Capital Gains Investing

When I refer to Capital Gains Investing, I include anything that appreciates in value. A few examples are stocks, mutual funds or ETFs, currencies, collectibles, gold, and real estate (only if I plan to sell). Depending on the investment, I plan to hold them anywhere between a few weeks to 20-30 years.

To set expectations, I am terrible at picking individual stocks and timing the market. Because of that, I spend the least amount of my time analyzing my investment accounts and charts. Also at times I’ll be presented opportunities for retail arbitrage deals but I tend not to focus too much of my energy towards them.

♦ Strategy: automate contributions and deposit one off lump sums at times when I can afford to just watch them (hopefully) grow long term (20-30 years).

♦ Goal: to build a security blanket for retirement, my kid’s college education, and increase general savings. But I view all of these accounts as something I hope never to need as I will mainly focus on Cash Flow Investing.

♦ Target: To reach $2.2 million through automated deposits and capital gains from investment appreciation. Read about the details in our article on Retirement Planning  and College Savings Strategy.

 

Capital Gains Investing Portfolio

Account

Description

Target

401k

With my personality I like knowing that I’ll be receiving a baseline paycheck each month and a W2 at the end of the year. I see tremendous benefits working in a corporate environment. I max my contributions each year eligible. Continue till Retirement

Traditional & Roth IRA

My wife and I currently max out our IRA contributions each year and contribute into them before all other account. Between the two, the Roth IRA is most appealing to us since unlike the traditional we will not be forced to make withdrawals at 70½. We view the Roth as our emergency fund if we need a large amount at once so we don’t get hit with the high tax that year. Continue till Retirement

529 Plan

We opened our 529 plan when my wife was pregnant. We hope to pay for our kids’ full tuition. We deposit $100 weekly into this account and deposit all cash gifts my son receives into the account. $100,000 (for each child)

Taxable Investment Account

We deposit into this account when we have extra cash to invest. We invest in index funds and just a handful of companies we think will be around in the next 20-30 years. This account is used to build our net worth and for future investment opportunities and to help fund our kids college education. $500,000

HSA Account

We contribute the max when we are eligible. We don’t always choose to go with the HSA plan at work since it does get risky when unexpected medical expenses come up. Continue till Retirement

Forex Account

I got into currencies when the market crashed in ’08. I understood the importance of diversifying my cash backed by countries other than the United States at that time. Currently we only have a small amount in money outside USD. Investments here are viewed to hedge when the dollar crashes. $100,000

Gold

We don’t invest much in gold. It’s not as fun and we do it just to diversify our holdings. We buy in the form of physical gold as well as ETFs. $50,000

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