Changes to the Portfolio!

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Recently I made some rather big changes to my portfolio. After some reflections and thinking about my goals and timeline, I felt it was necessary to make some moves to increase the cash flow my accounts generate. My target retirement date is about 7.5 years from now and I will need enough cash flow from my accounts to cover my living expenses. Let’s take a look at the moves I made to increase the cash flow from my accounts.

I sold out of my Vanguard Total Stock Market ETF (VTI) position in my Traditional IRA. This was a rather large position in my portfolio at over $6,000. About half of the money from the sale of this position went into Schwab U.S. Dividend Equity ETF (SCHD). This slightly increased my projected annual dividend income (PADI) while also increasing the amount of SCHD shares in this account to 200 shares. The additional shares allow me sell a second covered call against my position which will also increase the cash flow from my account. The rest of the money is currently being used to sell cash secured puts. This also increases the cash flow from my account.

In the Roth IRA I sold out of my positions in Vanguard Growth ETF (VUG) and Invesco NASDAQ Next Generation 100 ETF (QQQJ). Most of the funds from the sale of these positions were used to purchase shares in Medical Properties Trust (MPW). This increases my cash flow from dividends. This also increased the amount of MPW shares in this account to 200 shares which again, allows me to sell another covered call against this position.

Now, the safer route would have been to stick with the ETF’s I sold. My thought process is that SCHD provides a similar performance to the total stock market while producing more in dividends. So for this part, I feel it was an acceptable trade off without much risk. I also still maintain about 10% of my portfolio in a total stock market fund within my 401k which I will continue to contribute to every payday. The purchase of the additional MPW shares is much more of a risk. I believe I can mitigate some of the risk by selling cover calls.

Overall I happy with my decision to sell out of some ETF’s and move the money to positions that will increase my cashflow through dividends and trading options. Because my time horizon is relatively short, focusing on cashflow is becoming more of a priority for me. These moves increased my PADI by $130 a year plus I will get additional cashflow from selling options. I also have plenty of positions in my portfolio that are more geared to growth such as Microsoft (MSFT) and Visa (V). Time will tell if this was a good decision for me. I would like to here your thoughts on the changes I made to my portfolio. Please leave a comment below.

*Disclaimer – I am not a financial professional. The information shared here should not be considered financial advice. I am just a factory worker sharing my experience as I strive to achieve financial freedom. Before investing or making any financial decision do your own research and due diligence or consider seeking the advice of a financial and/or tax professional.

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Published by Bill

I am just a blue collar factory worker trying to reach financial independence by spending less, earning more, saving and investing.

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