Laying groundwork III

Some few things that you need to follow are:

1. When you leave jobs, first secure your 401k->Rollover IRA. Generally contribute some money, what ever you can to your roth/traditional ira or HSA or 529s.

2. You can invest via systematic plan where you put say a $100 per month or lump sum of $1000 at the end of year.

3. Rebalancing is something that you do periodically - either a designated time of a year like an anniversary. If you happen to read something in news, then think that it is a good idea to rebalance then that is also a good time to rebalance your portfolio. So what is rebalancing? I like to keep it simple by putting in 50% stocks and 50% bonds. For some folks, it is 80% stocks and 20% bonds. Now suppose, stocks have a huge run and you are now 60%  stocks and 40% bonds you book some profit in stocks and move that to bonds to bring it back to 50-50.

4. Tax loss harvesting : As said earlier, it is just a tool and not necessarily a core strategy of your investment. It is more like - Hey, I messed up but might as well book some tax losses and get some deductions there by declaring it in taxes. Once I get that money, I might put some money back into same stock and maybe put the rest in some other promising stock. 

5. There are tons of momentum and hot stuff that will come always. New ideas and strategies and new forms of old ideas that are rehashes just like movies coming out every summer. Don't get sucked into any of those. Enjoy the oceans, travel, art, read a book or what not.

6. Dividend investing: That is one old form of investing in which you invest in utility stocks. REITs are also good dividend payers. Always keep some money in this bucket.

7. Buy low ranges and sell high ranges: I kick myself in the back for not buying Apple when it was in the 30s and 40s in the 2008 stock market. It went up like crazy after that. I bought some then and sold them. 

8. How much hold? In buy and hold, typically if you buy something for 100 and see it become 200 and then back to 100, one wonders what is the point of the buy and hold strategy. No one can call 200. So maybe you are lucky to call a 150 or a 180 or at best a 195. What to do when you call 150? Plough down more thinking "your stocks has got some legs" or "she will tank any moment now?". Volatility and gyrations are part and parcel of the market. Hence the play in ranges are good. YOU have to figure out how much time and more importantly mental space one has to devote for such things. Work and family are way higher priority compared to finance - especially stock market trading unless of course you work in wall street. Even in this case, you are so heavily regulated that you can't just act on your own whim.

9. A good idea would be to have a bucket list of stocks. I rejected DOW and some chemical companies because I don't like their business and I would be invested in them via ETFs or mutual funds on which I don't have control over, but on my own I will never invest in them or a GM stock such as Monsanto. I am not a fan of genetically modified foods and think of it as unwise application of science. There are many financial stocks where I have my own discretion. I don't put more in banks now while I have always stayed away from Goldman Sachs etc. I do like insurance sector but stay away from certain names there which are very concentrated stocks.

10. Institutional investing is a good sign. Much more than the beta and P/E I like to see how much % of stocks are owned by institutional investors. Not having family owned or human controlled and relying more on institutions is generally a welcome sign for me. You might have your own such principles and convictions. List them out as above and add them and this will form the basis of your investment.

An average investor in the US will easily come to the tune of a million or more - counting your home and possibly a rental, your 401k over life time and IRAs and medical accounts. A million is not a small amount and if invested wisely, you are looking at comfortable secure retirement. At the very least, you need to attain a good degree of financial independence. FI is good and cool and gives you the freedom to help others, pursue what you truly like, pursue arts, power to say no which I think is one good thing about money.