Tuesday, February 21, 2017

My Biggest Fear is Becoming too Attached to Investing. Why an End Goal is Key.

In the 1980s my father made a lot of money. He was a mason contractor and there was plenty of construction to be done. He lived an exciting life. Big stock investments, owned a boat, horses, frequented Atlantic City. The gravy train didn't last. His health failed, he retired and moved down to Florida. He met a great woman that helped take care of him. And in the end he needed her. He left his business to my brother, who was a great worker, but didn't run the company the way my father did. The income stream he was hoping to get from my brother dried up. He then made a bad investment in a fast food franchise. He had no experience in food service. He became sick again and had to sell at a big loss. In the end he had some disability benefits and social security, he got by paycheck to paycheck. But he didn't live the life he had in his younger days.

I'm sure if he could have done it over he would have made smarter decisions with his money when it was coming in. I certainly hope to make better choices when it comes to money. But I do understand his mindset. The 80s were so lucrative he didn't think the money was going to stop. And, the other extreme can be equally devastating if not worse. Too much of a focus on saving and you may deny yourself life's pleasures. Which is why I think many dividend growth investors set goals they want to achieve. They want to retire at a certain age or achieve a certain number in annual dividends. I think these goals are very important. Without them there is a danger of not stopping. Putting off retirement indefinitely, dropping dead at your desk. In the process never taking your children on vacation. This came to mind because I realized I don't have a long term investment goal. And it is something that I have to work on. I know I'm always going to be frugal. But I don't want to live a life solely to see how much money I can raise.

4 comments:

  1. DS, I read this blog post and felt kind of bad for you. I will offer some suggestions that will seem strange. Take them for what they are worth. Don't take offense.

    1) Stop reading your "influential blogs" list. They are doing nothing for you. Read Seeking Alpha only, maybe Bogleheads Investing Forum, but only read those committed to DGI and most importantly VALUE/Quality investing. Only read those with a plan. Don't give the time to anyone else.

    2) Don't make another investment until you have some sense of value in the market. Invest in FastGraphs (I'm not a shill for FG) but I learned early that I needed a STARTING point on value. FG is that starting point. You can do all the DD after that you want, and plug in all the formulas you want, but let me tell you---price always eventually reverts to earnings or a historical premium/discount PE. Count on it. Don't think because you have 30 years you can over pay.

    3) Go shopping. Buy tomatoes, bananas and green onions at various stores. Go to WinnCo, Go to Safeway, Go to Albertsons, go to the small Mexican, Asian, Middle Eastern markets in your area. You will see ---and experience value when you do that. Bananas---meh---they sell for pretty much $0.49-$0.69/lb.everywhere Still there is a 30% difference in that spread.

    Tomatoes! Don't get me started. In my area you can pay as little as $.069/lb to $1.99/Lb. Do the math--buy the bargain.

    Green onions--Asian stores--- 4 bunches for a buck, Safeway $1.00 per bunch. These kinds of things make a difference.

    Stocks are no different. You have to find the value and learn how to shop.

    You say you have no plan, well--look to SA authors that do have a plan to guide you. Stay away from those that don't

    I am not a blogger so I cant help much except comment on what I read. Good luck

    ReplyDelete
  2. Mike A. Thanks for the feedback. You're right I need better goals.Though I have been pretty up front that my main goal right now is increasing my income and learning how to invest. Right now DGI is a hobby and a small portion of my portfolio. I don't proclaim to be an expert. My plan is to learn now while my income is tied up in things like daycare and my wife's student loans. I do read Seeking Alpha and some blogs. Most my goals involve increasing my salary and making career moves. I think that regardless of how I invest having more to invest will make the most difference.I am sure I am making plenty of investing mistakes. Everyone has to start somewhere. I do appreciate your feedback about having a better sense of the historical value of the market. Some sectors I'm coming along with this better than others. Thanks for stopping by.
    DS

    ReplyDelete
  3. Hi Dividend Seedling,
    I think Financial Independence is really about financial security than about money. And there are many things you can do to improve financial security (learning new skills, networking, side income etc) in addition to spending less.
    Life is a journey; keep in mind that time is more valuable than money.
    Best wishes,
    -DL

    ReplyDelete
    Replies
    1. Dividend Life,

      Wise words. I've just learned a few lessons from my grandparents and father that slightly outlived their money. My grandparents ended up in an assisted living facility that took every asset they had and ended up splitting them a part in the past couple of years. In the end they had their needs met, but I'm hoping to have a bit more security and to be able to pass some of it on to my children and grandchildren. But you're right. I had found myself becoming a little obsessed with accumulating without really looking at how much I needed. I think now that I have a goal I can focus on accomplishing it, while still doing the things I enjoy with those I love the most.

      Delete

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