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If you’re a regular reader of this column, you may already know that I’ve been helping my own father invest $100,000 of his retirement money over the last 15 months. And I’ve also been letting my Income Superstars subscribers not just follow along … I’ve been giving them the chance to act on the recommendations ahead of my dad.
Of course, unless you’re already a subscriber to my paid newsletter, you haven’t had the chance to see my dad’s actual brokerage statements or hear about our progress thus far. So today, I want to give you an update on my dad’s “extreme income makeover” … and share some of the secrets we’ve been using to boost his income. Hopefully, you’ll be able to use some of these same techniques in your own investing.
Obviously, the biggest question is simply:
“Have you been making your dad any money in this crazy market???”
The short answer is yes. In fact, through the close of trading last week, Dad was sitting on a profit of $7,780.12 on his initial $100,000 investment. That’s a 7.78 percent return in 1.25 years, or a little more than half a percent per month.
Here’s a table of every open position we have at the moment, along with the date Dad purchased each. Please note that his total returns include commissions paid thus far and do not factor in reinvestment of dividends …
As you can see, not including our cash position, 10 out of 11 investments are currently in the black — and our one “loser” is actually just about even.
More importantly, what you have to understand is that prior to launching this new approach all of Dad’s money was sitting in a money market fund earning 0.06 percent a year.
So while you might say it sounds crazy, this new approach has already boosted Dad’s income more than 125 times over!
More importantly, I think we have done it very safely.
Why? How?
Well, for starters, the majority of his portfolio has still been in cash the whole time because we’ve been buying our new investments very slowly and carefully.
Even now, he still has more than half of his portfolio in that same money market he started with!
So in addition to keeping a nice chunk of cash on hand, another strategy that I have employed with this portfolio is simple: I have recommended BOOKING outsized profits whenever possible …
We’ve closed out three positions already, in fact. They don’t appear in the table above so let me show them to you separately now …
As you can see, in each case we were sitting on gains well above the S&P 500’s moves over the same time periods. So we grabbed the profits and never looked back!
A third strategy is that I have done my best to keep the portfolio diversified in terms of the types of companies we’re holding … both in terms of their businesses but also in terms of geography.
Look again at all the investments we’ve held in the relatively short span of 15 months — retailers, staples companies, utilities, pharmas, and a whole lot more … including companies that are based in four separate countries (spanning three continents).
Plus, we have an active position in a select corner of the bond market, too!
Last but not least, we’ve been putting new money to work on a regular basis … especially whenever the market’s choppiness created special opportunities …
If you examine the various purchase dates, you’ll see that I recommended Dad make new investments — mostly in dividend stocks — throughout the past year. Yes, despite all the pessimism and worry.
In fact, you might actually say BECAUSE of all the pessimism and worry!
From day one, my goal has been helping Dad snap up solid values whenever and wherever I find them … with an eye toward long-term income generation. So, personally, I’m happy when the market sells off. It just means I’ll have more great stuff to choose from.
And again, by employing discipline — both by setting limit buy orders and by regularly booking outsized profits — we are further able to make the volatility work for us.
I think Dad’s been happy with the results so far … and I’m looking forward to continuing to build out the rest of this portfolio as we get into 2012.
I’ll keep you updated as we do that. And hopefully, you’ll be able to use some of these same ideas and approaches in your own investing, too. Because as our results show … it IS still entirely possible to make money conservatively … even in these challenging conditions.
Best wishes,
Nilus
P.S. I should also mention that it’s never too late to join my Income Superstars letter. Heck, for a measly $39 a year … I certainly consider it one of the very best investment bargains out there. If you’re interested, just click here to sign up for a risk-free trial right now.
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…and still almost half the portfolio in cash; while trading out of a few positions already. This is just too much “watchful trading” for most of us; and after the profits are “booked” there is still tax to be paid, presumably 15%, IF held long enough. As I have asked before, why don’t you consider adding some talk of mutual funds or ETFs that do the same thing you are doing, and their results. Many of us have other things to do than to constantly watch our money, and “trade the markets”. i know, you advise us on the trades, but still…