Tag Archives: Investments

REITs as Investments

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Okay, I decided to take the money from my Lunch Budget (Experiment) and put it into a REIT (Real Estate Investment Trust).  Now, I don’t expect the stock price of the REIT to rise much higher than the levels that they are currently at.  So you might be wondering why am I doing this?  …The dividend!

REITs historically pay a dividend percentage payout of about 6% to 7% for their dividend.

Why? Because they get special tax treatment if they do so.

To qualify as a REIT tax structure, a company has to:

  • invest at least 75% of total assets in Real Estate
  • deriving at least 75 percent of gross income as rents from real property or interest from mortgages on real property
  • distributing annually at least 90% of taxable income to shareholders in the form of dividends

So why would a company decided to be classified as a REIT?  Because they are able to pass the taxes to the shareholder instead of paying it themselves.  So these investment would be great in a Roth IRA, or in a child’s UTMA account where they don’t earn much money or the tax consequence is minimal.

I’m hoping that the addition of a REIT company while the fed interest rates are low will benefit me by the REIT stock appreciating and by receiving the juicy stock dividend that is higher than normal at this time!!!

Bests,

Don

A Stock Market "What If" from My Youth

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From the time I was 5 years old to about age 18, I had an uncle that would buy me shares of stocks every year for birthdays and Christmas.

DuPont Stock Certificate

 

He was pretty good at it.  By the time of the start of my junior year, the portfolio was worth about $15,000. Unfortunately, I was short on cash for my final college years, so I cashed in most the stocks so that I could paid for my remaining years of college. I still had some money left over, so I put the remaining cash in a savings account that I would mostly use up for rent.

Lately, I’ve been wondering how much that money would be worth if I just left it alone.  By my calculations, it should have worth more than $30,000, and maybe even close to $40,000.

Even though the money went to good use, it was nice know that I had that money.  Some days, I play devil’s advocate and regret using it, always asking “what if”…

I think it was great of my uncle to be so generous and wise.  I’ve taken my uncle’s lead and investing small amounts of money in the stock market for my kids and a 529 program. Hopefully, they will be more wise with their money than I was.

– D

Paying An Adult Allowance, A Lunch Experminent

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I’ve decided to pay myself an experimental Adult Allowance!

Currently, as I mentioned in a previous post, I pay my kids an allowance.  A few months ago, joking around, I told my son I was going to start to pay myself an allowance too.  That got me thinking about potential savings from my lunch expense.   In the end, my joke was exactly what I decided to do!

Let me provide my previous background:

Prior to starting my “Paying myself an allowance” experiment, I was spending about an average of $12 on breakfast and lunch per day, for a total of $60 a week.  That’s almost $250 a month!!!  I like going out with friends for lunch, but I don’t like paying that kind of money.

So, I decided to pack breakfast and lunch 4 times a week; enabling me to save at least $40 a week.  This is effectively money that I would have spent by going out to eat with friends, so basically it’s free money for me.  If it wasn’t for this experiment, I would still be spending that money on lunches out at work today!!!

Yeah, the math doesn’t work out perfectly, I left a buffer for special situations that don’t occur regularly, like Co-worker birthdays, cost of packed food, etc…

So you might be wondering how I’m spending on my new revised lunch budget?…

drum roll….: 70 cents a day, $3.50 a week, $14.80 a month.

I’ve  been able to accomplish this by eating instant oatmeal for breakfast, and 2 eggs with ramen noodles (or a small bag of peanuts) for lunch.  The people I use to eat out with looked at me eating my lunch a little oddly at first, but they got use to it.  Plus, I still go out with them once a week, so I’m not a total lunch recluse.

The idea is to save that money in dividend yielding stocks, bond or money markets, then after 2 year, to start using the interest earned off of the investment for other things… maybe even an additional lunch out every other week.

Ideally, after my experiment is over, I’ll be so use to eating out only once a week, that I’ll probably just stick to it.

-MR

UPDATE:  This idea has been implemented as a Lunch Experiment as I describe above!  Read about my “Lunch Experiment” here!