It has been a rough year. Surprise circumstances have drained emergency funds and mounted some debt. As a result of that I have chosen to do what I've had to in order to stay afloat. The portfolio has shrunk some and is far more concentrated then it was previously.
One thing that I have done this year was to eat a few losses in an attempt to consolidate some of my stock "experiments". Namely I closed out my holdings of funds I had purchased in my first brokerage account while searching for a diversified high yield dividend fund. Although down, I had held them for several years so in reality they broke even with the only loss being the time. A much better choice would have been more along the lines of Vanguard's High Dividend Index ETF [VYM] when looking for instant diversification and dividend income. I do enjoy a more active trading style then only buy and hold however so I'm selling options on the S&P 500 [SPY]. I've consolidated all of my winning holdings from individual Dividend Champions into this one contract to be able to sell covered options. I began trading week long options on this in October and am currently sporting a 2.24% gain on premiums. I've also hit the last ex-dividend date so that will get factored into the strategy next year. I purchased a single share outside of the contract in order to hold those dividends long term to realize buy and hold value from them versus a cash out when the dividend payments hit. I do believe I can top out at +10% per year with this strategy and I have all of next year to attempt it. So far so good.
I have cashed out all of my Series I US Savings Bonds. With the current low inflation environment I have watched all of my bonds lose all of their interest rate, having started with a 0% fixed rate and the inflation adjustment dropping to 0% as well. At this point it is literally more profitable for all of that money to sit in a savings account and make less than 1%. I've moved that part of the portfolio back into my main trading account to use for the weekly options. Betterment and Lending Club are now serving to cover the conservative portion of the portfolio as far as I am concerned. My current time horizon for retirement is twenty years. With that amount of time I have every reason to continue to be extremely aggressive in the market. I may revisit I Bonds should their fixed interest rates rise but that is in all probability, a long way from returning if it ever does.
Even with the hardships, downsizing, and consolidation there is still one big winner here. Lending Club has maintained it's stellar performance throughout the ups and downs of the year. At one point my small Betterment portfolio was spiking at over 10% gains while Lending Club was still sitting around 5%. I have since refined my criteria for loans after additional research and am currently sitting at 9.9% profit for Lending Club. In stark contrast Betterment currently sits at a loss of -3.2%. This doesn't invalidate Betterment as a good buy and hold option at all but it does serve to highlight the necessity of investments outside of the broader stock market. Having multiple streams of income will be essential to retirement. I am thrilled with the performance I've had from Lending Club and eager to invest in it even heavier next year. I've doubled my monthly Lending Club contribution going forward based of the last year's performance. Yes, I shoulder risk of default through this investment but I haven't had a single borrower default due in part to my stringent requirements. I do have one loan currently in "late" status. If that loan were to fall through after the 120 day late period, my gains for the year would be down to 6.6%. With a portfolio of my size that is still extremely respectable. Issuing an increasing amount of loans next year will continue diversifying the portfolio to make the occasional default have even less impact. After all, this is how the huge banks make their money. With the technology available to the home investor now we can get a piece of the pie.
SPY Options: 2.24%
Betterment: -3.2%
Overall the year has ended with success. The portfolio shrank but profits were up. Risky strategies such as credit spreads were tested and left behind after some early year losses. Some "bad" trades were made for Blue Chip and MLP stakes but there is no rush to cash them out so we may see profitability return to them. Options are still a part of the portfolio to appease my want of active trading and they are leveraging a much larger portion of the portfolio value to increase raw earnings. Although it looks like the market will end relatively flat this year I remain hopeful for next year and even with a flat market loans, dividends, and options continue to be profitable. For the next year I will be focusing on refining options trading and building a loan empire. I will also be hunting for another investment opportunity outside of the stock market. I've been looking for some time actually and have not yet found an option that allowed compounding interest with a small initial buy in outside of Lending Club. If I happen across something I'll be sure to post it here for wider consumption.
Happy New Year everybody! I hope everyone has had a fantastic 2015 and will have an even better 2016. Cheers!
Consolidation
One thing that I have done this year was to eat a few losses in an attempt to consolidate some of my stock "experiments". Namely I closed out my holdings of funds I had purchased in my first brokerage account while searching for a diversified high yield dividend fund. Although down, I had held them for several years so in reality they broke even with the only loss being the time. A much better choice would have been more along the lines of Vanguard's High Dividend Index ETF [VYM] when looking for instant diversification and dividend income. I do enjoy a more active trading style then only buy and hold however so I'm selling options on the S&P 500 [SPY]. I've consolidated all of my winning holdings from individual Dividend Champions into this one contract to be able to sell covered options. I began trading week long options on this in October and am currently sporting a 2.24% gain on premiums. I've also hit the last ex-dividend date so that will get factored into the strategy next year. I purchased a single share outside of the contract in order to hold those dividends long term to realize buy and hold value from them versus a cash out when the dividend payments hit. I do believe I can top out at +10% per year with this strategy and I have all of next year to attempt it. So far so good.
Cashing Out
I have cashed out all of my Series I US Savings Bonds. With the current low inflation environment I have watched all of my bonds lose all of their interest rate, having started with a 0% fixed rate and the inflation adjustment dropping to 0% as well. At this point it is literally more profitable for all of that money to sit in a savings account and make less than 1%. I've moved that part of the portfolio back into my main trading account to use for the weekly options. Betterment and Lending Club are now serving to cover the conservative portion of the portfolio as far as I am concerned. My current time horizon for retirement is twenty years. With that amount of time I have every reason to continue to be extremely aggressive in the market. I may revisit I Bonds should their fixed interest rates rise but that is in all probability, a long way from returning if it ever does.
Lending Club is a Winner
Even with the hardships, downsizing, and consolidation there is still one big winner here. Lending Club has maintained it's stellar performance throughout the ups and downs of the year. At one point my small Betterment portfolio was spiking at over 10% gains while Lending Club was still sitting around 5%. I have since refined my criteria for loans after additional research and am currently sitting at 9.9% profit for Lending Club. In stark contrast Betterment currently sits at a loss of -3.2%. This doesn't invalidate Betterment as a good buy and hold option at all but it does serve to highlight the necessity of investments outside of the broader stock market. Having multiple streams of income will be essential to retirement. I am thrilled with the performance I've had from Lending Club and eager to invest in it even heavier next year. I've doubled my monthly Lending Club contribution going forward based of the last year's performance. Yes, I shoulder risk of default through this investment but I haven't had a single borrower default due in part to my stringent requirements. I do have one loan currently in "late" status. If that loan were to fall through after the 120 day late period, my gains for the year would be down to 6.6%. With a portfolio of my size that is still extremely respectable. Issuing an increasing amount of loans next year will continue diversifying the portfolio to make the occasional default have even less impact. After all, this is how the huge banks make their money. With the technology available to the home investor now we can get a piece of the pie.
Bottom Line: Successful Year
Lending Club: 9.9%SPY Options: 2.24%
Betterment: -3.2%
Overall the year has ended with success. The portfolio shrank but profits were up. Risky strategies such as credit spreads were tested and left behind after some early year losses. Some "bad" trades were made for Blue Chip and MLP stakes but there is no rush to cash them out so we may see profitability return to them. Options are still a part of the portfolio to appease my want of active trading and they are leveraging a much larger portion of the portfolio value to increase raw earnings. Although it looks like the market will end relatively flat this year I remain hopeful for next year and even with a flat market loans, dividends, and options continue to be profitable. For the next year I will be focusing on refining options trading and building a loan empire. I will also be hunting for another investment opportunity outside of the stock market. I've been looking for some time actually and have not yet found an option that allowed compounding interest with a small initial buy in outside of Lending Club. If I happen across something I'll be sure to post it here for wider consumption.
Happy New Year everybody! I hope everyone has had a fantastic 2015 and will have an even better 2016. Cheers!
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