BennyEast.Com/Blog The official blog of Kenny West

Next Moves

So... It's interesting, most everyone I know is all like, married, or with someone and it's super serious... Or they have kids... And like careers, and basically they are all settled for life.

And then there's me.

So, obviously my plan is to continue with the investing stuff and the music stuff and the book stuff... But the IT stuff can continue too.  The thing about IT is that it's a pretty in demand field.  And each time  I browse any of the online job places there's always plenty of positions that, to me, at this point with my IT experience... I could do any of that stuff in my sleep.  Would I be thrilled to do it?  Or find it SUPER amazingly awesome?  Eh.  Probably not.  But it would be a paycheck.

It's my plan B if the music, books, investing, whatever, stuff never happens.

IT to me is cakewalk.  I could do it in the dark, in my sleep.

It's just not what I absolutely love doing.

Some people find a paycheck along with their calling... Just like some people find love...

Others just kind of have what they have.

So at this point, I'm not so much planning any next moves as just seeing what happens.

My thoughts are possibly that I'll rent out, or sell this house...

Then I'll maybe just apply for a job and get an apartment in a new city.  Just try cities that I've never lived in before...

Seattle, or Portland, Oregon...

Or maybe Austin, Texas, or Asheville, NC...

Just see how that goes for a year.

If I rented out this house and had income coming in to me monthly to cover my rent at a place where I lived I could then basically use my entire paycheck to go out on the town more often which would significantly increase my odds of meeting someone special... And eventually that whole settling down/marriage thing with kids like everyone else seems to have.

Then I'd have like... Kind of made a life with direction.

I can say, "This is where I plan to stay because my significant other and I met here, or my significant other has family here so we want to settle down here and buy a house and raise kids here."

You know, that sort of thing.

I probably won't rent out this house though, I'll probably sell it and then put the money into income generating assets (REITs Bond funds Dividend stocks...) along with what I already have invested.  Then that can supplement my income.  My current investments are actually already supplementing some of my expenses.  It's cool to see that in action.

I almost made one large trade this week, but the thing about the large trades is you have to watch them.  Just like you have to watch work study students... Obviously at my job I can't choose.  It's my job to do the work coming in, but during the semester we also have students working for us that I have to supervise.... Just can't do two things at the same time.

And to have 50 grand in on a single stock and not be able to watch it?  Not gonna happen.

So, maybe over the summer I'll do some more day/swing trades...

The thing is though, it's fine, because my longer term trades work too, I just put less in, and let it bounce up and down until it hits a price I like and then sell it.  Here's the thing about that, if you hold your shares over a year, not only do you get to collect dividends (as long as the stock pays a dividend) you also get to pay less taxes on your gains.  So, if you hold a stock for only a few weeks... or even a few hours, you pay a LOT more taxes than if you hold for 1 year and 1 day.

So, if I keep with my old strategy and split up 50 grand into 50 different socks and then buy and sell one stock a week... but hold those stocks for a year... Effectively ladder the stocks, I could technical make a similar amount of money while diversifying the risk, and not having to sit and babysit the stock all day.  It's more like a garden, you check it, and wait for it to ripen up, then you pick the stock when it's ready to be picked...

That's what I have been doing and then I also get paid dividends to wait for the stock to swing up to a price that I like.

Less taxes, less risk...

The thing about putting ALL your eggs in one stock too even if it's only for a few hours, is if you need that money, you can't get at it.

If you put, say 50 grand into 50 different stocks, and immediately 5 of them go up... And you need like 3 grand for emergency expenses you can sell off those gains right away and then use that money for your expenses while you let the other stocks do their thing... Generate income, and eventually return to the green where you can then sell them.

Yes you CAN sell stocks at a loss, but it's like my rule number one.

The last stock I sold for a loss was Dryships in the beginning of 2015.  I traded out of it and sold a lot of little gains trades to match my loss.

That was pretty much a 100 percent loss.  I bought that as one of my very first stocks back when I first started trading.

Live and learn.

Anyways... so yeah.  That's the power of diversifying.  You can take even a 100 percent loss for the year and still make money.  IN 2015 even though I lost like 98 percent on Dryships shares from my original purchase price... I still made money because I bought and held and sold a month later, 6 months later, 10 months later on 20 other stocks to not only cancel out the loss but to actually surpass it.

I also made money on my dividends.  And I also got a tax loss use of those Dryships shares.  So I paid less taxes anyways.

Anyways so far this year I have a fair amount of gains.  I have one stock that's in that significant unrealized loss area.  I could sell it at any time... But I'm waiting to see what happens with oil prices and their bankruptcy status.

I've already traded out of it and surpassed the loss in gains last year.  So if I do sell it, it's just another one for the pile.

Right now my income is still fairly low... But to be fair about 2 thirds of my money is in cash.

The reason for this is because I'm still finishing up distributing money from my mom's stuff, and I still have to wait and see how much taxes will need to be paid.  After that?  It's time to just take the rest of it and invest it.

When I do that, my investment income is going to jump up to at least 3 times what it is now.  Probably more than that since I know a LOT more now about investing as some of the stocks I'm still in on were bought YEARS ago and I just kind of kept them.  One of them is a stock I've own nearly since the beginning.  It pays a fairly low dividend... I could actually sell it for a gain now... But, in recent years their cashflow and profits have gone from meager to pretty darn good.  So, I plan to hold those shares for now because they seem to have a pretty solid business plan going forward.  Took them a while to really get of the ground but, they're cooking now.  SO, I'm going to hold those shares even though the dividend payout is lower than I 'd like it to be.

This is why my dividend income will most likely more than triple or possibly be 5 or 10 fold in the next year as I start to invest this cash that I have sitting.

By the way cash makes next to nothing.  I've had a savings account with like 100 grand in it.... It makes like 1 dollar a month.

And that bank told me I'm getting the "preferred account holder rate for people with high balances".

1 dollar a month is preferred?  Sounds like the banks are making out pretty well.

If the bank is paying me a dollar a month on 100k...

I bet they are loaning that money out at a pretty penny and making a good profit off the spread.

Yep, just looked up the rate for a mortgage from the same bank... 4.1 percent.

That means they are paying me 1 dollar a month on my 100k that I have in a savings account, or 12 dollars a year... And that same 100k they loaned out to someone to buy a house... and are charging them 4k a year.

Obviously they have other administrative costs, paying employees, cost of originating the mortgage, mortgages that go bad... Electricity and bricks and mortar...

But, I'm going to guess they are still making a fair profit off that 3988 dollars they are making each year from my 100k I have.

But here's the thing about invested money, for example AT&T and Verizon both are paying dividends that if you had 100k in shares with either one... You'd be making over 4500 bucks in income from the stock alone.

It goes up and down and there's risk... But 12 bucks from a savings account, versus 4500 alone in just dividends from AT&T?

And that's if you just buy the shares and hold them.  You don't even have to make active trades.  You just sit, and hold your AT&T shares and every 3 months you get like 1200 bucks.  Or whatever it is.  Right now their dividend is 49 cents a share.  Last year it was 48 cents.  The year before it was 47 cents.

So not only are you getting paid that 4500 bucks to sit on your ass... Next year, you'll get 1 cent more per share per 90 days.

SO if you buy, lets say, 2000 shares for example and you get 49 cents a share right now per 90 days... That's 980 bucks every 3 months in your account.  Next year should they push that dividend to 50 cents?  Now every 3 months you get a 20 dollar raise.  You're now making 1000 dollars every 3 months.

You could literally just sit on a beach all day and not even look at your trading account... And just hold those shares... and every 3 months you'd have a grand.

Obviously AT&T COULD go belly up... Just look at JC Penny right now.

This is why you diversify, rebalance quarterly, and look for the strongest dividend payers and get rid of your losses eventually and take tax losses.

I've talked about this stuff over and over again.

So over the course of the next 12 months, it's going to be happening... much more than it has.  I'm in right now on about 54 stocks... I plan to boost that over the next year to probably somewhere between 100 and 150 different holdings that all pay income.

Then, I'll just let it ride and rebalance as needed.

The day trade model might be something I do in the future when I can sit there and actually babysit the stock, but when I have other things I have to do with my days, I can't actually tend to the micro movements of a stock price.  For now, I'm going to go more with macro trends and smaller amounts of invested capital in any individual stock.  Clip my cash gains and then zero out my losses... And let the dividends keep coming in as per usual.  Because most of them, even if I do nothing, are consecutive dividend increasing stocks, so as the years go by and I simply hold my shares, most of them will continue to increase their dividends year over year.

As far as anything else in life?  I have no clue.  Love seems to be completely hopeless.  SO, I'll just keep focusing on this long term invested divided generating portfolio of mine and continue to grow that year over year.