November 1, 2007
You haven't gotten anything from me the last few days because I have been working as much as I can on the revisions to Income Planner. Write, rewrite and rewrite again. And this is only in regard to the portfolios and not the regular pages in IP.
Basically this is what I've come up with as we move forward. There will be several different kinds of portfolios along with one that you can create on your own.
There is what I call the 7.5% Core Bond Portfolio which you should be familiar with by now. Because bonds have taken a beating since mid-August, an equal position in all ten of the bond funds today would yield about 8.25%.
Then I set up a tax-free bond portfolio that again you should be somewhat familiar with. An equal $ amount in each of the ten bond funds would yield a tax free 5% which could be a tax equivalent yield as high as 8% depending on your tax bracket.
Next I am keeping the two ETF growth portfolios that I put together earlier this year and which were listed under my other website - http://www.etfchoices.com/.
Finally, I made a change as to the approach to what I labeled the $20-$50-$100k conservative, moderate and aggressive portfolios we started out with this year. We found out that when the August downdraft occurred, it didn't matter what we were in, everything went down with it. Since then we have some rebounds but it's been up and down with the whims of the market. At least all of the dividends have continued to be paid out as we had hoped for. Those portfolios will still be shown on IP and if you purchased any of the securities in the portfolios, stick with them. My only concern is with DCA and DFR since the mortgage/real estate market is so shaky (as we found out again today with the Citigroup news). These will have to be watched closely since I don't know how long it might take for them to rebound. In hindsight, I wish I had incorporated more securities in both the commodities and shipping sectors that had paid a high dividend, but I felt they were too volatile. Diana Shipping has gone up 160% (without counting the dividends), but I only included it in our aggressive portfolio. So what can I say? Like we saw today, markets can swing in a heartbeat.
What I have learned in the emails I have received, is that many of you pick and choose among the funds in the portfolios rather than go with an entire group within the portfolio. Only two folks have emailed me this year that they bought into an entire portfolio. So I could be wrong, but I only know from those that contact me.
It also takes an incredible amount of time to update all portfolio values since each one was set up to hold a different amount of $ or shares in each position. Its much easier to update and understand if we just go with an equal $ amount now. Then we can easily compute the average yield you would be looking at.
So, for lack of name creativity, I thought I would call it the "Create your own portfolio" portfolio. What I did was to select 43 (I think that will be the final number) funds and individual securities over a broad range of sectors that pay us a high monthly or quarterly dividend. Some of these I have owned myself for years and have confidence in their management while others are where I would put my money today if I weren't already so fully invested. You also know that I speculate a lot (check the Purchases and Sales tab), so money has to be set aside for that too.
I think you'll be able to follow the table well enough and I set up an example of a portfolio I would put together for myself. You may want to go with that or you may want to switch one fund or security for another. But if you were to place an equal amount of $ into each one, be it $1,000 each or $5,000 or $10,000, etc., by adding the yields together and dividing by the number of funds making up your portfolio, you'll approximate the average yield that you could expect from your portfolio. Hope that doesn't sound too confusing.
So stay tuned and I'll be back to you in a couple of days. If you want to investigate what I've done so far, use your IDs and Passwords and go to the Portfolios tab and get a feel for it. I'm not done with the "Create" portfolio yet and once again I've had trouble with the text editor from my web hosting company in getting the columns to line up nicely. But, you've heard me complain about that before.
Have a good evening and a good day tomorrow.
Pete Lipke
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