Saturday, January 19, 2013

Recent Purchase - GGN

After loading up my roth IRA with my 2012 contribution last week, I made a purchase.  I bout 161 shares of GAMCO gold and natural resources (GGN) for $13.60 per share.  This brings my total number of shares of GGN to 236.  My total number of shares will now bring $28.32 in dividends to my roth IRA every month.  I still have enough cash in the acount to make at least one more major purchase.  I have an idea of what I want to buy with it, I'm just waiting on a good price.  What are you guys buying?

Saturday, January 12, 2013

Contributing to my Roth IRA

I was able to contribute to my roth IRA this week, thus eliminating goal number 1 from last week.  It wasn't as straightforward as it is for most people, as I make too much income to regularly contribute to a roth, so I wanted to write about my experience doing it.  I feel like this could serve as a guide for others who want to do the same thing.

So on Monday, I walked into my discount broker's office, and asked to open a traditional IRA, and then immediately convert it into my roth IRA.  They seemed to understand what I wanted to do here, and I walked out of the office thinking "wow, that was easy."  About 5 minutes after I left the office, the person who set up my account called me to ask how much I wanted withheld for tax purposes on the conversion.  I said zero, as I explained to him that the contribution I made to the traditional IRA was non-deductible, and would be made with after tax dollars, therefore there was no need for withholding anything.  He said he had never heard of doing that, so I told him I would check with my accountant and get back to him.

I then called my accountant.  It took me about 30 minutes to explain to her what I wanted to do.  She said she wasn't sure, but that she would look into it and call me back.  About an hour later, I got a call from her saying that she had looked into it further, checked with some of her colleagues, and that yes, what I wanted to do was perfectly fine, and to go for it!   I went back to the broker the next day and set everything up.  On Friday morning, the money hit my roth IRA.

So to sum it up, to contribute to a roth when your income exceeds the limit:
1.  Contribute to a traditional IRA. 
2.  Make the contribution non-deductible - to do this, you'll need to file form F8606 at tax time.
3.  Convert this traditional IRA with the non-deductible contribution to the Roth.  You've now contributed to your roth IRA even though your income is too high to do so normally.

** NOTE - if you have any previously existing traditional IRAs, this won't work.  You cant just "choose" to convert the non-deductible IRA contribution to the Roth, if you have previously contributed to an IRA, you will only be able to convert a portion of the traditional IRA to a roth without tax implications.  For example, if you do this and already have $5000 in a traditional roth, $2500 of your conversion will be from the non-deductible contribution, and $2500 will be from the previously created (and so far not taxed) traditional IRA, for which you will owe taxes on the conversion.

The only thing I'll say is that make sure you let your accountant know that you're doing this at some point.  I knew this going in, but I'll need to file form F8606 to make the IRA non-deductible.Other than that, I think I'm all set to go.  Be on the lookout for a post about what I buy with the money in my roth!

Saturday, January 5, 2013

2013 Goals

Since another year is in the books, its time to make new goals for 2013.  I've had some of these in the back of my mind for a while now, so I wanted to get them down here.  As last year, I'm sure they'll sort of change and evolve as the year goes on, as the market can change dramatically over time.  I'm obviously not going to let these goals get in the way of good financial sense, but I will do my best to accomplish them.

1.  Buy a House.  This isn't exactly new; I've been looking for a place since September.  I guess the goal here is to buy something that makes financial sense without going overboard, but still getting a good place to live.  I live in the North East in a pretty expensive area; money doesn't go very far when buying a home.  I have a pretty sizable down payment saved up, I'd like what I have saved to cover at least 20% of the cost of the house.  At the same time, I don't really want a place that's going to require me to put in a lot of money to make it livable.  Hopefully I'll be able to get this done sometime in the first half of the year.

2.  Contribute to my roth IRA.  I plan on doing this as early as next week.  Unfortunately, its not as easy as writing a check and dropping it off at the broker's office; I think my adjusted gross income is over the limit for a 2012 roth contribution.  In a nutshell, I plan on contributing to a non-deductible IRA and then converting it to a roth.  I'll post here on how it goes.  As far as what I'll invest it in, I will probably go with monthly paying, higher yielding dividend stocks.  As I receive and accumulate these dividends, I plan on using those to purchase fairly priced, lower risk dividend growth stocks (PG, T, INTC, etc.).

3. Plans for my taxable dividend investing:
a.  Diversify.  If you look at all of my 2012 purchases, most of them (especially in the beginning of the year) were in the same few stocks (LINE, CLMT, ERH).  This isn't to say that I regret my decisions to buy those stocks, its just that I certainly realize the risk I'm taking with only having a few stocks.  I think only owning a few things is fine when first starting out, but now I've been taking this seriously for a while, and its time to branch out some.
b.  March/June/September/December dividends.  Keeping with the diversification trend, I would like to try and focus on investing in companies that pay in the months I have listed here, as those months are my smallest payouts.  Again, I'm not going to invest in companies just because they pay in these months, nor am I going to invest in companies that pay in these months in favor of a better-valued stock that pays in another month, it would just be something I'd like to do if possible.  By the end of the year, I would like to be receiving $700 a month in dividends in these months by March 2014.
c.  Total dividends.  As of right now, I am projected to make $22,234.17 in non-roth IRA dividends for 2013.  By this time next year, my goal is that I am projected to be making $26,000 in non-dividend income.  I realize that this is an extremely aggressive goal, but I am confident that in addition to the money I'm going to put into my account to invest each month that my dividends will continue to grow.  Last year I set a goal to make 2K more in dividends than I did in 2011 (from 18K to 20K) and I blew that number out of the water by May.  This goal will be a lot tougher than the one I set last year, but I'm confident that I'll be able to hit it.

Well, those are my financial goals for 2013.  Wish me luck!  I'll be interested in reading everyone else's 2013 goals.

Tuesday, January 1, 2013

December Dividend Update

Happy New Year!

Well, now that 2012 is in the books, its time to reflect back on the month of December and the year as a whole.  2012 is a year that I'll remember for turning the corner, both financially and in life in general.  In this post, I'm going to give an update on my dividends in December, and also on my total dividends received for the year.  First, for December:

Taxable Account:

ERH - $75.00
O - $10.60
INTC - $22.50
FGP - $50.00
DUK - $21.42

total from taxable account - $179.52

** - I actually received more dividends this month from companies that typically pay in January, but I'll be reporting those next month here to keep things consistent.

Roth IRA:

ARR - $99.90
STB - $18.82
GGN - $9.00

total from non-taxable account - $127.72


Kind of small, but better than September!  Compare this to December 2012, in which I earned only $195.89 total (compare here).

Now, the yearly totals:

Taxable Account: $20,349.50 (2011 total - $16,016.10)
Roth IRA Account $1,544.83

Wow, a 25% increase in dividends from my taxable account, that's quite the raise!  I doubt I'll see that much from 2012 to 2013, as 2012 was the first full year I took dividend investing seriously.

I'm hoping to work on my goals and post them this weekend.  I'll be interested to see how everyone else made out in 2012!