Earnings Call App

Every quarter companies release a quarterly or annual report, and executives discuss the quarter will Wall Street analysts. Public companies often link to the call on the investor relations section of their website. if you own many stocks it can be time consuming to track down all these links. Borsa has a great iphone app that pulls together all of these earnings calls into one place: Link. It has a simple interface that makes it easy to find an recent earnings call of most companies.

Investing Start

How to get started investing money? 1. Create an emergency fund 2. Pay off credit card or high interest debt 3. Maximize retirement accounts 4. Reduce spending 5. Invest in VOO or SPY in a taxable stock account 6. Invest in individual stocks

S&P 500 Entrance Requirements

S&P 500 index funds have been some of the best performing stock ETFs and the individual stocks that make up the index are incredibly desirable investments for most investors. Getting into this elite group isn't easy, Tesla became one of the largest publicly traded stocks before getting in. Market capitalization isn't the only criterion for acceptance by the committee that picks the approximately 500 stocks. One of the criteria keeping Tesla out was the requirement for a year of profitability, since Tesla was unprofitable for many years. S&P 500 also only accepts stocks that trade on US stock markets with sufficient trading volume. There are a number of other minor requirements related to corporate governance and stock share types.

Trinity Retirement Study

 In February 1998, a group of researchers at Trinity College released a study of the safe withdrawal rate (SWR) for retirees. Instead of focusing on income generating investments like dividend paying stocks, real estate, and fixed income, the study considers how the total return of a portfolio of stocks and bonds can support a fixed withdrawal rate over a long period of time. If over that time period the portfolio balance doesn’t go to zero, it is considered safe. Using past histories of returns and inflation a 4% withdrawal rate is prudent with more stocks in the portfolio. An all stock portfolio can support a higher withdrawal rate, but with a lower probability of success.

Retirees don't need to consider only income producing assets for retirement. With an appropriate SWR, the capital gains of stocks and bonds yield income for retirement.

Large dividend ETF using covered calls

 The NASDAQ 100 Covered Call ETF (QYLD) offers a very attractive yield by holding the NASDAQ 100 index and writing covered calls on that holding. (Also known as a buy-write strategy) The ETF yields about 11.5%, which can fluctuate based on the volatility of the index. The ETF monthly sells at-the-money call options and uses that to pay a monthly dividend. The fund has paid monthly dividends for 7 years. The fund generally doesn’t seem to generate much capital gains and the fund has a 0.6% management fee. In March 2020 the dividend dipped about 20% to $0.18 from about $0.23, but was within the normal range of dividend variability.

4% Rule for Retirement

 This article by Vanguard suggests a dynamic 4% that fluctuates with the market instead of a consistent amount starting from 4% of the beginning net worth. This seems possible if most expenses aren’t fixed, but would probably be pretty undesirable. The recommendation to invest internationally instead of only in the US seems like a much easier adjustment.

Retirement Planner

 Vanguard offers a "Retirement Nest Egg Calculator" for projecting the effects over time of portfolio weighting and spending rate. The calculator found here projects into the future how a portfolio will perform using monte carlo simulation from historical data. It can estimate up to 50 years in the future for someone wanting to retire early in their 40s. You specify your portfolio mix of stocks, bonds, and cash, and your yearly expenses, and it will estimate the likelihood of running out of money by the termination date. It also shows how the portfolio will grow over time. The portfolio returns are based on diversified returns from index funds. One thing to keep in mind when estimating yearly expenses is to include income tax on top of the spending rate if pulling cash out of a 401k or IRA.

This tool is a great way to show the power of compounding for the projected net worth. The projected net worth shows exponential growth in later years as wealth compounds. The further you go out the numbers begin to reach astronomical values.