Saturday, February 22, 2014

END OF AN ERA: Final Mutual Fund Purchase

On Friday I made my final American Funds purchase.  After two years of dollar cost averaging into my taxable account I am finished.

Here is the breakdown:

  • AHITX (high yield bonds) --- $2000
  • CAIBX (dividend income) --- $2500
  • ABALX (balanced fund) ---$2000

From now on I will only buy individual companys that pay dividends.  I still buy American funds through my 401k at work.  They actually are a pretty good fund family, but the fees they charge (especially the front end load) are just too high for me to stomach.

In March of 2012 after a few years of receiving no interest on my savings account, my investment advisor told me I needed to be in the market.   At the time, the market had just about doubled from the lows of 2009.  The 2008-2009 and 2000-2002 market crashes were still on my mind.  Even though I had bought HD at 57, GE at 50 and Intel at 70 in August 2000 (OUCH!), I still felt that my broker might be right.  In any event, there was no way I was jumping into individual stocks after what I believed was yet another bubble. 

Eventually I decided to average in monthly with well diversified funds. I liked the idea of income producing funds because of the perceived stability they provide.  American funds held up exceptionally well during the 2000-2002 bear market. 

AHITX provides great income but it doesn't grow.  CAIBX has great dividend holdings but the high front end load and yearly fees negate most of the dividend growth. 

I am in no hurry to sell these funds because they do provide diversification while I build my dividend pipeline.  Eventually when I have enough companies  and enough sectors, I will slowly sell off my funds and use the proceeds to continue accumulating income producing assets.

Starting next week my only purchases will be made through Sharebuilder.  I have learned so much through the many excellent blogs that I have been following over the past six months.

Let the new era begin!


  1. I think it's good to diversify. I blog only about my stocks so far but I also hold various index and bond funds. I'm a big fan of municipal bonds, nothing like not paying taxes:)

  2. Dexter,

    I agree with you about taxes. I probably should have invested in tax exempt bonds while I am still in the work place. The high yield bonds are definitely not tax friendly.