Investment plans

Recently I hit a milestone from a financial perspective. Beth and I have been saving for the last few years and now have accomplished two of my main goals, we have a three month emergency fund, and we have saved enough for the adoption fund (minus some legal fees, nursery outfitting etc). With that in mind its time to start working on a new war chest of money.

I have usually set aside a few hundred dollars in my ING Direct (now Capital one 360) online account as mid term cash reserves. That worked well for a while, but the interest rate was always sad. It currently sits at 0.75%. Better than my checking account, but nothing to write home about. So I want my money to do some more work. I need to go a bit riskier and focus on real honest to God investment. Over the last few weeks I 've developed a new strategy.

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First I 've been playing with Betterment for several months and I 've been generally happy with their approach. I 've set up an automatic deposit of $200 a month into an account I 'm calling "Spending Money." This is used to invest in a big basket of stocks and bonds that will, in theory, grow at a better more reasonable rate than my sad 0.75%. There 's risk here, but for this account I go 70% Bonds and 30% stocks as I view this as short term investment money that I can and will pull out for large home projects, vacations, etc.

The nice thing about betterment is that you can set up a bunch of sub-accounts, with different goals and time lines. It will then calculate how much you should set aside and what mix of stocks and bonds you should use to maximize your chance of meeting your goal. So if you want to take a trip to Italy in three years, just set up a goal, name is Italy, say you need three grand in three years. It will tell you how much a money and make a one click setup available.
Its the kind of "set it and forget it" approach to investing I approve of. I only have the "spending cash" account right now, but I may set up some other goals later on, like finishing the basement, or buying property for the next house. And you can withdraw money whenever you want. They got in trouble for saying it 's like a bank account, but I can understand the thinking behind it.
I also plan to do larger deposits into this account when I have leftover money at the end of the month. As long as you set an automatic $100/month your cost of using the service is 0.35%, with a drop to 0.25% after you hit $10,000.
So if you have a few extra bucks at the end of each month looking for a home, take a look at Betterment.

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My second area of investment is VERY long term. My goal is to retire at 57. In order to do that I need to get some additional sources of income and investment other than the pension I 'm working on. With that in mind a dividend based investment strategy seems to be in order.
I started by looking at just some stocks I was interested in buying. Then I noticed that some of them paid an annual dividend, usually in the 3-5% range. "Well," I though "If they pay as much as my bank pays, and I get to own the stock that will slowly but steadily rise over time, that's like double dipping. I like double dipping." So i started to research.

I read this book, Retire With Dividend Growth: A Better Way, and it made a ton of sense. I 've further followed the Dividend Growth Investor blog, and started to do some math.
If Ispend $500/month on a common stock that grows 5% a year. and that stock pays 3% commission a year, then by the end of the second year, I 've spent $12,000, I have $13,000 in value, and I 'm making $30 a month is dividend, that just free income. I 'm assuming I 'm using that money to buy more stock with, which certainly help get that compounding up.
Lets say I do this for five years, then the costs of everything else just gets too much, and I can 't put away more money. At this point I have $36,000 value in my account and a monthly income stream of $90. Adding no more money to this account but just reinvesting that dividend. by the time I retire I 'll have a monthly income stream of $450, or $5,400 a year. Not amazing, but that certainly fun money. It pays for a car, or two vacations a year.

Lets say I continue, $500/month. This gets easier over time since $500 means less later on than it does now. 25 years of $500 a month gets me a value of roughly half a million dollars, with a monthly dividend of $1,200. Seems like rent is paid forever.

Compare this to just putting $500 in a bank account at 1%: Value of $151k with a monthly interest stream of $125. Same money with vastly different results. I could stop saving in five years and still beat the bank account.

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I set up an account with Tradeking. I went with them because they have the lowest transaction fee I was about to find at $4.95 a trade. You can find a few places that are lower but they either do bulk trading where you don 't know the price you 're getting, or you need to pay a lot of money up front. I 'll discuss some of these other options at a different time.
So far I 've only made one purchase, 28 shares of GM. this is not a long time recommended dividend stock, but I believe they will be, so we 'll see. In the future I 've developed a trading system that will focus on long term winners with LONG history of dividends.

Spicy Bread and Butter Pickles #3

I've tried several Bread and Butter pickle recipes over the last few years since I started growing cucumbers. After the first few rounds, I decided that spicy red pepper flakes added a nice bite to these and complimented the sweetness. So this is my final Spicy Bread and Butter recipe. There's no reason to make a non-spicy version.

Spicy Bread and Butter Pickles #3

• 10 Cups of sliced cucumbers (i used about 8 cucumbers, but this will vary with type)
• 1 large sweet onion - diced or sliced, depending on if you like to eat the onions)
• 1/2 Cup pickling salt
• 3 Cups white vinegar
• 2 Cups sugar
• 2 Tbsp whole Mustard Seeds
• 1 tsp celery seeds
• 1 tsp ground turmeric
• 1 tsp red pepper flakes
• An additional 2 - 3 tsp of red pepper flakes
• Pickle Crisp

Combine the sliced cucumber and onion in a large bowl. Separately dissolve salt in two cups of warm water. Pour salt water over cucumber and onion mixture. Add additional water (cold is fine) until mixture is covered. Set aside for 2.5 hours. [This wait time is important. We are using the brine to move salt into the vegetables. This is the only salt in these pickles, and if you cut this time short you'll notice the the lack of taste.]
After the soak in the brine, pour out liquid, rinse and drain cucumber onion mixture. Set aside.
In a large pot (i used an 8 Qt) pot combine the vinegar, sugar, mustard seeds, celery seeds, turmeric, and the teaspoon of red pepper flakes. Bring this to a simmer and stir until sugar is dissolved into the vinegar. Once this is mixed together, add cucumbers and onions. Simmer for ten minutes.
The pickles are now done. This recipe makes 5 pint jars that can be canned in a boiling water bath for 10 minutes. Any pickles that don't fit, I usually put in a Tupperware container in the fridge and eat.

The Outcome:

1. Great, a real crowd pleaser.
2. I recommend you let them sit three days in the fridge or two weeks in the jars before consuming to maximize taste.

Flank Steak with Quick Pickles

Tried a new recipe today. Found it in Southern Living. Had to make a few modifications, but overall it turned out great. The best part was actually the Quick Pickles. Only take 30 minutes (but I'd give them an hour) and add awesome flavor.

Quick Pickles:

Here's how I made them.

• 4 Cups fresh thin slices cucumbers (I used pickling cukes from the garden)
• 1/2 cup slice yellow sweet onion
• 1/2 Cup white vinegar
• 3 Tbsp sugar
• 1 tsp minced garlic (I used jarred)
• 1 tsp salt

Place the cukes and onions in large bowl. Bring vinegar, sugar, garlic, and salt to a boil in a small pot until everything is dissolved. Pour over cukes and onions and let sit for at least 30 minutes. I tossed them once every ten minutes or so.
Flank Steak

• 2 lb Flank Steak
• olive oil
• salt & pepper

This is simple. My grill was out of commission as I'm resurfacing the deck. So let flank steak come to room temperature. Brush both sides with a thin layer of olive oil and salt and pepper (I go more liberal with this). Let sit for at least 15 minutes for the salt and pepper to penetrate.
In the broiler, with the rack set 7-8 inches below the heat, I cook the flank steak 5 minutes a side, and then one more minute on the original side. Remove and cover with aluminum foil. Let sit for 10 minutes before carving (very important, or you'll lose juices and get a tougher bite).

Remember: always cut with the grain into chunks, then across the grain for slices. Again this will help avoid tough pieces of meat. If done right it will present well and be very savory.
Steak Sauce #1

• 1 Tbsp sesame oil
• 2 tsp minces garlic (I used jarred)
• 1/4 cup soy sauce (i use low sodium, but choice is yours)
• 1/4 water
• 1/4 Cup brown sugar
• Juice from half a lemon
• 1 tsp cornstarch + 2 Tsbp water

Saute the garlic in the sesame oil for about a minute. Avoid burning the garlic or over heating the oil by watching your heat. I used just below medium on my stove. Add the Soy sauce, water, brown sugar and lemon juice and simmer for about 3-4 minutes. Finally make a rue with the corn starch and water (mix them together until they form a cloudy liquid with no hard particles, and add it to the pot. Stir and simmer and an additional minute. This should thicken it up a bit.

The Outcome:

1. Steak tasted great, cooked perfectly and not chewy, which was a concern of mine
2. Pickles were okay. I think they need some more seasoning. If you've got some ideas, please post a comment.
3. I didn't drain pickles before plating, and that was a big mistake. The steak sauce was downed by the brine, except the stuff that sat on top of the steak.