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Treating my Favorite Investment Account Like a Business

by My Journey to Millions
Monopoly card Dividend

When I was doing a review of my 2018 Goals and Objectives last week I noticed a glaring failure on my part.  When I was creating my goals and objective for 2018, I remember specifically thinking that I wanted to treat my dividend account more like a business.  The account is not (yet) large in terms of my net worth, but I really believe I can turn it into a future income stream.

To me, “treating it like a business,” would mean increased record keeping and transparency (even if that is just to myself and my tens of readers).  Record keeping and transparency forces me to discover and revisit mistakes and missteps.  While I have been screening for undervalued dividend growth stocks, and sharing those screens, I have completely failed to keep track of my dividend and option income.

As I started to built out the following spreadsheets I quickly figured out why I stopped being transparent to myself and on here.  I had a particularly few bad months mid 2017 which is exactly the time I stopped sharing!  With that being said, I think what I am going to do is create these reports only once a quarter. This will flatten out the extremes when it comes to rolling naked puts.

Dividend Income

I found an old spreadsheet that actually went back 6 years, so I just started to add to it.  I am missing a couple months in the beginning of 2016 when I switched over to from Fidelity to TD Ameritrade:

Dividend Income by Month

I created the scale at $1,000 a month to give myself how much of a perspective of how f’n far I am from that initial goal!  Notwithstanding how far I am the next thing I noticed is how flat the line is so many years later.  I know I took a few months off from purchases, but that couldn’t explain the lack of growth. Combing through 7 years of net worth spreadsheets it took me about 5 minutes to figure out what the hell happened.

In early 2016 I decided to pay off a good amount of credit card debt that had been hanging around a couple years since we bought our house,

After my meeting with my account I was informally told that I would be receiving a tax return that while smaller than in years past it was still a few thousand dollars.  When I told The Wife about the money, and that it was solely going to be used to pay down debt  I could see the disappointment in her face.  For the past few years I have carried consumer debt at zero percent, and while I would put a few hundred towards it a month I had more going towards my family’s investments. So whenever tax returns or bonuses came through most of it either went towards debt (or again into one of our investment accounts). When I asked why she was disappointed, she explained that she would feel better if we just eradicated our debt so that future lump sums can be used differently. It didn’t take much convincing because I already started feeling that way independent of her statement.

When looking back at my net worth spreadsheets I can see tens of thousands of dollars leaving the account and the corresponding credit cards being marked down to $0.00.  It wasn’t till late 2017 that the account’s balance matched that of “2012 Evan.”  I know it is more or less meaningless in the long term, but being able to track down what happened was a very interesting exercise for me.

Cleared Options and Liquidated Assigned Positions

I sell a lot of naked puts every month.  Without getting too deep when someone sells a naked put they are taking  bet that a particular equity won’t go beneath a particular strike price.  To take on that bet I get paid a premium (money up front).  My goal is to get out of the position at about 50% of the premium and move on to the next “bet.”  As alluded to above, and as every adult knows, not all bets work out in your favor and I am either assigned the shares or I have to roll the bet essentially doubling down.  I have written extensively about the topic over the years.  So, what occurred was in 2017 I had to roll quite a few times giving me MULTIPLE bad months, until my rolling worked and I was able to get out from underneath the bet.

So at some point I just gave up on sharing the information because it depressed the shit out of me to actually update the numbers.  Terrible attitude especially with hindsight and seeing how it all worked out in the end.  In an effort to not discourage myself again, I am going to only update this section every quarter.  Will there be legacy failed positions that cross over the 3 mark bet? Absolutely, but such is life and more palatable than questioning myself month after month while in the trenches of the trade gone wrong.

Really, what occurred is that the stellar January 2018 made up for the terrible Q2 and Q3 of 2017.  As I look at this graph, I don’t think it accurately represents anything useful yet. Until I come up with a better tool I am going to run with it.

Tracking Margin Interest

Failing to track my debt (via the interest paid) seems dishonest at best. If I wanted to “lie to myself” about how well I am doing I could just buy a ton on margin, and conveniently ignore the servicing of that debt but count the income therefrom.

I think an annual view that can be compared to my option income would be much more useful in the future.  For example, my margin debt in 2017 was about $1,800 but I only brought in $1,300 of options income.  Not good.

As compared to 2018 where I have brought in approximately $4,800 YTD of options income and only paid out $290.00.


The Future of Tracking and Sharing

I think I need to engage someone a bit better than me on Google Sheets to show me how to put this all together, but until that happens I am going to share all this information every quarter going forward!


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