Something New
Taking on new projects with you
You may have heard the term ”DRIP“ and asked yourself “What is that? Well, wonder no more! In this post I will be explaining DRIP from the eyes of a beginner and helping everyone reading understand this incredibly powerful investing tool.
The Acronym DRIP stands for Dividend Reinvestment Plan. This is just a fancy way of saying “If you own dividend stocks those very stocks will pay you a portion of the company’s earnings (usually paid out once per quarter but some do vary) just for holding them, nothing more.”
Dividends could be paid out in two ways:
1. Cash
2. Additional stocks (DRIP)
Cash is just that you get the payment as income which is a nice way to earn money with little work.
If you decided not to take the cash option and pick DRIP instead, the money that would have been paid out to you is instead used to buy additional shares of said stock. This is most beneficial because it allows you to buy fractional shares.
Let’s use a very simple example, let’s say stock XYZ is paying out $1.00 in dividends and that stock is trading at $10.00. You would receive 1/10 of a share just for holding that stock.
This really helps grow your position whether the stock is either cheap or expensive. Here’s another example, say you own Coca-Cola Co stock, (symbol KO) which at the time I’m writing this blog is trading at $44.88, you can increase your position by a whole share depending on how many shares you have of this stock.
For KO you would need to own 109.5 shares to get one full share from your dividend reinvestment. Just to make that clear, this would be per quarter, but if you are thinking about yearly, the shares needed would only be around 27.375 shares to see one full share growth in a year. Think about that for a second, you are gaining an extra share of KO from just holding those 109.5 or 27.375 shares, that compounded over years will really add up to some real money.
Let look at a stock that is trading at a higher price like 3M (stock symbol MMM) which is trading at $157.04. You would have to own 106.9 shares to get one full share from your dividend reinvestment. Doing the math that’s a lot of money to have invested in 3M to see that full share and that’s where the power of DRIP comes into effect. You really don’t need to have that many shares. If you just own 26.725 shares you would see that full share in less than a year because every quarter you will be able to get a fraction of 3M shares which would add to your position and the growth is never ending.
Another thing that I would like to tell you about is that DRIP also takes advantage of what is called “dollar-cost averaging”. When it comes time for the dividend to be paid out you are getting the shares at whatever the dictated price is at that time. This means that you are reducing the impact of volatility on the overall purchase and never buying the stock right at its peak or at is low. Instead, you are just averaging out the price as the stock is moving up and down over time.
I will leave you with this, if you don’t need the money that you are earning from your dividend, you should consider enrolling in DRIP because you will benefit way more over time from taking this route instead of just taking the cash.
Over time these small DRIP payments will only get larger and larger helping your account see some real movement year after year, not just in capital but in your overall position holding. It will help your account grow from a seed to a full-grown tree where each branch is paying out for your future. Be patient so all your hard work and time will pay off.
And as always, have a great day and keep learning and moving towards your goals, never stop pushing!
Let me be honest with you, there was a time that I felt that the only way one could enter market trading would be to have a sizable account like something around $25,000, but that is far from the truth! Today, with $0 commission fees really anyone with side money can enter the market. There are so many different platforms to choose from to start seeing real return on your money instead of those very small saving account gains which amount to really nothing in the end. Once you think about the taxes that you have to pay plus inflation, which a lot of people forget about when they consider where they will keep their money, you are really left in the hole instead of gaining.
There are a couple of different ways one could start to day trade. Those ways could be a margin account or a cash account for example.
A major problem that comes from using a margin account with less than $25,000 is you will fall into the pattern day trader rule (PDT). All this means is you will not be able to make more than three trades in a rolling five-day period. Let me break it down for you, the easiest way to think about it is if you make your three open to close trades on a Monday you will be unable to trade again until the following Monday.
On the other hand, a cash account is different in the way that you could take as many trades as you wish as long as you have the funds to continue to trade. Here is how you can envision what I’m talking about, let’s say you have $5,000 in your account and you take a trade that uses up $2,000. Now, you can only trade with $3,000 moving forward because even if you sold your shares that were holding up that $2,000 you now have to wait for those funds to clear.
What I ultimately decided to do was to open a TD Ameritrade account in March and I’m currently using a cash account for the reason that I want the freedom to make as many trades as I want and also, because I don’t have $25,000 to be able to use an margin account(yet?). In March the economy was taking a nose dive, so I was starting my dividend account for long term stock holdings to take advantage of all these great companies being traded at such a discount.
About a week ago at the end of June I felt that it was time that I try my hand in what I really wanted from this account which was day trading. I had just south of $1,000 in my account that wasn’t held up in stocks so I decided to give it a shot! I had been using the thinkandswim paper money account to practice. If you are interested this is how I recommend starting out because if you lose its technically not real money so there is nothing really lost but everything gained because the experience is the most valuable part of using the paper money. I had been using paper money for three months and it was time to put everything that I have learned into action.
I will be putting updates every time I trade recording my gains and my losses for everyone to see. I want to share with my readers that it doesn’t matter where you come from, how much you start with, or what your day/night job is. The truth of the matter is everyone can make something more of themselves and be their own boss, the boss of their own lives not having to answer to anyone any longer but rather being accountable only to yourself.
Since I’m using such a small amount of capital, I will be using a cash account instead of a margin account. The main drawback to using a cash account is that once I make a trade (a buy and sell) I won’t be able to use that same money for two days because I will have to wait for the money to clear. Therefore, I won’t be trading every day, instead I will only be able to trade when the money clears or there’s money left in my account.
The main goal here though is I want to grow this small account to $25,000 where I will be able to access a margin account being able to take trades while not having to wait two days for the funds to clear. In addition, I will have a multiplier on my money meaning I will be able to take bigger traders.
In a later post I will be sharing things that I have learned and things that I wish I knew when I was first starting out. I will say that I’m still very new to this but in a way that’s the point that I want to focus on, sharing my experience as I am experiencing it. This is different from all those accounts out there flooding you with all this information with the endgame of trying to sell you a program for a way to get rich overnight. That’s not what I’m trying to do. I’m just like you trying to learn the ins and outs, so let’s take this journey together and with my mistakes I will teach you what doesn’t work and what does so you too can begin to see your own gains.
As I always say, have a great day and keep learning and moving towards your goals, never stop pushing!
It’s Thursday morning and I will admit that I didn’t wake up at my usual 7:30 or 8:00 am Central Time, I stayed in bed longer then I would have liked too. When I opened my eyes, I saw that it was 8:46 am Central Time so I forced myself out of bed and opened my laptop because it was going to take too long to turn on my desktop and I didn’t want to waste any more time. I replayed the Warrior Trader YouTube stream to see which stocks was at the top of the gap scanner. I found it to be the stock symbol JOB and I pulled up the chart and saw that it had jumped up around $.90 since the open. I missed out on this profit because I didn’t get up in time. Here’s an example of what I mean. If I took a position of 400 shares on this stock from the opening, I would be looking at close to a $400 gain in just 20 minutes of trading. I hope my mistakes, as small as not waking up on time, show you that the market will move with you or without you. So, try your hardest to make the best effort to stick to your plan and your schedule so you don’t miss the plane when it takes off!
Here’s how the trade really went for me.
I bought my first 200 shares of JOB at 9:49 am Central Time for $ 2.365 per share for a total of $473.00. After I bought those 200 shares, I knew I made a mistake, not just because the stock started to head for the down side but also because I don’t like buying more than 100 shares at a time plus it ties up too much capital. I would rather save the extra shares so I can average down if the stock goes south, which is what happened with JOB. After I saw the dive switch directions, I felt that it was such a stong mover that I just got so eager to make my money back, with that I added to my position 100 more shares at 9:55 am Central Time at $2.0901 for a total of $209.01. As I saw it continue to move, I added my last 100 shares at 9:55 am Central Time at $2.175 for a total of $217.50. My average up to that present moment for all my shares was at $2.248. This was more on the high and I should have taken my time to collet myself and see what this stock was doing but I will have to say that FOMO (fear of missing out) really took me for a ride that day. At this point the stock was hitting its lowest point of the morning at $1.70, which I’m sad to say would have been a $200.00 loss. I didn’t want to make a loss that huge a reality so I stuck it out, and let me tell you this. If you are not able to handle losing the money that you have put up then don’t hold the shares longer than you need to because you could very well lose way more while watching it happen right before your eyes.
I sold my shares at two different points because I wanted to make sure that I was able to lock in some profit, so I set a sell point at both $2.30 and $2.35 for 200 shares each. At 10:09 am and 10:10 am I heard that beautiful sound, a sweet sound telling me that both sell orders went through and I was able to lock in a profit of $30.49. It may not sound like a whole lot of money, but thinking back to the fact that I was able to come back from being $200 in the red, I would have to say that I ended on a good note.
Below is an update of how I’m doing so far;
Account Total
$945.67
P/L for the day
$30.49
New Account Total
$976.10
*$.06 misc. fees
Goal – $10,000.00
Left Until Goal Reached – $ 9,023.84
And as always, have a great day and keep learning and moving towards your goals, never stop pushing!
Day 5
This will be my very first update on my dividend account. It’s still very new and small but I’m thrilled to say that i’ve made $7.66 on an account that started with only $1,093.6. Taken at face value, numbers like that don’t sound like anything nowadays because if you do the math it comes out to be around .007%. Regardless, that coupled with the market gains of all my shares makes for a total gain to be $110.60 at the time of this post there will be a 10.04% increase on my account.
I’m not using any of my dividends as income, instead I’m reinvesting it back into those stocks using what is called DRIP (dividend reinvestment plan). This makes it so that whatever money is paid out to me will be used to buy more of said stock. This is the most powerful way that I’ve seen to invest. Essentially, these companies are paying you to increase your position in their stocks. This in turn means that the next time they pay out you will receive more income and the cycle will continue as long as you have DRIP active.
I’m still very much on the young side so I plan to take full advantage of DRIP reinvesting and dollar cost averaging as much as possible. This will put me at a greater advantage later on down the road when I start to pull money for my account for retirement.
Predictable dividend income investing will make all the difference. let’s imagine you’re able to invest $500 per month into passive dividend paying stocks yielding 5%, which is a reasonable amount. With those numbers, you’d end up investing $6,000 per year which would create $300 per year in dividend income. I don’t know about you but making an extra $300 per year for investing what you would have already, I would have to say, is nothing to laugh at. That’s not even including the market gains that you are also receiving on those stocks.
Concluding Thoughts
This is really just the start for this account, it has a long way to go. The plan moving forward is going to be add $500 per month into the account hoping to reach the first milestone of $150 in income for 2020. So, receiving $7.66 in income in just three months in an account that I haven’t added to because of uncertain times is a really good start in my eyes.
As always, have a great day and keep learning and moving towards your goals, never stop pushing!
Day 4
Today I woke up with excitement and nervousness because I was going to be making my first set of trades with real money on my small account. I got up at 8:00 am Central Time to get myself set up. I turned on YouTube and tuned into the Warrior Trading channel, where I get the ideas for which stocks I will be looking at for the morning. The channel host, Ross, gives a lot of insight into why stocks are moving in the direction they are. I highly encourage everyone to check out this channel for yourself, in doing so you will gain so much knowledge from this man that has seen both the highs and the lows from trading.
After watching his watch list video for the day, I knew which stock I was going to be focusing on. The picture below shows the top four leading gapers for Monday morning at 8:27 am Central Time. With three minutes remaining until the market opened, the only one that made the most sense to me to trade was BHTG. BHTG, at the time was gapping up 140.6% with 15.11M shares of volume. It was in the price range that I was shooting for with this small account that had just south of $1000, so I knew that I would safely be able to get 200 shares.
I bought 100 shares of BHTG at $3.90 per share for a total of $390.00. Even though I saw that the stock started to go down I wasn’t panicking for the fact being for every cent that the stock went down I was only losing $1.00, so I found solace in that fact that I had some room to play with. I knew that I was also able to get 100 more shares so I could use what is called averaging down, which will lower my take profit point. I continued watching what the BHTG stock was doing and at 8:39 am Cental Time I picked up 100 more shares at a price of $3.50 per share for a total of $350.00, which makes my whole position 200 shares of BHTG at an average price of $3.70 per share. I have marked in the screenshot below in light green, the two points when I picked up shares and in dark green when I sold all my shares. I held my position for less than 30 minutes and at 8:55 am Central Time I sold all 200 shares for a price of $3.85 per share which made for a profit totaling $30.00. It’s not much but for the time that I put in and for the fact that my account is so small I will take any profit over a loss. It’s the small wins that will grow this account, I would rather take base hits than try and swing for a homerun and miss and lose money.
You can see on the chart that I indeed left money on the table because the price did go to $4.14 which would put it at $58.00 that. I know I missed out on these gains, but I didn’t want to take the risk of the stock going south. I took the emotions off of the table by setting a sell point at $3.85 so that once the price hits that number it will sell for me by taking the “me” out of the equation and locking in the profits instead of locking in a loss.
I will be sharing my gains and losses daily so here is a summation of my first trading day.
Account Total
$915.71
P/L for the day
$30.00
New Account Total
$945.67
*$.04 misc. fees
Goal – $10,000.00
Left Until Goal Reached – $ 9,054.33
And as always, have a great day and keep learning and moving towards your goals, never stop pushing!
Day 3
As I sit at my computer, I am working out an action plan on how I’m going to start to tackle all the ideas that I have in my mind. A tidbit of information about me – I have a job where I spend quite a bit of my time because as you know bills are a real thing in this world and it demands its money otherwise you will lose everything that you have. Trying to find the time to set up all these plans will be a project in itself. With that being said, I have made it a point to begin my trading journey starting tomorrow morning.
As soon as the trading market opens up at 9:30 am Eastern time tomorrow morning, I will make some trades on a small account to see how well I can do. After all that is said and done, I will be sharing a rundown of what happened, whether I made or lost money. So, if you are interested in trading or if you just want to see me succeed (or fail) the reveal will be tomorrow night.
That’s all I have to say for now, just wanted to keep this update short and to the point.
As always, have a great day and keep learning and moving towards your goals, never stop pushing!
Day 2
It’s a Sunday night, I’m sitting at my computer reflecting on how this has been something that I’ve been wanting to do for way too many years. For the past seven years, I have tried to start a blog with each time failing to post more than a few posts ending the same way with the site being forgotten about. It’ll be different this time. Why you ask? What sets this time apart from all the rest? Simply put, there is expression within me that yearns to come out and be heard.
What I consider to be my “first ever post”, I will take the time to tell anyone that is willing to listen about the journey I am about to embark on. Join me in the documentation type of journey. All are welcome. All that is, who are willing to hear me out.
There are so many projects that I’m going to embark on, each one something new and something that I know many other people have been wanting to try themselves but just might not know where to start. With this blog, I can help you take out the guesswork with my own personal experiences.
Day trading – buying and selling stocks for both long term and short term.
I have been diligently watching the stock market and tracking the lows and highs since the market crash of 2008 and our most recent one in 2020. Putting hard earned money at risk would make any ordinary American cringe at the idea but there is definitely something to be said about taking a risk, sometimes they pay off and sometimes they pay off REALLY big. Needless to say, I’m not about to take big risks, go all in, or anything extreme of that nature. I’m simply talking about learning to take the trades that will start to put money into my pocket and set me on the track to make something for myself. You know, that financial independence that everyone is talking about nowadays? Yeah, it would really be nice not to have to go to a job anymore. Am I right?
Metalwork, woodwork, blacksmithing – If you are anything like me, then there is a chance that you have seen the show “Forged In Fire” on the History channel. If not, it’s on Hulu and there’s a good chance that you can catch it on TV. Watching this show for so many years had really got me thinking, “Why can’t I try this? What is stopping me from giving it a shot?” I have the space to set something up where I live. You know, the kind of ample space where I won’t be able to burn down the entire neighborhood? All jokes aside there is a real sense of accomplishment that one feels when they are able to make something out of nothing, to be able to make a lump of coal turn into a beautiful diamond so to speak. As for the metal and woodwork they will go hand in hand with the fact that they will help play an important role in helping create that diamond form.
Fitness – this is really just going to be an add-on to the journey that I am taking. It’s going to consist of recipes here and there, fitness programs that I will be working into my regime, and progress updates for those who will be following me on not only on this adventure but new lifestyle change. Personally, I feel if you are going to try to learn something new or expand on the knowledge that you have obtained in your life, why not take another step further and improve both your mind and your body.
Bonus
Cooking – I’ve been cooking for about 12 years now. Being that I’m 25 years young, It’s a little less than half of my life! It’s been a real passion of mine for so long and I feel like if it wasn’t for the Food Network, I wouldn’t even have had it in me in the first place. I can honestly say that it was the first project I took on and really went the whole nine yards with. So as a bonus to this journey of new ideas and new exploration, I will be also including recipes that I will be trying and share how they ended up.
Thank you for supporting me by taking the time to read this very first post. I really wanted to keep everything short and to the point. As always, have a great day and keep learning and moving towards your goals, never stop pushing!
Day One
Thanks for joining me on this life changing journey where I set out to learn new skills and trades while documenting it all!
“The knowledge of all things is possible” ― Leonardo da Vinci
With every day that passes there seems to be less and less time to get anything done and before you know it months and years pass by. This has been the case for me and I feel it may be the case for you as well. Starting to think about all the time that has just gone by with nothing of substance to show, really puts things into perspective.
Now is the time for change! Now is the time that I start to DO! This blog is more than words on a screen, it’s going to be the record of all the projects, all the knowledge, all the crazy ideas that I’ve been wanting to try being put out into the world with the hope that it keeps me bettering myself day after day, but with a much greater goal in mind, helping people like me that may be sitting on the couch, daydreaming at work, or stuck in traffic thinking that they haven’t done much with their life. I’m here to tell you that it’s never too late to better yourself.
Something New 