Posts by jsangl

Joseph Sangl’s Current Investments – 2018

Full Disclosure: I am not a certified financial planner, nor do I sell investments, insurance products, or other similar financial products. My goal in sharing this information is to shed light on a topic that few people understand well. It is my hope that this information will help inspire more people to climb the I Was Broke. Now I’m Not. Ladder (download a free copy HERE) and become wise investors so they can live fully funded lives.

=| 2018 INVESTMENT UPDATE |=

It’s that time of year again where I review my current investments and take a moment to philosophize about the future of investing.

My investing activity is driven by a powerful truth: “There is no HARVEST if you do not INVEST.

Just as a farmer can not have any hope of a harvest if seed isn’t put into the ground, we can not expect to reap a financial harvest if we do not invest! In May, I will have been an active investor for 22 consecutive years. That is half of my life! For the first six years, I invested exclusively into market-based investments via a company retirement plan (401k), college savings plan (529), and a small stock trading account. Since that time, I have diversified into real estate and small business along with a dabbling in precious metals. This approach has yielded excellent results.

As I prepare this report each year, I always take time to review previous updates I have provided. A statement made in my 2007 update bears mentioning again: “Many people are diversified WITHIN the stock market. It is also important to be diversified OUTSIDE of the stock market.” I encourage all investors to invest within the stock market, but to also explore other investments such as real estate, small businesses, franchises, or precious metals.

One of the most common questions we receive here at I Was Broke. Now I’m Not. is: “What investments do you recommend?

My answer is always, “I don’t recommend specific investments. I can only tell you the investments I own, and they have worked well for my family. The investments you choose are up to you.”

Below is a chart of my current investments – click on the chart itself to download a printable version.

The market experienced amazing growth over the past year. From my last update on March 30, 2017, the markets have soared. Aided by decreased regulation, major business tax reform, increased consumer confidence, increased capital spending, a fully employed workforce, and an improving worldwide economy, all of the major market indices have experienced substantial growth. The Dow Jones Industrial Average has increased 20.01%, the S&P 500 by 16.90%, and the NASDAQ by 28.24%.

Throughout the year, I continued to actively trade stocks. I have sold several individual stocks while deepening my investment into others. Overall, my investment strategy has continued on a straight-forward path of maintaining a balanced portfolio with approximately 32.64% real estate, 27.01% small business, 24.66% stock market and 11.57% cash.

My views of the investing market place:

  1. Stock Market Strength  There has been significant earnings growth which has supported a substantial increase in company valuations. One key measure to track is the “P/E Ratio” – Price-to-Earnings. This is the ratio between share price and the earnings per share. Currently the DJIA is priced at 26.17 times earnings (it was at 21.12 last year!) and the S&P 500 is priced at 25.86 (it was at 24.68 last year). This is not sustainable. One of two things must happen: earnings must increase substantially or share prices will drop. My belief is that a combination of the two will happen. Earnings will indeed grow due to tax reform while share prices will moderate to achieve a more reasonable P/E. (Side Note: My weighted balance P/E Ratio for my individual stock investments is a more acceptable 14.58). While I could be wrong, it is difficult for me to see major growth within the stock market in the near future.
  2. Turmoil and Roiling  There will be deals available in public markets, but I suspect they will be related to companies that experience major breakthroughs in new products or services.
    • Amazon is one of those companies that seems destined to completely redefine consumer behavior in multiple industries. Most of my mutual funds hold a substantial position in this company. “The Investment Company of America” [AIVSX] holds it as their third largest holding (2.7%), “Fundamental Investors” [ANCFX] holds it as their second largest holding (3.8%), and it is the top holding (6.9%) for “The Growth Fund of Ameria” [AGTHX].
    • Interest rates will be going up which will create earnings pressure for highly leveraged (meaning: lots of debt) companies. You can see the debt load of a company by looking at their Balance Sheet.
    • Oil prices have been creeping up as well. This can create pressure on earnings also for companies highly dependent upon transportation of their goods or for delivery of their services (think: airplanes, freight companies).
  3. Deals will be found – but they will have to be looked for! As I travel throughout the nation, I still see enormous amounts of building activity. Cranes in the skyline of every major city, new subdivisions being constructed, and lots of activity in the mortgage industry. The travel industry is on fire with hotel, car rental, cruises, and air travel all issuing price increases. Will this be able to continue to grow? If the answer is yes, then we must ask the next question: will it be able to grow profitably?
  4. Tax Reform  With more money going into the pockets of an estimated 87% of tax-payers (figures vary), I’m confident that Americans will do what they do very well: spend more money. This will continue to stimulate the economy with a measure of growth.

I will continue to invest in both individual stocks, index funds, mutual funds, real estate, and small businesses. Occasionally, I might pick up some shiny metal (the silver-colored one) along the way.

I welcome your thoughts on the investing market place as well. What do you think? What are your strategies?

My favorite investing information I’ve encountered over the past year:

Warren Buffet’s annual letter to shareholders (2016 lettertakes a few seconds to download, but well worth it)

  • I found Warren’s discussion of comparing hedge fund investing with index funds to be very compelling.  I dare you to go read it. It begins with the last paragraph on page 21 and continuing through page 24. I found it to be both wildly entertaining and tremendously enlightening.
  • In his 2017 letter, Warren writes the concluding piece to this discussion and “the bet.” I triple dog dare you to go read it. It begins with with the third paragraph on page 11 and concludes on page 14.

Read previous installments of Joe Sangl’s “Current Investments” posts HERE.

Have the Best Financial Year in 2018

Are you ready to have your best financial year ever? A year where you look back and see noticeable changes to your financial status: an increased bank account balance, reduced debt, and growth in your investments?
 
There is no better time than 2018 to achieve your best year ever!
 
Have the Best Financial Year in 2018
 
Step #1  Identify your current status.  Here at I Was Broke. Now I’m Not., we identify three different financial status points: STRUGGLING, STABLE, or SURPLUS. Most people can readily identify their current status. This allows you to clearly determine your next steps.
 

 

(Download your free PDF copy of the I Was Broke. Now I’m Not. Ladder)

 
Step #2  Identify your next rung on the I Was Broke. Now I’m Not. Ladder.  Once you’ve identified your current status, it is helpful to look at the I Was Broke. Now I’m Not. Ladder (pictured above) to determine your next step. Below is some general guidance for each financial status.

  • STRUGGLING  If you are struggling, your goal should be to achieve Rungs #1, #2, and #3 this year. Consider the results that you would enjoy:
    • You would understand your “why” (Rung #1 – set goals)
    • You would have financial margin (Rung #2 – a month’s worth of expenses in savings)
    • You would begin to benefit from having your money work for you through investments (Rung #3 – investing each month)
    • KEY TOOL: Monthly Budget (we really like these free budgeting templates)
  • STABLE  If you are stable, your goal should be to position yourself to prosper and experience surplus. Your goal should be to work through Rungs #4 and #5. Consider the results you would enjoy:
    • You would eliminate all non-house, non-business debt! No student loan debt. No credit card debt. No furniture loans. All of your vehicles would be paid off. You wouldn’t owe any family members or friends.
    • Your savings account will have grown substantially which provides you with incredible margin to focus on the things that matter most!
    • KEY TOOL: Debt Freedom Date Calculator (here’s a great one – download it)
  • SURPLUS  If you are enjoying the blessings of surplus, you can position yourself to live a fully funded life that positively impacts the lives of those around you: your family, the least-of-these, and causes you are passionate about supporting! It is time to climb on up to the top of the IWBNIN Ladder by completing Rungs #6, #7, and #8. Consider the amazing results you get to experience:
    • You would have 30-percent of your gross income in investments which positions your money to earn more money for you – a secret all wealthy people have discovered.
    • You would have zero house payment. None. Zero. Nada.
    • KEY TOOL: Investment (this is a great, and simple, calculator)

 
Step #3  Set five key financial goals for the year. Rarely does anyone accomplish anything great without first making it their goal.

  1. INCOME GOAL Be sure to think outside of your normal income source(s). What are some alternative ways to produce more income this year?
  2. GIVING GOAL  What are the causes you want to support financially throughout the year?
  3. SAVING GOAL What are the things you are saving for? Consider your dreams, both short- and long-term. What are some expenses you could eliminate from your life that would allow you to boost your savings?
  4. INVESTING GOAL This is money that is positioned to grow. There might be some risk required (think stock market), but it provides you the opportunity to beat inflation and grow your money to a level such that big-time dreams become possible. Dreams like retirement, paying for college educations, and that big trip around the world!
  5. DEBT ELIMINATION GOAL Take a moment to document all of your debts. Which ones would you like to eliminate before the next year ends?

We prepared a handy DOWNLOAD for you to use to document your goals.

[2018 Financial Goals Free Download]

 
Step #4  Establish accountability. No matter the passion in which we pursue our goals, we are all susceptible to falter along the way. Share your goals with someone, but don’t just share with anyone! Share it with someone who shares similar goals and has already achieved many of the same goals you are pursuing.
 
Step #5  Increase your financial education. We have all heard the famous statement: “If you keep doing what you’ve always done, you’ll keep getting what you’ve always gotten.” The same is true with your financial future. It will require an investment from you – and in you! Read some financial books. Attend a financial conference or two. Hire a financial coach. I’ve never heard anyone say that they regretted investing in their financial education!
 
Accomplishing greater things will require activities and decisions you may have never made before. It will cost you time and money. It might make you feel uncomfortable, and the truth is that most of your friends and family will think you are plain weird to do something like this. Just remember this truth: “There is no growth in the comfort zone, and there is no comfort in the growth zone.”
 
You are positioning yourself to prosper. Congrats! Let’s have an amazing 2018.