Investing . . .

Many years ago while living in Alexandria, LA I formulated a few simple rules to use when investing.  They were always invest in only New York Stock Exchange (NYSE) stocks, in stocks that also paid dividends and if investing in mutual funds do not invest in funds that paid 12B-1 fees.

Why NYSE?  NYSE is the big board.  It is the world's largest stock exchange.  And it was closely monitored by the Securities and Exchange Commission which had reasonable but stringent rules.  Other exchanges did not have as generally as good stocks as the NYSE.  Some stocks do not want to be traded on the NYSE and preferred lessor stock exchanges in San Francisco, Chicago and even New York City (the American Stock Exchange).  The NYSE has specific rules in listing the stocks on their exchange.  Usually a certain size (that means big enough to trade all the time), certain capital requirements and adherence to stringent accounting processes.

I required dividends because that is cash money in return.  Usually only mature companies pay dividends though today paying dividends is much more common than not paying dividends.  For instance, I do not invest in Berkshire-Hathaway, Warren Buffet's company.  It does not pay dividends.  They certainly invest in companies that do pay dividends like Coca-Cola - but they keep the dividends to reinvest in other companies.   I have a few shares of KO, the symbol for Coca-Cola and collect the dividends for me to use.

12B-1 fees are used to reimburse brokers for selling the mutual fund.  In other words you the fund holder are paying the broker to sell the funds even though the fund maybe charging you a fee to buy into the fund.  The funds back then routinely charged you 5% up front for their services.  Then along came the "No Load fund" funds where the management did not charge the customer anything to buy into the fund.  That is not to say the fund does not pay fees to buy and sell shares, those fees are expensed to the net profit of the fund, you do not see them.  Brokers soon learned they had a hard time selling funds with a 5% front end fee.  They design funds that had no up front fees but had exit fees.  If you left the fund, that is sold out your shares, they charged 5% if you bailed out in the first year, 4% if you bailed out in two years, etc, until you had owned the fund for 5 years.  They still do that and call those funds no load funds when in fact they have an exit load on the fund.  Read the fine print.  There are several large fund companies like Vanguard, T. Rowe Price and Fidelity that have pure no load funds.  If you feel like that is the way to invest, by all means used funds from those no load fund companies.

Today I have modified my rules.  I still require an investment to pay a dividend or interest.  And I read daily "Seeking Alpha" a forum on the Internet.  It is comprise of articles written by financial advisers, some of the certified, some are foreign and all of them seem to be specialized in some form of investment.  There those that only cover big oil companies, some energy companies (oil, electrical generation, wind farms, pipe lines, etc.), some only Real Estate Investment Trust (REITs), some closed in funds, some in Master Limited Partnerships and so on.  It covers the gambit and is educational.  I also subscribe to Kiplingers Magazine, a magazine that covers investments as well as advise on a host of topics from credit cards to buy automobiles.  It gives good advice and is equally educational.

Today We hold Exchange Traded Funds, a new kind of mutual fund that is actively traded on the stock exchanges.  We both have life insurance, which is a kind of cash investment for your heirs.
Annuities another kind of insurance policy.  We also own some old style mutual funds, all no load funds, that I just let them do their thing and watch them grow.   We have some real estate, our home which is paid for, our autos which we either own or lease, a camp (Judie's family place on False River) and I have shares in the family corporation that owns the plantation.

I am fortunate in that I have a pension earned as retiree of the USAF.  Coupled with that I have compensation from the VA for my disabilities from my military service, and we collect Social Security.  We have Medicare paid out of out Social Security take care of our medical needs for the most part (we do have to pay for prescribed drugs albeit at a discount).  Our secondary medical insurance is TRICARE for Life, another earned military benefit.   So for the most part our day to day needs are met by the pensions and VA compensation.

That allows us to keep being well invested.  And the cash thrown off can be like Warren Buffett reinvested to grow out holdings.  We always lived within our means while in the military.  When I retired from the military I started drawing my pension immediately yet I went to work and had a second income.  I retired from Raytheon (and Texas Instruments at the same time) and took a cash settlement that I invested.  I rolled it all into an IRA and continue to mange those assets today.  Yes, we must take an annual minimum required distribution annually but generally make that back though the year in the investments.

It pays to plan ahead.