Friday, May 24, 2013

Live Today but Plan for the Future

We don't know how long each of us will walk the earth.  My father is in the final stages of Lewy Body dementia at the age of 72.  He showed signs of the disease in his mid sixties, before he retired, although he didn't get the proper diagnosis until years later.   It is a savage and fatal disease combining both Alzheimer's and Parkinson's symptoms.  He is now bedridden and can barely speak, but still knows who I am.  He never enjoyed his retirement.

I plan to retire in the next three years at 50. I have things I want to accomplish on this earth.  I may live to 100;  I could die tomorrow.  Life is about priorities, responsibilities, and desires.  I think it is important from time to time to think about these things and write them down.  So here is my list:

1.  Provide for my family: This is far and away the most important thing in my life and takes priority over my wish to retire early.   I have adequate life insurance for my wife and two boys so that they wouldn't have to worry about paying a mortgage or tuition for college education.  I have also funded 529 accounts for my boys.   I should still be able to retire at 50, but properly funding this priority came first.

2. Provide for my mother and father:  I now manage my mother's and father's assets and brokerage accounts.  My mother was getting fleeced by a broker who had purchased mutual funds with a hefty load fee.  I will never buy a mutual fund if I can help it.  With the advent of ETF's there really is no reason to.  She has adequate resources to live a comfortable life if I manager her assets properly.   My father is also financially secure.  He bought long term care insurance in his fifties, a smart investment as it has unfortunately turned out.

3.  Stay fit:  For the past 20 years I have lifted weights and kept myself fit.  My workouts are brutal but I love it.  I am probably in the best shape of my life right now, and I want to get in better shape tomorrow.  My mindset is that I will fight age until death.  I want my golden years, should I live that long, to be active.  Word of advice:  buy a weight vest and use it.

4.  Live in a foreign country and learn a foreign language:  My wife is Brazilian and my boys are fluent in Portuguese.  I am not fluent although I can get by.  If all goes as planned, we plan to move to Portugal for a few years (Brazil is too expensive right now) when I retire.  We found a private school in the city of Porto that looks promising for high school and living expenses are reasonable.  This will also be a great opportunity to see Europe, and give my boys a different experience.

5.  Get a pilot license:  I always wanted to learn to fly.  There is a great school 10 minutes from where I live.  It will cost about $8,000.  I may try to do this before I retire if I can.

6.  Learn to play the piano:  I hated music as a child.  Now I wish I had been forced by my parents to learn an instrument.  In retirement I will have the time to see if my patience matches my desire.

7.   Get a black belt:  I have a brown belt in American Kenpo but haven't had time to finish.  But I fear no one and feel I can handle myself if necessary.  I could see myself getting black belts in several disciplines.

There are other things, and life always throws a curve now and then.  I also try to be grateful for every day but that is a subject for another post.







Monday, May 20, 2013

Background and Investing History

I have been actively investing for the past 10 years.  Like many DGI investors, my goal is to rely on the dividend income stream to partially fund my expenses when I retire at 50 (I am now 46).

I have worked in the public sector for the past 15 years, so I will have a pension in lieu of social security that I can start drawing on at 50.

I own a condo with no mortgage in Miami that generates a 6% rental return rate after expenses and taxes.  I bought the condo in January 2012, near the bottom of the market in Miami.   My wife and I plan to eventually live there after our two boys (now 12 and 11) fly the coop.   Florida has no state income tax which is one of the main reasons we want to retire there.

I also own the home in California where my family currently lives.  I bought the house in the spring of 2008, after the housing bubble burst.  I plan to sell the house in the next 4-5 years.  Assuming the housing market doesn't do a 180, this should result in a nice capital gain with no tax liability.  California  now has the most onerous taxes in the nation.  If I could move today, I would.

My stocks are owned in tax advantaged accounts (457, Roth 457, and Roth IRA).  I also have a regular brokerage account with Scottrade.   I do dabble in options, mainly covered calls as a way to supplement dividend income.  I will on occasion purchase LEAPs deep in the money when the underlying security is significantly undervalued.  I currently own LEAPs for INTC and AAPL with expirations in January 2015.  I bought the LEAPS when INTC was at $20, and AAPL was at $395.

Here is a list of dividend stocks I own:

AFL
APD
BBL
BIP
BP
CAT
COP
DLR
GIS
INTC
JNJ
KMI
KO
MCD
MO
NSC
PG
PM
POT
SYY
VOD
WAG
WMT
WU
XOM

More about my goals and how I plan to get there in a later post.  I have never blogged before so it may take me awhile to get the hang of things.






Friday, May 3, 2013