I start to journal of long term investment plan execution. The plan is executed starting from 2 Jan 2017.
This account starts with initial capital of $1, 000. The plan will take 40 years. The first 20 years assume $6,000 additional deposit annually, and the second 20 years assume $8, 000 additional deposit annually. Annual return from this account is assumed to be 8%.
3 steps involved in this plan:
- Save $1, 000 to open your account.
- When your account value is between $1, 000 to $25, 000 use a broad market index mutual fund (eg: Charles Schwabb broad market index mutual fund). Instruct your broker to reinvest all dividend.
- When your account value is between $25, 000 to $1,800, 000 start dollar cost averaging into individual stocks. Placectrailing stop orders for all stock positions.
5 months before reaching $25, 000, starts buying stocks. Use $5, 000 to invest in 5 stocks in 5 different sectors. Place 10% trailing stops on each position.