ETFs & Funds
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I'm Gene Baugh and I've been studying the stock market and the economy since before I went to The University of Texas at Arlington to earn a Bachelors in Finance. Class of '83.
One day as I was listening to a Jim Rogers interview and the reporter asked him if he was buying any oil stocks right now. His reply was "Only for my kids."
My son was sixteen at the time. This made me ask myself alot of questions.
I had always been a mutual fund trader and a 'macro' kind of guy sometimes moving from fully invested to a 100% cash allocation (back when money market funds actually paid you something). Occasionally (like 1986 through the '87 crash) I would move from cash into a bond mutual fund for long
periods of time.
I can do that... but I can't expect my son to! How would I invest for HIM? How would I TEACH HIM to invest?
Although he is the beneficiary on everything I have, I suddenly felt the need to get him some investing experience of his own. An early start can be a critical component of success!
So, I opened up a UGMA (Uniform Gift to Minors Account) and went out and got myself a part time job with the intent of splitting my paychecks with him to build us both an investment program to share and have in common.
I wanted to show him what a couple of hundred bucks a month could do over time.
First I decided I wanted him to have the experience of being a direct investor in companies rather than an indirect holder via mutual funds. The most dangerous game in the world of investing.
At first I was leaning toward 'widow and orphan' investing and considered the DGI approach.
Eventually I rejected that philosophy because it was too capital intensive for our small portfolios. It would simply require too much money to produce a material cash flow. He is young and I feared a 3% yield on a $500 position would not exactly captivate his attention.
I wanted his portfolio to have a meaningful and material effect in his life NOW, as soon as possible. The idea is not to make him 'rich one day' in the 'far, far off future, but to give him a little extra passive income to help pay the bills in this very expensive world.
I am reinvesting the dividends now while the account is in trust but when he comes of age (after college) he will be able to access whatever cash flow I can produce for him over the next few years.
So, I decided to invest for income using alternative investment vehicles. And I decided to focus on monthly payers. I don't want to challenge his attention span waiting three months for any "action" in his portfolio. We will end up "Staggering some Quarterlies" eventually,,, but to start out, we are going with the monthly payers as a practical matter.
That word "practical" kept coming to mind in every move I considered. If I were to name this portfolio, the way many SA Contributors do, I would call it:
"The Practical Monthly Income Portfolio."
I also do institutional portfolio research I follow the portfolio of the Queen of England and others.
Mutual Fund Trader.
Alternative Investments, Closed End Funds, Dividend stock ideas & income, ETFs, Energy stocks, Gold, Mutual funds, Options, REITs, Retirement savings, Stocks - long
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Feb 16, 2014
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