This content is clipped from an article I recently submitted about Rio Tinto (NYSE: RIO). The theme was a little too off the mark for SA readers, but I thought it was a humorous title and it is an actual technique I use.
· Regular contributions to your kids trust funds can reveal opportunities for your portfolio.
· Rio Tinto is down, and about to pay it's larger of two semi-annual dividends, historically.
· Initiating a position now while the price is "low" could leave you with a nice short-term profit.
It's my tenth article here at Seeking Alpha! (Yaaaaaaay!)
I wanted to do something special for this one. I wanted to write something that was both hilarious and captivating, as well as educational. But at the same time, serious and useful.
My kids are my greatest assets. I love them. I wanted to make sure that I was able to share the success I've had in investments with them. And I wanted to show you a technique I use that leverages their financial worth as well.
My children, as well as several of my nieces and nephew have custodial accounts (Trust Funds) that I've opened for them at Capital One (NYSE: COF) Investment's Sharebuilder. Due to some amazing promotions they were running, I was motivated to set up as many accounts as I could, and ended up creating them for nine children altogether. One of those offers are still run once or twice a year where you can get a $50 cash bonus on an investment of as little as $5.
But I didn't withdraw their cash bonuses if that's what your first thought was based on the article title. No, what I've done is make it so that each of their portfolios has a certain focus or theme to it. Everyone starts with a similar foundation. Each has a bond component. Right now I'm using Pimco's Corporate Income Fund (NYSE: PCN), as well their High Income Fund (NYSE: PHK). Those two are set at 20% and 5% of total allocation, respectively.
I add a small amount of cash to whichever portfolio is the smallest each payday. When enough cash is there to offset the trade fees, or I have a free trade promotion, I buy something. I either add to the bond funds to maintain their allocation, or I buy them stocks if they have enough in bonds. There is very little turnover, I'm pretty much always only making buy orders.
Each of the portfolios are constructed around a certain industry. One of them, for example, is focused on high yield investments like REITs. One is Pharmaceutical/Healthcare. One is fast food, another video games/electronics, then banks, and oil & energy companies. Toys. Candy. You get the idea. As often as possible, I try to select consistently profitable companies with good dividends so that I can just let them compound over the years.
And each of them has a commodity component. That's where the focus of this article will be at today. What ends up happening, is that when I am ready to go make a purchase for one of these kids, I might notice that a certain thing has had a sharp drop. And that sets me on the path to further researching it and ultimately buying an even larger quantity for my own portfolio. It's a sort of cost averaging, except that I don't necessarily have to already have taken the risk of loss on for myself.
.....You'll find the remainder of this content in this article:
Disclosure: The author is long RIO, PHK, PCN.