In the meantime, I now find myself in the unusual position of having over 20% of my overall portfolio in cash. Even though I am eager to put the rollover money to work, I do not see much in the way of attractively valued dividend growth stocks at the moment. The value investor inside of me cringes at the thought of buying overvalued stocks simply because I have money to invest. For that reason, I will not be investing the money all at once. However, I will not attempt to time the market, either.
I have decided that a reasonable course of action is to invest the money at regular intervals in whichever stocks happen to be fairly valued or undervalued at the time. With over $25,000 at my disposal, my tentative approach will be to make two purchases per month over the next five or six months, with each purchase being in the range of $2,000 to $2,500. The only constraint is that a stock has to be either fairly valued or undervalued by my judgment in order to be purchased. If the market happens to take a sudden downturn and more than two opportunities become available in a month, then I would accelerate the purchasing schedule.
Note that these purchases will all occur in my Roth IRA. Let's not forget that I will also be contributing new capital to my taxable account on a monthly basis (I have not made my November contribution yet). The amount will vary a bit from month to month, but it will likely average over $2,000. Thus, I will have sufficient cash to make a third (and possibly a fourth) purchase every month.
That's the plan as it currently stands. Incidentally, thanks to the rollover money, my portfolio reached a new milestone today, closing above $125,000 for the very first time ($125,862.52). Continuing with $25,000 increments, the next milestone will be $150,000.
Milestone history for portfolio value:
- $125,000: November 2013
- $100,000: October 2013
- $90,000: August 2013
- $80,000: March 2013
- $70,000: January 2013
- $60,000: September 2012
- $50,000: March 2012
Thats an impressive progress! Congrats on reaching your milestone, DGM.ReplyDelete
R2R: Thank you. Reaching this milestone was a bit anti-climactic, but I'll take it!Delete
Haha not a bad way to hit that milestone! Looks like we can expect a heck of a lot of buy posts over the next six months. I know I will certainly be looking forward to them!ReplyDelete
w2r: This is likely the only time I'll reach a milestone in this way. I sure hope I find plenty of good buying opportunities over the next few months.Delete
On Friday, October 25, 2013 - you have written about the reached goal from 100,000 USD.ReplyDelete
Now, one month later you write about 125,000 USD.
That are 25 percent more in one month!!
Have you robbed a bank? :-)
D-S: Thanks! Unless I start robbing banks, it will take me longer to reach the next milestone. :-)Delete
Congrats!! how abt KMI @34.5$ and HCP 39.3$ReplyDelete
Anonymous: Thanks for the suggestions. I am tempted by KMI (even though it's already my second-largest holding) and I am looking at a few different REITs.Delete
Go with DE as your first Buy. :)ReplyDelete
FFd: Thanks for the suggestion, but I ended up picking KMI. :)Delete
Do you pay regular income tax on conversion or is there any tax break? I have ROTH IRA and thinking converting my 401k (at the end of my work period - before retirement) to ROTH it if make sense at all of course.ReplyDelete
Martin: I have to pay regular income tax on the conversion (no tax break), but I already have money set aside for that purpose, so it's no big deal. Even though the immediate tax hit is unfortunate, it will pay off in the long run because once I invest all the rollover money, it can undergo 30+ years of compounded growth and my eventual withdrawals will be tax-free. The conversion also helps make up for the fact that I didn't start my Roth IRA until early this year (when I contributed for 2012 and 2013), so I missed out on several previous years of potential contributions. Conversions don't count toward the annual contribution limit, which means my rollover money makes up for about 5 years of missed contributions.Delete
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