January 2018 · Rebalancing Act · Uncategorized

Rebalancing Act: January 2018

The Rebalancing Act of January 2018 actually started in October 2017. Back in October, I finally converted my contract to a full-time position. That’s a pretty common thing to happen in the IT space, but that meant I would need to roll over the existing 401k plan I had with my contract firm. That part was nothing new to me. I’ve been working contracts ever since I started working so at this point I’ve rolled over three previous 401k plans. When you roll over your 401k plan, you may have the option to have a broker manage it for you or to manage it yourself.

I understand more often than not, people would just let that money sit. Whether it’s because they don’t want to pay the fee to have someone else manage it, they aren’t confident enough to manage it themselves or the rollover process hasn’t been explained to them.

Whatever the case, I want to share how I’ve dealt with that process with this first segment of the Rebalancing Act Series. With the sum of money that was transferred into my Rollover IRA from my company-sponsored 401k, these are the moves I made:

BUY: Nvidia
Nvidia was probably my favorite purchase because I REALLY wanted a play in the future of Artificial Intelligence technology. This company stock has been supercharged since 2015 and shows no signs of slowing down.

BUY: Costco
At just under $200/share I bought Costco because many American families like to buy certain things in bulk regardless of the overall economy. In fact, over the past 10 years, Costco’s sales have grown a bit over 7%. The earnings per share for Costco has grown around 10% over the same time period. That was enough to get me to buy in…the dividends (quarterly distribution of $0.50/share) is a little bit of icing on the cake too.

BUY: Target
While the stock growth is not supercharged as other stocks in my portfolio, Target is very generous with its shareholders. Over the past 12 months, Target has paid almost 52% of it’s qualified earnings out in the form of a dividend. Not only do they know how to keep us in the stores, but they know how to keep their shareholders at the table.

BUY: Medtronic
Heart health is a cause I feel pretty strongly about. Given that people in my family have had bypass surgeries and some family friends have had stints put in place, I sought out companies that produced some of the tools that help improve lives of folks who have heart trouble. Although they make a lot more than just cardio related medical equipment, that is Medtronics highest revenue generating segment. Doesn’t hurt they pay a nice dividend either.

SELL: Kimball
Plain and simple…this was the worst performing stock in my portfolio and I wanted some extra cash to buy more shares of Nvidia so this guy had to go. This medium cap company just didn’t generate the growth percentage I was targeting. For a company of its size, I expected a return on my investment between 10% and 15%. We were barely at 6% over the span of 9 months so it was clear we were not in agreement.

Hope you enjoyed this first segment of Rebalancing Act!! Until next time folks…

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