How do you approach investing when the market is so volatile? We’ve never seen the DOW at this level, and many people say that it can’t last. Then some say DOW 50k. No matter which side you are on, the game has changed, no doubt. To invest going into 2020 and maximize returns, you are going to have to take a hands-on approach to growing your portfolio like a business.
You can make short-term trades, and you can even day trade if you have enough money. But I strongly urge you to build a foundation of buying and holding dividend stocks and using options to your advantage. The more money you accumulate, the more you have to manage your funds like a business and mitigate risk. I’ll be the first to tell you that you have to take risks to make money, but you have to do so wisely.
You’re going to win some, and you’re going to lose some. You can certainly make those trades. You might want to consider doing monthly reports. Do you blog? Start a financial blog, outlining your portfolio and the holdings you’ve chosen. Input the options contracts, and calculate those dividends. Think of each monthly blog post as though you are providing an earnings report for a business.
Businesses report earnings quarterly, so you can certainly do your updates by the quarter vs each month if you like. I think this is a great idea for investors that have begun to accumulate substantial amounts of money. Outside of the monthly or quarterly updates, you can also keep good track of your investments in other ways, too.
For example, you can track your dividends with Excel. You don’t have to go old school, but you do want to keep good records and also track your ROI. As you get everything underway, be sure to do a 6 month check and a 1 year check. Write options contracts that maximize your rate of return, and set the goal of getting 15 % gains on your portfolio. Those gains will in turn compound for you and bring in serious profits.
People that start out investing don’t always realize the power of compound interest. Even if they do, seeing and doing are two different things. You’re going to enjoy building up an investment portfolio. The more money you have, the bigger moves you can make. It feels good when you get to the next level.
Pick at least 5-7 stocks to get started so that you have a diversified basket. I have chosen 21. Just to get 100 shares of each of those 21 stocks so that you can write a covered call for each one, you would need over $100k. Of course, you can also operate on margin if you get comfortable with the leverage. Do you see what I mean though about the big moves requiring big money? Take it one step at a time, and build your way up to that point.