Always Be Buying
One of my favorite mentors in the stock market world is Jaspreet Singh. He runs a company called Market Briefs and does a bunch of YouTube videos about money management and wealth accumulation. I have learned a lot from him and highly recommend everyone to listen to him. One of his suggestions is to split every paycheck into buckets. His suggestion is 75 percent is the money you spend on living. That is your mortgage, rent, groceries, gas, and whatever lifestyle things you want to get. Of the remaining money you put 15 percent into an investing account and the last 10 percent into your emergency fund. Personally, I think that you should reverse that and put 15 percent into the emergency fund until you have built it up a good bit. It should be at least 3 months of living expenses and probably more. But either way you have money going regularly into both of these accounts.
He suggests that these be 3 separate accounts at the bank to keep you from “accidentally” buying a wide screen TV with your emergency money (because a sale at Best Buy is NOT an emergency!). What I did was put my emergency money into a money market account and also have some in a CD Ladder. I set up the CD Ladder so that I would have one CD coming due each month as a paycheck replacement in case I lost my income. The money in the Money Market makes a better interest rate than in a standard bank account, though I keep some in the bank just for convenience.
Now that I am retired, I don’t have a regular paycheck other than Social Security, which doesn’t even really cover my living expenses, so I have to pull money from the other investments that I have built up through the years in my IRAs. So I would have a lot of work to do in cutting expenses if I could only use 75% of my Social Security money! I’m trying but it’s not easy.
Getting back to the Always Be Buying (A.B.B.) plan. Jaspreet indicates that this is the percentage of each paycheck that you set aside for investing, and since it is regular, you can even automate it, so it happens without you even seeing it. But can’t do that, at least, not right now.
My plan
My emergency fund is pretty high right now and the interest rates in my Money Market account are pretty high, so while I want my emergency fund to keep growing, I plan on taking a small amount ($25.00) each month and use that to invest. I currently have 9 ETFs which will benefit the most from a regular infusion of money. $25.00 isn’t a lot of money, but it can at least be regular, since I get the interest payment every month.
I had purchased these ETFs with one small cap, one medium cap and one large cap, plus one Foreign Stock ETF, four high dividend ETFs and one renewable energy ETF. I have picked 3 of the dividend ETFs and the renewable energy ETF to benefit from my plan. Each month I will rotate the $25.00 into one of the 4 stocks so that over a year, each of them will have gotten $75.00 of new investment.
I know, it’s not a lot of money, but I don’t have a lot to spend. At least not regular income money. So, it will have to do.
And in addition…
Once in a while, I get a small bit of extra money. If I should sell something, or do some odd job for some extra money, I will put that into an investment account (basically just send it to my broker who has a money market to hold money) and then choose what to do with it at that point. While there are some new stocks that I would love to get, I’m going to hold off on them for a while and use this money to add to my positions in the stocks I currently own. Right now, I am thinking Coke, Proctor and Gamble and Realty Income Group. When I bought them initially, I didn’t get very many shares, so I want to increase that at this point.
So that’s the plan, and we’ll see how it works out.
