Thursday, May 21, 2015

Be Awesome

After a slow start, our 2 3/4 year old son's talking skills have been growing exponentially the past few months.   He surprises us with new vocabulary words every day.   Recently, he started exclaiming "Be awesome!" out of the blue.   This isn't a phrase used in our house.  And he watches very little TV.   So we don't know from where he learned it.

He says, "Be awesome!" with so much enthusiasm that it got me thinking.  Wouldn't it be great if "be awesome" was the inspiration by which I lived.  Too often, it's too easy to get caught up in daily life demands and lose the inspirational elements.

So the next time he said "Be awesome!," I came right back with my own, "Be awesome!"  Without hesitation, our son responded, "We are!"

"Yes, you're right," I thought.    And I need to keep remembering that we are :-)

For more on Crossing Generations, check back Thursdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2015 Achievement Catalyst, LLC

Wednesday, April 15, 2015


I usually file my taxes in the summer or later since we don't get a refund.  By managing my withholding and estimated tax payments, I usually am pretty close to owing just a little on April 15th.   This year, however, we have large refunds coming from both the federal and state returns, since I am unable to adjust the withholding from my income.

If the past is a predictor, my state refunds will come first, in about 2-4 weeks.   My federal refund will come later, in about 6-8 weeks.

I still do my taxes by pen and paper, with the help of an excel spreadsheet, which gives me an in depth understanding of how and why I pay the amount of tax that I do.   My conclusion is that federal taxes are going up and getting more complicated, mainly due to the Obamacare tax changes that were implemented in 2014.   Our resident state taxes are going down, and keeping the same complexity.   Our non-resident state taxes are stable, with complexity increasing slightly.  

Although, I am still competent at doing our taxes by hand, I expect I will need to use tax software if the complexity or the amount of tax law changes continues to increase.  This has caused me to consider simplifying our retirement finances, which should simplify our income tax filing.   For example, going from 7 part time jobs to no part time jobs has already been a simplifying event.  There are probably several more that I can do over the next few years.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2015 Achievement Catalyst, LLC

Wednesday, April 01, 2015

Preparing for a Market Decline

"Buy when there's blood in the streets, even if the blood is your own." ~ Baron Rothschild

It is very hard for me to put additional funds in the stock market during a market decline.  Instead of buying, I become conservative and worry about how much my current investments have fallen.  By the time, the market recovers, I've missed my opportunity to buy stocks at a discount.

At this time, I've decided to prepare myself to buy into the next decline and build our core investments.  First,  I have designed  strategy using 4-6 commission free ETFs. Second, I have created a list of dividend paying stocks to buy in addition to the ETFs.  Third, I've identified cash funds that can be invested for 3-5 years without causing financial hardship if the investments decline.

I'll learn how much this preparation helps when the next stock market decline occurs.

For more on  The Practice of Personal Finance, check back Wednesdays for  a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2015 Achievement Catalyst, LLC

Saturday, March 14, 2015

Happy Pi Day

Today is special Pi Day.  At 9:26:53 the date and time date/time 3/14/15 9:26:53 will be equal to first 10 digits of Pi, 3.141592653  This only happen once every 100 years.

For more on Reflections and Musings, check back on Saturdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2015 Achievement Catalyst, LLC

Sunday, March 01, 2015

Changing Core Investments

Before I retired, my core investments to generate income were my job and my company stock.   After I retired, my company stock continued to be a core investment, accounting for 33-50% of our net worth.  Over the past two years, I have been selling down the percentage we have in company stock toward a target of 10-15%, which will be achieved in 2017.

As I was reducing our company stock exposure, I realized we need to replace my company stock with another core investment.   I've looked at a few options: 1) advisor managed accounts;  2) self directed stock selection; and 3) index ETF portfolios.

I've been testing advisor managed accounts as a core investment since late 2012.  During that time, I have been happy with the results since the returns have been positive in the double digit range.  So I've been able to rationalize the 1% wrap fee as equivalent to the expenses of an actively managed mutual fund.   Of course, I realize that the 1% would have been an additional loss if the market had declined.  Also, none of the manage accounts exceeded the benchmark returns.  Thus, I am open to considering other options which may be lower cost.  For now, I will keep the managed accounts I have mainly because I like the stocks that have been selected.

Since mid 2012,  I've been experimenting with investing in individual stocks.  I've tried a long/short strategy, a sector (biotech, energy or materials) focused strategy, and a dividend stock selection strategy.  The main issue with the long/short and sector strategies is insufficient time and expertise to continually research the hundreds of stocks that can be considered for each strategy.  Also, I have a tough time deciding when to sell a stock, either for a gain or to cut losses.  The dividend stock strategy appears to be a good approach, since the stocks tend to from good companies and the dividend will offset short term price declines.  In addition, the plan is to keep the stock in perpetuity for the dividend, and therefore would only be sold due to a catastrophic event.  I continue to slowly build a dividend stock portfolio.

In 2013, I began to build a ETF investment portfolio based on low cost, commission free index ETFs. Unfortunately, I sold out of most of the ETFs a in the bounce shortly after October 2014 correction since I expected a further decline.   Up until now, I've been using the commission free ETFs for a trading strategy.  So the next step is to test using commission free index ETFs as a core investment portfolio.  I will be implementing the ETF strategy this month in our IRA accounts.

At this point, the index ETF strategy feels like a good option for the main core investment strategy.   However, I will run the test to determine if I will be comfortable keeping a significant amount of our investment funds in this strategy.

For more on  New Beginnings, check on Sundays for another segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2015 Achievement Catalyst, LLC

Saturday, February 28, 2015

The Crash that Never Came

Since the bear market of 08/09, I've been extremely cautious and kept most of our investment funds in cash or cash equivalents.  During that time, I've been expecting a significant correction of more than 20%.  Unequivocally, I've been wrong.   With the exception of an almost 20% drop in the summer of 2011, the stock market hasn't been close to another bear market since 08/09, despite many experts forecasting near term market collapses.

Going forward, I continue to be cautious.   I still think that bear market is coming soon.   However, for now, it seems the market trend is up.  In hindsight, my biggest investing mistake was to take profits too early for the stocks I did buy.   So,  I will start keeping my winning stock picks longer, instead of taking only 20, 30 or 50% profits.  My second biggest mistake was not selling losing stocks soon enough.  I need to start cutting losses sooner for my poor stock picks, before the price drops over 20%.  

Finally, I'm preparing myself to make some selective purchases, when the next bear market does occur.  

For more  Reflections and Musings, check on Saturdays for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2015 Achievement Catalyst, LLC

Monday, January 26, 2015

Creating Steady Sources of Income in Retirement

Over the past year, I realized one of the deficiencies of my retirement finances: insufficient steady income streams.   Our retirement income is primarily dependent on the gains of our investments. While investment gain strategy works well when investment values rise, it under performs during market corrections and bear markets, as I learned and experienced in 2008.

Here are the four investments elements I am working on to create steady sources on income:

  • Fixed income -  For us, these are mainly CDs.  Over the past year, we bought several 5-10 year CDs that pay 2-3% a year.  (Alas, gone are the days of earning 5% in a money market account.)  We purchased the CDs through a brokerage, and therefore, can sell them before maturity, if we need the funds.  I am also considering investing in closed end municipal bond funds, which pay about 5% yields.  I am targeting to get 25% of our retirement income through fixed income.

  • Dividend income -  I will be increasing the number of stocks that pay dividends in our investment portfolio.   First, we have invested in a fund that focuses on dividend income and growth.  We have used this fund from 2009 to 2011 and since 2012.  I have been happy with both the dividend yield (~3.5%) and the investment gains over that time.  In addition, I plan to add dividend paying stocks on my own, using the Dividend Aristocrats and Dividend Achievers lists as a starting point.   Finally, I plan to keep, instead of sell, the remaining stock I have of the company from which I retired since it has a 3% dividend.  I am targeting to generate 25% of our retirement income through dividends.

  • Rental Income - In 2013 I became a landlord when I inherited part ownership of a commercial rental property.  The good news was that the mortgage was paid off and the property is positive cash flow.   It is also handled by a property management company, which reduces direct involvement by the owners.  Although there is consistent income, the annual net rental income varies due to vacancies and economic conditions.  I would like the rental income to cover 25% of our retirement income.   However, once this property is sold, I don't know if we will purchase another property to replace it.

  • Annuity Income -   I've looked at purchasing a lifetime annuity through an insurance company, but haven't been able to rationalize the cost.  I am interested in an immediate annuity in about 20 years, but most agents aren't interested in selling me a policy in 20 years :-)  At this point, our most likely source of lifetime annuity income will be Social Security, for which we won't be eligible to receive for about a decade.  I expect that Social Security will cover about 25% of our retirement income. 

  • For now, we will consider gains in our investments as a bonus, but also target investment gains to cover 25% of our annual retirement income.  This will provide a cushion if the four income categories fall short of their 25% target.

    I'll be working on implementing this retirement income strategy over the next few years.

    For more on Strategies and Plans, check Mondays for a other segments.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2015 Achievement Catalyst, LLC

    Friday, January 02, 2015

    Returning from Sabbatical

    Happy New Year!

    After over a year on sabbatical from blogging, I am returning on an occasional basis, posting between one and four times a month.  I will try this posting frequency for a few months and decide whether to continue.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2015  Achievement Catalyst, LLC

    Tuesday, December 31, 2013

    Final Post Before Sabbatical

    This is my final post before taking an indefinite sabbatical

    After more than 7 years of posting on mostly a daily basis, it is time to take time off.   I feel better prepared for retirement finances since recovering from the 40% decline in the 08/09 bear market.   For the past year, we've consistently been able to meet our financial targets known as Wealth Builder Ratios.   We will continue to use the ratios as our metrics going forward.

    Here are some posts that I particularly enjoyed writing for this blog:

    Achieving early retirement:

    Achieving Financial Freedom - I've Retired In My Forties

    The Our Journey to Financial Freedom series:
    1. Our Childhood Preparation
    2. The Value Of Higher Education
    3. Making The Most Of My Job
    4. Lifestyle and Spending Choices
    5. Setting Goals, Developing Plans and Tracking Process
    6. Staying The Course
    7. How Luck Played A Role
    8. My Personal Finance Mind Tricks
    9. The Professionals We Used
    10. When Preparation Met Opportunity

    I wish everyone a great 2014 and good luck on their journey to financial freedom.


    This is not financial  or retirement advice. Please consult a professional advisor.

    Copyright © 2013 Achievement Catalyst, LLC

    The Wealth Builder Carnival #157 - Final Edition

    Welcome to the one hundred fifty-seventh edition and final edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

    And now on to the Carnival.


    Bryan presents How To Make A Career Change posted at, saying, "The end and beginning of each new year brings about many changes. If you are planning a career change or possibly considering starting your own business, here is a guide with steps on how to manage your finances and prepare for success."


    John Schmoll presents Betterment Review: A New Investing Option to Consider posted at Frugal Rules, saying, "Investing in the stock market is vital to building wealth and with the variety of options available of where to invest it can be confusing. Choosing a good brokerage that has good offering and low fees can be a great way to help grow your retirement portfolio and get your investing on the right foot."


    Justin @ Root of Good presents Running Out Of Money In Early Retirement posted at Root of Good, saying, "Depleting all your assets during early retirement is a common fear for those seeking financial independence. Here are five reasons why it's unlikely you'll run out of money and four tips to avoid depleting your investment portfolio in early retirement."

    That concludes this edition. Past posts can be found on our blog carnival index page.

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    For more on Ideas You Can Use, check back every Tuesday for a new segment.

    This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

    Copyright © 2013 Achievement Catalyst, LLC