Category Archives: Investing

Wikinvest / SigFig Teaches Me About Investing

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Incredibly enough, I’ve added nearly $150k to my investment accounts across my IRAs, 401ks, and taxable accounts. While I’m still not sure if taking the “select companies” vs index fund route makes a lot of sense, I know I end up putting more money into investments when I feel like I have some control over the fate of my networth, and at the very least, an opportunity to learn more about business and how public markets work.

Of all the finance sites I use, my favorite is Wikinvest (soon to be SigFig, which I received an Alpha invite to this week.) Wikinvest is awesome because, as seen above, it offers a really easy way to track your stocks (and ETFs), including information on P/E, Rev Growth, P/S, etc. These are probably fairly basic things to look at when deciding to purchase a stock. Above, you will see the six stocks I own with the lowest P/Es (and how many shares I own of each).

It’s fun to look at how AAPL, while $493.42 a share, still has a relatively low P/E and its revenue growth was 67.6%! Now, I wish there was more data here regarding what that revenue growth represents (Qtr over Qtr? YoY?) but regardless, this data shows that AAPL stock, despite being pricey per share, may be worth a lot more than some other stocks. I’m still concerned AAPL will lose value (can it sustain such growth) but seeing that it made $3.60 per share vs say, GE’s $1.35 per share makes me feel confident in a long-term AAPL investment. As you can see, I’ve made $15k on AAPL (on paper) with just 79.94 shares.

Let’s sort by my stocks owned by P/E in the other direction. AMZN has the highest P/E — 135! Compared to AAPL, it’s Revenue Growth was only 40.6%. Even Google, which has a P/E of 20.50 (not too bad, but still higher than AAPL) only increased 29.3%. But it also has a P/S of $5.20, which is better than AAPL. This is where my knowledge lacks and I don’t fully understand the factors which make that possible, or our P/S is determined. More research on my end is required.

In a related note, I am annoyed that I have .44 shares of FTR. That happened when VZ split  with them. .44 shares is pointless, to sell them will cost $8 (more than they are worth) and they just clutter up my account. Looking at FTR, however, they seem to have a 79.7% revenue growth, I wonder if I should just purchase $100 worth of FTR shares and see if they can run up enough where I can sell the stock so it doesn’t clutter my portfolio and I don’t lose $8 on it.

In case you’re wondering, in my taxable account, here are the stocks and ETFs which have been performing best so far:

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Selling GLD *Before* My Profits Are Too High

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I’m not a day trader, or even a month trader. But I’ve started to realize if I want my portfolio to have any serious upside, I need to rebalance every now and again. I’ve sold off most of my cleantech investments including PBD, ENOC, and COMV, and put that money into a mix of large-cap tech companies (AAPL, CSCO), international funds (HAO, EWZ, EDIV), and food (MCD, CBOU, SBUX, WFM.)

Up until today, I’ve only sold small cap losses that seem to be destined for failure or, at best, growth after years of retreating even further, while that money could be in a large-cap dividend stock earning income. Today, however, I decided to sell one ETF where I have turned a profit.

So long GLD, at least from my taxable account. After making an early $500 investment in GLD I found out that gold, even in an ETF, is taxed at a collectors rate. That means 28% capital gains tax. Instead of letting my $500 sit in my taxable account (it is at about $900 now) I’ve decided to sell the 5 shares and move my investments into other funds that belong in my taxable accounts. And after today’s AAPL earnings news, I’m tempted to put the $900 into purchasing two more shares of the company that made the computer I’m currently writing on and the phone I’ll be making calls on in a few minutes. I only own 70-some odd shares of AAPL stock, my goal is to get to 100 shares before the company hits $500 a share. Since AAPL doesn’t pay dividends, this is the perfect company to hold in my taxable accounts.

Meanwhile, I invest regularly in GLD in my Roth IRA account. It seems GLD is fairly expensive right now (afterall, I nearly doubled my initial investment from just a few years ago) so I might hold on aggressively investing in it. My Roth account is my “play” account, since I can only put $5k in it per year. I put that mostly into high-dividend ETFs and rebalance by adding more funds in new sectors the following year. For instance, this year I’ve already invested about $2k into XLE (oil) and XRT (retail companies) as well as GLD. I only have $3k left for my Roth this year, but I plan to start contributing to my 401k (no match) soon, and trying to max that out this year. I’m hoping for a significant raise, which in the ideal world will be enough to cover maxing out my 401k without noticing those contributions too much, but I’m not sure yet if that’s actually going to happen. Fingers crossed.

In the meantime, I have $900 liquid that I can invest somewhere. Oh goody. I think it’s pretty crazy that I currently have $149339.25 in my investment accounts right now, not counting about $10k liquid (though taxes are going to eat some of that up I think.) Even though $150k doesn’t seem like a lot of money, I’m proud that in the last 6 years since I’ve graduated college I’ve been able to go from $5k in savings to over $160k. Still pushing for that $200k this year — if the economy decides to recover and I manage a sizable raise it will help lift me up there, otherwise I’ll probably end up at $180k for the year. Really would like to see that happen, I’m so set on entering my 30s with $250k in the bank, I’ll be pretty peeved at myself if I don’t make that goal.

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How to Convert a Traditional IRA to ROTH IRA?

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I’m currently trying to figure out how to convert my traditional IRA to a ROTH IRA. The only reason I contributed to a traditional IRA for the last two years was because I thought each year my income would exceed the income limits for a ROTH IRA.

Well, it turns out the income limits for a traditional IRA are lower than those for a ROTH contribution. Thus, I’ve invested $10,000 into a traditional IRA for the last two years and put post-tax money into the account, and will be paying tax when I retire later in life and take the money out of the account. I think that’s probably a bad idea, so I want to convert the $10k to a Roth.

The question I have is… how do I do that? Sharebuilder has a form for this, but it seems to assume you put the funds in pre-tax. I’ve heard if you paid tax of money in the account already, then you only will have to pay tax on the interest in a conversion. Given I still have 30+ years before retirement, it probably makes sense to convert the funds now, especially if I only have to pay tax on the $1k.

Do any of you out there in cyberland know how I can do this without paying tax on the entire $11k in this account?

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Get Rid of My Emergency Fund? Everyone Says “No” — I still think yes.

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My earlier post on how I want to get rid of my emergency fund and instead invest the money into stocks led to a few commenters practically saying that’s the dumbest idea in the world — after all, an emergency fund is for, well, emergencies, and should be available in case something bad happens.

I don’t think I’d want to put the entire $8k into stocks, but at .35% or even 1% interest, it’s just a wasted investment opportunity, esp with the market still probably at a lowish point. I could be wrong and the market could collapse again at any moment, but I’m confident that I can find a way to earn enough per month to pay my basic necessities (probably $1000 / month total including rent if I get desperate and need to cut back.)

This is why I prefer to invest with my savings then buy a house/condo. My rent is cheap and if it so happens I can’t pay rent, it would really suck, I’d have to move out and crash with a friend or find an even cheaper place to live, but I wouldn’t loose all the money I invested in a house, paying off the giant gobs of interest that you have to pay to afford a house in the first place.

Now, the shit could hit the fan and all stocks could drop to $0, and I’d be poor with no emergency fund, but chances are that isn’t going to happen. Worst case the market goes down for a while and I end up losing money instead of making money. Best (reasonable) case that $8000 earns 10% interest in the stock market and in one year I have $8800 plus dividends.

Emergency funds are important if you don’t have a back up plan, or you have kids and other major responsibilities. I know I could manage to get enough freelance work to cover my basic living expenses month to month — because I am focused on keeping those expenses low. Without a mortgage, I think it’s more reasonable to live without an emergency fund. Just don’t spend that money on random stuff, invest it in something you could sell if you needed to, even if it loses some of its value and you have to pull it out for less than you put in. I’m probably going to cancel my CD this week with the $8k, but I haven’t fully decided what to do with the cash yet. At least I can save $2k per month if needed, so I could quickly build up my emergency fund again as long as remain employed. I guess if I get hit by a car and can’t work and lose my health insurance I’d be screwed, but even with a sizable emergency fund, $8k isn’t exactly going to cover medical bills like that anyway, I’d be better off taking my chances and trying to turn that $8k into more money before I need to use it for an emergency.

 

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My IRA Breakdown

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I’ve received a few emails lately at hereverycentcounts@yahoo.com asking what the breakdown is of my Sharebuilder IRA that I started last year. While my taxable account is focused on individual shares, I require all funds that go into my IRA to be index funds or ETFs for long-term diversification.

Account Total: $9281.23 (+$1,021 (14.19%))

AGQ: [Shares: 4.65 | Loss $216.34 -43.27% ] — silver leveraged, selling
DVY: [Shares: 28.8984 | +$194.51 +14.73%] — dividend etf
GLD:   [Shares: 8.25 | +$403.26 +40.33%] — gold w/ collectible tax
SDY:   [Shares: 47.76 | +$193.89 +8.28%] — dividend etf
SLV:   [Shares: 26.71 | +$ 348.39 +69.68%] — silver w/ collectible tax
VNQ:   [Shares: 10.40 | +$403.26 +9.19%] — REIT tax
XRT:   [Shares: 10.40 | +$48.67 +40.33%] — retail ETF, prob should be in taxable account, dividend is not too high, but holding long

What do you hold in your IRA?

 

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