In December when it was announced that the GOP and President Obama had reached an agreement on tax rates, included in the plan was a 2% Social Security tax holiday. It was intended for this act to put more cash into the pockets of consumers so that they would go forth and be just that. I had other ideas.
I followed through on my plan and opened a Roth IRA account with Sharebuilder. I selected Sharebuilder because their accounts in general (qualified and non-qualified accounts alike) feature cheap, once-per-week $4 share purchases of whole and partial shares, meaning you can invest all of the money you're intending to rather than leaving some on the table when you don't have enough for that last whole share. Sharebuilder also gives you the option of reinvesting dividends for free, a feature that I will be taking advantage of.
As with all of my retirement accounts, I am more interested in growing within them a stream of income to draw out one day, rather than counting on growing a massive chunk of principal and eventually cashing it out. Following this strategy, I went looking for high yield investments with monthly dividend payouts for faster compounding.
To make this search easy, I used Nuveen Investment's CEF Connect online tool to search for investments based on my criteria. I went looking for yields of at least 7%, monthly payment of dividends and, since I'm working with closed-end funds, price-per-share discounts to net asset value of at least 10% (As I'm said, I'm not going for massive share price appreciation, but I still do prefer to buy assets for less than they're worth!).
I found several CEFs that fit my criteria, and after reviewing their compositions, strategies, and past and present performances, I settled on one that invests in non-investment grade debt securities and global equities (I don't want to say which CEF so that I don't have to worry about investment advice or share ownership disclosures - just in case though, this isn't investment advice!). At present it yields over 9% and is sporting a 10.7% discount to NAV.
My first purchase will go through this Tuesday, the day of the week Sharebuilder performs its whole-and-partial share purchases. I have the account set to do this automatically every time there is an amount of cash available that I have defined, which the account presently does have as of Friday when I received my most recent paycheck. Between the automatic deposits from each paycheck that I have set up and the cash balance-triggered automatic investment plan, from now through the end of 2011 this will all be fairly automatic.
0 comments:
Post a Comment