to work for you and understand that no matter what the financial news channels say to scare you, the investor stays the course. The patience and knowledge to understand that, while the sky may be figuratively falling at times throughout an investor’s investing career, they have done their homework and have no fear. The economy could contract or expand, but nothing changes for you. Will there be turnover in a long-term investor’s portfolio, absolutely? Will there be stocks that fail to perform, absolutely. For the most part though, those market scares and downturns will be the times that knowledgeable investors accumulate additional shares at lower prices. Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/BvurAl0Hgt4/?utm_source=ig_tumblr_share&igshid=1cy3aqu16wd6b

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All the listed dividend growth stocks have paid and raised their dividend annually for at least 10 years. They are established companies with businesses that have been through terrible market turmoil and have come out stronger. These stocks can be the foundation of a great dividend portfolio that will get investors through decades of consistent and focused investing that will return capital appreciation and dividend growth. Investors would be diversified in 5 sectors of the economy. They would be invested in companies that take their dividend payouts seriously and would likely continue to pay and raise their dividends far into the future. 1) Johnson & Johnson is a healthcare company that was founded in 1885. It was been paying and raising its dividend annually for over 54 years. In a stock market with thousands of stocks, there are only a handful that have a longer streak. 2) 3M is one of the most diversified healthcare, technology, and industrial companies in the world founded in 1902. It has been paying and raising its dividend for 59 years. 3) Coca-Cola was founded in 1886 and sells and distributes non-alcoholic drinks around the world. Dividend streak – 55 years. 4) Procter & Gamble was founded in 1837 and sells beauty, grooming, cleaning, and child care products around the world. Dividend streak – 61 years. 5) McDonald’s was founded in 1940 and has over 35,000 restaurants around the world. Dividend streak – 42 years. 6) Medtronics was founded in 1949 and is in the healthcare sector. The company sells medical devices and has a dividend streak of 29 years. 7) Pepsico was founded in 1898 and sells drinks, food, and snacks around the world. Dividend streak – 29 years. 8) Qualcomm was founded in 1985 and designs, develops, manufactures, and markets digital communication products worldwide. Dividend streak – 13 years. 9) Southern Company was founded in 1945 engages in the generation, transmission, and distribution of electricity. Dividend streak – 17 years. 10) Microsoft was founded in 1975 and develops, licenses, and supports software, services, devices, and solutions worldwide. Dividend streak 15 years. Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/Bvhwanhg1H2/?utm_source=ig_tumblr_share&igshid=15yb1x50su6ue

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Decision Making What kind of decision-making skills do you possess? Are you making key decisions that affect your overall financial, personal, career, and educational life, or are you making pointless decisions that neither move you forward nor matter 10 seconds after you make them? Are you: Placing thousands of dollars in investments Leaving a job to start a business Deciding to apply to a master’s degree program Taking a job across the country Getting married Investing in real estate Having Children Taking care of a sick relative Lending money to family These are real decisions that must be made that can have long-term effects that can ripple through a person’s life. They are decisions that if left unmade, can be catastrophic to a person’s business and personal life for years or even decades. How many times have you been in line at a fast food restaurant listening to people order in front of you like their lives revolve around a cheese, condiment, or drink decision. They ask questions that will not change what they order. They stand there stressing about gluten free, sugar free, MSG, 1-2-3. These are not the kinds of decisions we are talking about here. Many people live lives made entirely of these pointless decisions. Many of these people can’t be trusted to make decisions passed their shoe selection in the morning. It doesn’t matter what socioeconomic background people come from. They can have all the money in the world or none at all. They can be high school graduates or have PhDs. If people can’t: Identify their options Gather relevant information Weigh the pros and cons Access the consequences Take timely action They will never consistently make decisions that move their lives forward. Being in a manager, supervisor, foreman, or executive does not make you a good decision maker. A title does not automatically make you logical, proactive, and decisive. Great decision makers are experienced, educated, and take input from the people they work with. They can explain their course of action. A decision doesn’t have to be popular, it has to be logical and intelligently thought out. Start Investing Early, Never Stop, Stay Focused (at Dallas, Texas) https://www.instagram.com/p/Bvct-QXg3w2/?utm_source=ig_tumblr_share&igshid=165l7wtv2c3ey

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These are the major economic sectors: Consumer Discretionary Consumer Staples Energy Financial Healthcare Industrial Information Technology Materials Real Estate Utilities The economy rarely drops across all sectors. There will be down sectors, there will be up sectors, and there will be sectors treading water. You will need to read the economy and research stocks to find your opportunities. Are laggard sectors down because they are in danger of implosion or is there just a rotation in the economy and that down sector happens to be out of favor at the moment. There are a variety of reasons for this to occur. This can be due to interest rates going up or down, mismanagement, warfare and conflicts, negative weather conditions (hurricanes and tornados), or government emphasis on a sector (oil and solar). These are a very short list of reasons for a sector to be in or out of favor. It will be your job to find that reason. A quick way to check sector performance is to visit Vanguard’s website (no affiliation) and look up sector ETFs. Research the two or three down sectors (there are always down sectors) and investigate the top holdings in those ETFs. Start your research there. Use the knowledge that interest rates could turn, the weather condition will pass, and energy policy could be overturned by the next administration to place yourself in a position to ride future economic winds up to new highs in your stocks. IMPORTANT!!! Do not fall into the trap of finding a sector ripe with great buys and decide to overload your portfolio. While you may look back 12 to 18 months and see how much more money you could have made, you will rarely look back at the wreckage your portfolio could have been if additional negative news, political maneuvering, or continued mismanagement drove the sector 20, 30, or even 50% lower causing you to panic and sell at precisely the wrong time. I would not recommend buying stocks at multi-year highs. I am a much bigger fan of buying low, accumulating shares, getting a great dividend yield on cost, and sitting on a position until it turns around. Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Frisco, Texas) https://www.instagram.com/p/BvXgD_-ApZo/?utm_source=ig_tumblr_share&igshid=1bi0iabfbj4m0

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How diversified is your portfolio? With the uncertainty that the middle of 2019 is likely to bring, are you well positioned to take the ups and downs? Are you invested in at least four sectors of the economy? Are you holding at least 10 stocks? Did you decide to automate your portfolio with low cost index funds? Where do you see the rest of the year going? Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/BvP5xPiHtv8/?utm_source=ig_tumblr_share&igshid=qukids7c6tq2

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Volatility will be the norm for the next two quarters of 2019. I realize we came from a very negative space in December 2018, but ten consecutive weeks in a row of positive gains is just as ridiculous as the drop. I don’t see anything currently or in the near term to justify being less than 4% from the all time high. Q2 and Q3 are going to see a ton of volatility. I see at least one 10%, possibly 15% drop, in the next 6 months. I will be buying on those big drops just like I did in the last quarter of 2018. Q4 2019 will be the interesting quarter. I don’t see two Decembers in a row being negative. Late November and December will be the months that add to your portfolio in a big way in my opinion. Right now, I am adding to my cash position. I am almost at 20%. I had several positions post 20-25% gains during the run up in the first quarter. I won’t be adding to those positions. What are you doing right now in your portfolio and where do you see the market going for the rest of 2019? Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/BvHZLiLnTJo/?utm_source=ig_tumblr_share&igshid=3vr11ci2z4xa

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What are you buying right now. Tech stocks, dividend stocks, or index funds? Something else? What sectors do you feel have the biggest upside? Are you holding more cash and waiting to see the market improve? What signs would you like to see to start buying again? (at Dallas, Texas) https://www.instagram.com/p/BvC8K5RAoqZ/?utm_source=ig_tumblr_share&igshid=1p8rxfko0zhjp

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First off, not going to college does not mean that you will not be self-educating continuously for the rest of your life. No one can stagnate intellectually and expect to have success and create wealth. The more expensive college gets, the greater likelihood of people seeking their fortunes outside the college degreed norm. The internet and social media have opened so many possibilities. The antiquated mindset that you cannot succeed in life without a college degree is completely outdated. More and more, people are leveling up in their field by spending their own money on their education. They target what they want to learn and move forward. Some of this education is free or can be learned for between $1000-$3000.00 a year depending on the person’s motivation for consuming the information and the need to implement it. Very few careers require a high-priced education. There is no need to attend a high-priced university to take entry level English literature, history, math, political science, and physical education classes. Courses can be taken at local community colleges for a fraction of the price. The student can transfer to a four-year university in year two or three and continue their education in the sciences, engineering, law, or medicine. Police officers, firemen, licensed vocational nurses, soldiers, retail managers, real estate agents, credit managers, construction foremen, banking branch managers, sales managers, and the list can go on and on. Many of these professions can be entered with little or no college hours. Once working, many organizations will pay for their employees to seek higher education. I’d rather have someone else pick up the bill than drop $500-$1500 a month paying back college debt for the next decade. Those that rise from the internet and social media will make it or not on their own talents, and not on the whims of an expensive college education, seniority, a bad boss, the office butt kisser, a corporate shuffle, recession, or other circumstance completely out of most people’s control. Companies will soon be placed in positions to come up with better incentives than ever before to compete for the best people. (at Dallas, Texas) https://www.instagram.com/p/BusA_iOAXxh/?utm_source=ig_tumblr_share&igshid=1om8cu9j5fc6z

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Sometimes people’s intelligence and influence can be a detriment. I work at place that has an association that represents employees. The President of the association understands people and knows how to work within and outside the system to get things done. He can talk to new employees as well as state and federal officials with the same ease. The association has a Facebook page and he is one of the administrators. There are over 1000 members so when he posts something there, the influence that he has lends additional weight to those reading what he posts. In his most recent post, he makes everyone aware that he is not happy with the deferred plans that we are provided. Of course, I make him aware that our plans are very flexible and even allow employees to invest in individual stocks as well as low cost funds outside of what the company offers. My wife’s deferred plan does not offer this versatility. She has only high cost funds and 2-3 index funds. It’s bad so I know the difference. He replies with a convoluted comment about limited options, something about an independent investor cannot manage the account, and ends it informing that it is his job to make the money and someone else’s job to invest it. I tried to educate him further on what he actually could do but got nowhere. Others in the group began jumping on the bandwagon who also had no idea what they were talking and I was done. I say all this to drive the point that no matter how educated, experienced, or knowledgeable you are in a particular field or profession, if investing for your future is not a priority, be ready to use that education, experience, and knowledge in your 60’s and 70’s. That failure to educate yourself on investing will lead you to have to continue to produce income at precisely the time you should begin accessing the funds in your portfolio. Don’t be the smartest guy in the room who is also the poorest. How would you rate your deferred compensation plans? Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/BupPw20AJ1X/?utm_source=ig_tumblr_share&igshid=11qazzacneudv

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This is what one focused and motivated couple can accomplish when they decide that their financial future is their #1 priority. Let’s say that a couple in their mid-20’s meet and marry. They agree that securing their financial future is their #1 priority. They are willing to wait to have kids. They are fine with driving used cars and buying an affordable house in a good neighborhood, not the very best. They agree to go out to fine dinners for special occasions only. They save for two one-week vacations and pay cash. They both work at jobs that offer 401ks and have decided that they will max out their accounts for the first ten years. They will invest in index funds to keep costs down and they are focusing on averaging 7% per year over those 10 years. They will invest $19,000 each annually for a total of $38,000 over the next 10 years. This is what this focused and motivated couple can accumulate during that time. 10 years - $550,000. This couple would have over half a million dollars saved on average in just ten years. They would be in their mid-30’s and by no means be old. In addition, they would have a house that was appreciating, likely at 3% annually, and they would have been paying down their mortgage leaving the couple with solid equity in their house. If they never added another dime and they continued to average 7% a year. They would accumulate: 20 years - $1,100,000 30 years - $2,200,000 Again, this would be if they never added another dime to the account. What if only one of them contributed the max in their 401k after the initial 10 years. That’s $19,000 instead of $38,000. Kids, a bigger house, and other expenses would likely cause them to spend more. 20 years - $1,400,000 30 years - $3,000,000 Are you focused enough to sacrifice for just ten years to secure your financial future? Are you maxing out your tax deferred plans? Are you able to possibly save even more? Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/Bum0oq8AY9e/?utm_source=ig_tumblr_share&igshid=1p5uqtbbd6uq1

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I can’t count the number of times I’ve been in a public setting listening to people speak and say absolutely nothing. They talk about reality tv, how a food order was taken, the length of time it took to get a drink, how they weren’t thanked, what time they got up, what time they went to sleep, what they ate, and on and on. Of course, not every spoken word has to have the gravity of the Gettysburg Address. It would be nice if more people exercised their intellect in a social setting though. Injecting conversations about books, personal finance, travel, real estate, charity, physical fitness, business, and the stock market would likely make an outing more memorable than the latest housewife reality tv drama or the latest scores. Absolutely, people get uncomfortable having real conversations. Comfort is overrated. Life is short and there are hundreds of topics that can be discussed intelligently with other bright people of differing ideas. Likely, the discomfort comes when someone speaks in platitudes with no original thought to back it up. People tend to be on the safe side of conversations, usually the consensus of the room to make everyone happy. Eventually, you come to believe and regurgitate those simple platitudes because it makes life easier. Do you really need the approval of the people around you that much? Will disagreeing with them lead to you being uninvited to the next backyard BBQ or the next trip to the mall. Is that really how you want to live your life? I know people that lead these kinds of lives. You can see them wince when you ask them what they think, and they don’t know where you stand on the subject at hand. You don't have to find people you agree with on every subject. It would be nice to be able to have intelligent conversations where thought out opinions can be exchanged without the interjection of the latest trilogy or screaming housewife show. If the people around you back away because of a philosophical disagreement, so what. You now know where you really stand with them instead of living with blinders and noise cancelling headphones on. Do you know people like this? Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/BuZ3gTsgc90/?utm_source=ig_tumblr_share&igshid=12y8kb5gjj6cw

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But I have a Great Pension. I can’t tell you how absolutely flawed that thinking is in this modern world. The last thing you want to find out less than 5 years from retirement is that your pension was “mishandled” for several years and the benefits that you thought were rock solid are now gone. Speaking from experience, I was supposed to be the recipient of a very good pension at the organization I had already spent 19 years. My goal was to retire at 25 years. The rumblings began at about Year 15 year when the organization began changing the pension for new hires. That began to signal the coming changes for those willing to listen. Those changes eventually came to all employees and those that hadn’t began preparing themselves began to scramble to save more, add more years of service, and to hold off on major purchases. The forward thinkers had been saving 15-25% of their pay in their tax deferred accounts from Day One and continued about their business with no change to their lifestyle. They were the “what if” people, the planners, and the anything can change people. There was also a group that had not saved much at all. They lived their lives saving minimal amounts and taking out loans from the little they had for unnecessary reasons. Many had to stay several additional years and attempted to make up for lost time maxing out their accounts whenever they could. Their spouses had to add years to their time in the workforce as well to make up for the financial deficit. If you are under 30 years of age and work at a location that still offers a pension, good for you. The best advice you will ever get will be to treat your financial future as though there is no pension. Don’t fall for the fallacy that retirement benefits cannot change, cannot be cut, or cannot be lost. Save and invest like the sky is always falling and you will be about to retire comfortably no matter what occurs outside of your control. Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/BuXNnLkAP6c/?utm_source=ig_tumblr_share&igshid=xdf4nyvmwzk3

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Assuming you will “grow” into your lifestyle with promotions, raises, and bonuses that may never come. Don’t put yourself in a situation where you may have to sell something to get out from under debt because your lifestyle stayed ahead of your income for too long. Many times, people get caught in the cycle of buying and spending and telling themselves that the next pay raise or bonus will take care of that expense. The next thing you know, you are leveraging raises, promotions, and bonuses for the next 2-5 years. How long will it take for this type of lifestyle to come crashing down. What will happened when that first HVAC goes out, that first water heater starts leaking, or that radiator blows just out of warranty. With no savings and no emergency fund, credit cards will likely be the easy and most expensive answer. Everyone wants to have the nice things in life, but nothing will stall creating wealth and having financial freedom more than an overleveraged lifestyle. What would happen if you just stopped? Stopped buying. Stopped spending. Stopped looking for fulfillment outside of what you can afford. Would you lose friends? Would a divorce be in the cards? How happy can you be or how happy can you make someone else when you are miserable and worried about every knock on the door and every phone call you receive. Change is always a difficult thing. Begin correcting past mistakes now before the possibility of a large unexpected expense becomes a reality. No one can go years without that unexpected expense. Don’t look at your credit cards as that emergency fund. The hole you are digging for yourself will only get deeper. Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/BuUmEdxgzIw/?utm_source=ig_tumblr_share&igshid=qupzhvbh91fj

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Blaming We all do it. If it wasn’t for your family, friends, the government, or your boss, we wouldn’t be in the predicament we now find ourselves in. No one is perfect and no one has life dialed in 100% of the time. The problem is that it can’t be the other political party who is to blame all the time. It can’t be your in-laws’ fault or your flaky brother’s fault all the time either. That demanding boss also has someone to answer to as well and our personal problems are not his problems. When we are constantly finding fault in others for our actions, who is the real problem? It’s so much easier to point and say that’s what’s at fault, not me. When you can’t find the money to invest because you over spend, who is at fault. When interest rates go up making that house that was already at the top of your budget more expense, who is at fault. When you have a medical emergency and there is no emergency fund for that eventuality, who is at fault. Start looking in the mirror for answers and not the people or institutions around you. Don’t be a part of that group that fails to self-assess when things go wrong. The fault can’t always lie outside of your control. If you were never taught to budget or understand personal finance, pick up a book. There are hundreds if not thousands of online resources. The days of saying you didn’t know have been gone for almost two decades. There is so much free information out there for anyone serious about bettering their financial situation. Go ahead and keep blaming. Go ahead and keep looking outside yourself. You don’t make enough money. What are you bringing to the table? Why shouldn’t someone pay you the minimum they can? Is your skillset unique or can someone do your job with minimal training? If you are skilled, why don’t you go somewhere you will be valued and paid for that knowledge. The days of staying at a job for 30 years are done. Blaze your own path. Reassess regularly and move forward. Blaming others will do you no good. Follow @crushinginvesting Follow @crushinginvesting Follow @crushinginvesting (at Dallas, Texas) https://www.instagram.com/p/BuSQuu5gRVV/?utm_source=ig_tumblr_share&igshid=6axzb4c4lrzs