7 Steps To Investing SWAN (Sleeping Well At Night)

Feb. 15, 2016 12:20 PM ET12 Comments
Robert Jacobson profile picture
Robert Jacobson


  • The recessionary drumbeat continues to get louder.
  • Financials add to the sectors experiencing a bear market (energy, materials, biotech, and industrials).
  • The stock market has not yet decoupled from oil prices.
  • What should you do if you're a dividend growth investor?

Given the state of heightened volatility and fear that has been rampant in the stock market so far in 2016, I'd like to outline the 7 steps that I use to maintain/increase my net income (and I don't use the word "net" lightly - as like it is in business, it's not what you earn, but what you keep). These steps (as well as my investing experience) keep me from tossing and turning each night worrying about today's, tomorrow's or the short-term stock market's spiral downward. For simplicity, I am excluding a discussion of taxes, but always remember that the government will rarely keep its hands out of your pockets if they see you making money. Please keep that in mind.

  1. Always review expenditures first and foremost. It's the one thing that you as an investor have the most control over. You, not the market, decide what your choices are for how much you spend based on the lifestyle you want. If you can't be assured of having enough income to support that lifestyle, then the only thing you can control is a decision to adjust that lifestyle to the income level you're comfortable you can maintain. The more assured you are of your income, the better you will be able to decide on the cost structure to support it. Always remember, though, that things happen that could disrupt your income (loss of a job, unexpected illness for you or a family member, poor business environment for your company that could obliterate incentive income that you count on, etc.). I strongly suggest that you have at least 6 months of cash on hand before you even consider making any investments. That will buy you time to be able to navigate any potholes in life's road before you and prevent you from having to make investment decisions at what could be the most inopportune time.

This article was written by

Robert Jacobson profile picture
I am an investor and CFO for over 40 years who focuses now on high yield dividend investing, particularly for building retirement income. In addition to financial data, I concern myself with the quality of management and the long-term macro perspectives of the companies and industries in which I invest.

Disclosure: I am/we are long HCP, BA, CVS, BAC, BX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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