October has been a busy month. With starting a new job, researching some rental properties I have been considering buying, and buying/selling stocks there has not been much time for me to post updates here. This morning I wanted to share something with you guys that I believe is timeless advice for anyone.
For the record, I don’t watch CNBC or any of the other useless information that passes for financial journalism these days. However, while sitting down this morning with a cup of coffee and checking on some of my watch list stocks on Google finance I did come across this gem. It’s from the Jedi master investment guru himself, Warren Buffett. Take a minute and read what he had to say this morning.
Recently I’ve done a lot of thinking about utilizing a sell strategy to optimize ones investment account. In this post I attempted to get some feedback from you guys on when it is a good time to sell. There were a lot of insightful comments and I appreciate you guys sharing your thoughts with me. The following sell does not represent any of the reasons we discussed in the comment section. I made this sell for one simple reason: free up cash for an upcoming real estate purchase. There was nothing wrong with the company nor was I attempting to use the funds to purchase other stocks (altough I had been thinking about it). Just moving funds from one type of investment to another.
SOLD: AT&T
I purchased AT&T in two lots:
200 shares @28.47 in March of 2011
100 shares @ 29.89 in July of 2011
Total funds used for purchase: 8683.00
On Wednesday I sold 300 shares at 38.25 for a total of 11475.00. Add to this dividends of 697.00 and I received a total return from AT&T of 12172.00 or 28.67% 40.18% This is a gross return. I have not included trading fees or taxes. As I mentioned before, the only reason I sold AT&T was to free funds for another investment. I’ve been happy with T and will most likely add it back to my portfolio, but not at todays levels. It will take another dip before I would buy again.
Wish there was more I could tell you guys about my decision to sell. It’s cut and dry. Let’s hope that I can get as good a return off the real estate as I have AT&T. I see a lot of future posts coming from the real estate investment. Wish me luck.
After watching this I had to get the book as well. The question of how much is enough has been on my mind since I started reconstructing my financial life. The idea of early retirement really brings up the question of what is enough, because it is imperative that one acquire enough assets that can support oneself after retirement. Everyone will have a different dollar amount of what constitutes enough. What I want to focus on in this post is how do you decide what your enough point is??
The question itself begins with an assumption that there is such a thing as enough. I’m sure some would contest this point, especially when talking about money, but I think with further investigation most would agree that there is such a thing as enough and it is of no small significance that we attempt to answer what it is.
It was from my attempts at answering the enough question that I decided to leave a high paying job with great benefits to return home. Each month I saw this large amount of money being deposited into my account and realized that I had more than enough. Sure, I could have stayed and continued to accumulate assets at a fast pace, but our financial lives and goals do not exist in a vacuum, they are a part of larger whole. Focusing on a part at the expense of the whole seemed a flawed way of doing things.
When I approach my investing activity how much is enough is always in the background. I’m not out trying to beat the markets or make a killing off of them. My goals are simple; preserve capital, achieve a return on capital that outpaces inflation and gives me a risk premium (typically 6%), and a steadily increasing cash flow that will allow me to be independent of paid employment for my living expenses (this is why I like dividend paying stocks and starting to consider rental property). As you can see these are simple goals and are really not that difficult to achieve once you have structured your financial life to reflect those values. This saves me a lot of emotional turmoil in stressing over whether I could be getting a higher total return on this or that investment. Sure, I don’t want to leave money on the table, but I know what my enough point is and there is little need in chasing after more.
Looking at how much is needed for retirement I like to focus on what my expenses are rather than the total sum needed to fund those expenses. The two are coupled tightly together, but looking at what I need/want and then working backwards as to what is needed to cover those needs and wants is much more relative to my situation. It avoids the irksome amounts you find when using the retirement calculators that state a couple of million dollars is needed to fund your retirement or the 80% of current income rule. Pleeease. As Jack Nicholson said in the movie As Good as it Gets: “…sell crazy someplace else. We’re all stocked up here.”
If you have an enough point you will know when you can retire. Period. It’s a question of what it takes to make you happy in this life. Don’t let the absolute numbers scare you. They are all relative and reflect the diversity of human capacity for want, which in the developed world often seems boundless.
A classic example of enough.
What you see above is a picture of The Stoic with his new love. Her name is Simone, named after the French philosopher Simone de Beauvoir. We met two months ago and have enjoyed a thrilling relationship since.
I’m new to the world of riding and I have learned that there are two types of riders, those who own Harleys and those who do not. I fall into the latter group, but my father finds himself in the former. He is trying diligently to convert me. I’m holding out. Simone pleads with me, ” Am I not enough? What more do you need? Have we not spent many miles roaming the countryside together “sucking the marrow out of life” in a way that would make Thoreau proud? Does my single cylinder engine not provide you with miles and miles of wandering bliss while costing you little? Dear Stoic, Am I not enough for you?”
And I have to answer, to the chagrin of many a dedicated Harley owner, yes Simone you are indeed more than enough…
Hard to believe it is October already. Wow, I’ve been back just over four months. I love this time of year. The smell, the colors, the change in the way the sun shines. Small changes in nature that when you stop to recognize remind you that it is really cool to be alive. Yes, cool indeed…
It is looking like I will finally be employed once again. My four-month break has been nice and I can tell you that when it comes time to retire I will have no problem with it. I have mixed feelings on going back to work. I enjoy being off and having my time to do what I want; it’s really nice. On the other hand I’m drawing down on my savings and that is not good. So I’m excited to begin adding to my savings once again.
I’m also looking at real estate once again. When I mentioned this before here many of you thought it would be a bad idea while overseas, an objection that was certainly valid. Now that I’m back I’m thinking of purchasing a duplex or fourplex. This would allow me to reduce my living expenses by living in one side and start a side income by renting the other. The ones I’m looking at would be cash deals and are in need of rehab. It would certainly require me to learn a new set of skill, but a challenge I’m up for. If it goes through I will be sure to include the project in this blog from start to finish and even include some pictures for your viewing enjoyment. 😉
October has the potential to be a really exciting months. I’m looking forward to it!
The Stoic Investor 