I was struck with the idea that I was doing so many things wrong when it came to money earlier this year. So a few weeks ago I began taking steps to correct that. This is my journey so far and what I have done to put my money to work.
I’ve cut down on everyday spending. I don’t eat out for lunch hardly ever anymore, and I eat dinner at home anywhere from 3-5 nights a week. I do still spend a little bit of money eating out on the weekends, but nothing like what I was once spending. Additionally, I save what little money I can. More recently that’s calculated out to be about $200-$250 per month. This is money that I set aside to either save in a high yielding savings account, or invest via TD Ameritrade. If $200 per month was all I saved for the year, that’s still $2,400. No, it’s not a lot of money, but I plan to increase that amount very soon and continue to invest it.
I made the decision only a few weeks ago that I need to stop trying to beat the market when I trade stocks, AND I need to stop letting my money earn nothing in my current checking and savings accounts. I might get a couple of pennies here and there on a couple thousand in savings…woohoo! I moved $1,500 into an online high yield savings account the second half of last month and already got 29 cents in interest. That’s not even for a full month of it being there, and it’s earned more in interest than my bank had paid me for all of my accounts combined for all of 2018.
I did some reading online and there are several online banks that now exist, some are well known names, and others are new players. I decided to open an account with Wealthfront Bank. They currently offer a savings account with 2.32% APY. That figure was higher when I initially began my research, and of course it may come down even more depending on what the Feds do regarding interest rates. Either way, I’m earning way more than with my traditional bank, and it’s a great place to store some cash that I’m not currently using. It features unlimited transfers and no fees.
*As of 9/23/19 it’s 2.07% APY after Fed cut rates*
As for my investments I sold everything I currently owned in my brokerage account and Roth IRA. I moved some additional money into these accounts and then did some research. My plan was to invest in dividend paying stocks so that I could earn on average, about 5% on my money regardless of what the market does. While the market value of my investment will fluctuate based on stock prices, those dividends should just keep coming. About half of my investments were in companies that are considered “dividend aristocrats”. This means they have not only paid a dividend, but increased it every year for a at least 25 years!
Not all of my potential investments fell under that category though, so I simply studied their dividend histories myself and then decided what was worth buying. A couple of my investments were specifically targeted for their high dividend yields. And in the midst of trying to find stocks or funds that paid handsome yields, I was also trying to diversify (somewhat) based on industry and investment type. Four are individual equities, one is a fund, and three are REITs. These are my current holdings based on their stock symbols:
IRM, KMB, LTC, O, PEP, RDS.B, SPYD, and T
The fund (SPYD) is an ETF that holds various stocks with high yielding dividends. The overall yield on the fund is currently 4.7% with a very low expense ratio of only 0.07%. This investment has the most weight in my portfolio. I invested anywhere from $1,200 – $2,400 in each of the other holdings, but in the fund I invested $5,500. I’ve also left a few thousand available for trading in the event of a market downturn/recession. If the market does fall heavily at some point, I want to make sure I have some money to throw in and buy that dip!