That's not bad. Our goal in our most Conservative virtual portfolio was to make $4,000 a month so a person with $500,000 in a retirement account can generate $48,000 a year to live on without touching (and, hopefully, growing) the principal. As we're now up $95,175 on $500,000 in our 7th month (and only about 50% invested), we are comfortably on track as all those little trees we planted begin to take root.
The current positions are actually up $130,845 but we pulled some bad positions that lost us $35,670, which is normal as we begin this process – you can't pick all winners – the key is to have the discipline to cut your losses and nurture those winners because, hopefully, those are the ones that will be with you a long, long time and keep producing that income. So, in theory, this type of portfolio gets stronger and stronger each year and it's amazing how fast it can grow – especially when we're at a 35% annual pace.
The chart on the right shows the portfolio's performance over time – down over $13,000 in November before turning around with the markets. All that time we kept planting our trees – adding an average of 3 positions each month as we will continue to do throughout 2013 as a portfolio like this is always a work in progress and today's review is, in fact, an exercise in identifying which positions we want to cultivate and which ones we are ready to harvest the cash on.
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