On investing

Comment: Bert asked me about this in the CINF post so I thought I would address it with a blog post. First I am far far from an expert at this. We got a very late start on investing. I did get a big boost by buying 1000 shares of FITB at close to a buck and selling at over $ 11. More on that here. That profit basically started me up with investing this year

Introductory comments:

• Saving and investing is Biblical. John Piper has a good read on this!
  
• Get debt free. That make take some time. You don't have to be debt free to invest (eg your mortgage) but if one is paying interest on CC debt, paying that debt off is a good investment in and of itself!
  
• Have tight financial controls. With the Internet this is easy to implement. I check all of our finances daily. Kathee and I have a weekly financial meeting. There is close coordination. And all monies are accounted for. We used Quicken for years and years. Currently we use an online service called Yodlee
  
• Budget and save up for the big stuff. For example we save in advance for every Christmas. There are no Christmas bills to pay for in January. (If you have a good theology of Christmas you know that it is about Christ and not the presents anyway!)
  
• Have a highly liquid emergency fund. Ours is in Ing Direct
  
• Live below your means.
  
• If your company matches your 401K contribution, invest in through your 401K .. that company match is free money!
  
• Diversify. If one of your investments is a future Enron and all is lost how bad would it be for you? The max investment we have in any one stock is less than 2% of our total portfolio (401Ks (both Kathee and I have one); IRAs (I have one going back to when I was a Pastor)
  
• We started with small investing 19 years ago when Kathee started at Norwest (now Wells Fargo). She bought Norwest stock at $ 50 per pay period.
  
• Later we used Sharebuilder to invest $ 250 per month in stocks. This is a great service and I highly recommend it
  
  

Along the way we achieved debt free and I was able to ramp up our investing. The Fifth Third stock trade provided seed money. We have a deal with an investment service where I have 100 free trades a year. (That's a lot by the way ... last year I only did 24!)

Next steps

• I don't need to make a lot of money. I just want to stay positive and have dividend yield greater than 3%
  
• The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition). This is the book to buy!
  
• Understand there is no fast way to make money. Yes I got lucky with the Fifth Third. But that's rare and impossible to predict (in my view).
  
• I follow Dividend.com and look for stocks that pay dividends. We have a large spreadsheet with over 250 potential stocks that we track. I use Yahoo Finance to track potential stock buys
  
• We try to buy stocks in even lots of 100 shares. We do have six stocks that we bought only 50 shares of, but our go-forward plan is to get those up to 100 and only buy stocks in even lots after those 6 are up to 100
  
• Currently we only have 24 different stocks. Some: General Mills, MMM, First Energy, Centerpoint, and Xcel Energy
  
• Kathee and I have a short list of stocks we want to buy. Probable next buys are P & G and WalMart.
  
• We save in a brokerage account (every Friday a certain amount is transferred from our checking account to this account). Once we reach the threshold to buy a full lot we make the trade.
  
• Our brokerage account has a cumulative yield of over 3%. We have one stock, Ford, that does not pay dividends.