Picking Products, Watching Stocks and Generally Hoping for the Best

I’m taking a break from cleaning my house to post an update on my recent activities, partially as a reward but also to help me get some of my thoughts down.

How do I ... business?

How business makes me feel.

This past week, I’ve been trying to choose a product to start my side business with. As I mentioned recently in my post on making money on the side, I am in the process of getting things rolling with Amazon FBA and, subsequently, an e-commerce business. Featured prominently in that post was Kermit as I was trying to make it clear that I am very green to the process from the business side, although I have spent years working with various e-commerce shops from the engineering side.

So the first step in any commerce-based business, as far as I can tell from what I’ve been studying, is to choose a product. Well, for some that may be easy, but for me picking products has been nearly impossible. There are so many things to choose from and I definitely don’t want to recreate the wheel here. I have a list of products I plan to start with and later I will narrow that down by setting up a score for each — essentially going with the product that I think will sell best while maintaining a decent profit margin, all while being something that I can pivot off of for similar products.

All the things on my list are of high quality, which is extremely important to me. As I mentioned previously, I wouldn’t want to sell anything to other people that I wouldn’t sell (okay, give) to my mother. That qualifier has sort of narrowed my list of possibilities way down, which is nice, but there are still hundreds to choose from. It could take forever.

This is exactly why I’ve given myself a deadline. I have to have chosen five products by this Monday. And that’s after choosing many and narrowing down the list based on a series of factors both of my own and sort of plucked from various posts and videos I’ve been watching. I don’t want to take forever on this. The next goal is to find a supplier for said products, foreign or domestic. Either way, it has to be done and soon!

Another interesting thing has been watching my individual stocks and comparing them to my index funds. Obviously there hasn’t been enough time to compare them in a meaningful way, but still — the index fund has been killing the individual stock selection. Luckily, I’m a buy and hold kind of fellow and won’t be selling my stocks any time soon.

Despite the downward trend my stock selections have already entered, I have transferred another $1,000 to Scottrade for some buys on Monday. That money is to take advantage of my free trades which, inconveniently, have an expiration date. For me, I see that as free money.

At this point, I don’t think I will invest more into the companies I already have. Once I have a decent selection, perhaps 10 or 15, I think I will do that but while I have 5, my plan is to diversify my selection a bit more. I don’t have a hard and fast rule here, it just feels like what I should do. Maybe some of you fine people can weigh in on this with your valued opinions.

For now, I should get back to work. This place needs to be clean before I go (I hate returning to a dirty house). For this next week, I will be out of town on a much-needed vacation so I’m not sure how often I’ll be posting, but rest assured I will be back to keep you posted on where I take my portfolio and my side business.

Recent Buys

Ha! “Recent buys.” Am I doing this right?

So as I mentioned in my last post, I purchased several more stocks after my first one, which was for Coca-cola!

The research behind these was essentially the same, meaning I stood on the shoulders of some of the DGI Giants in our circles and moved forward based on their hard work. I’m thinking that my next stock purchase will take some actual hard work and due diligence on my part, so I’ve already started putting some legwork into that. But meanwhile, I figured I’d update on what I actually got going.

Please excuse the smaller number of shares. I realize some of you have 10X or more what I have here, but remember I’m just getting started:

5X UNP @ $97.5899 for $494.95

5X WMT @ $73.5599 for $374.80

5X MMM @ $156.719 for $790.60

5X PG @ $82.379 for $411.90 (this was a free trade)

So, as you can see on my portfolio page (which I promptly updated after buying up the stock for Proctor & Gamble), I have updated my total stock equity amount to $2,460.35 from $2,048.40. My trades for UNP, WMT and MMM all came with the $7 trade fee from Scottrade, but luckily my referral situation finally got figured out. I had signed up through a referral link but something went wrong in the process. All it took was a quick call to customer service and they were quick to help me out (very nice!). So now I have two more free trades to make within the next 30 days!

I’ve also added another $2,500 to my Vanguard SEP IRA which brings its value to about $15,270!

All these recent moves have pushed me over the $40k mark in combined brokerage + investment accounts, which is … such a good feeling.

I think as I move toward the $50k mark, my goal is to start adjusting my portfolio to include a higher percentage (which currently sits at 0%) of both bonds and international stocks. Most likely, I’ll go with the Vanguard index funds that track both those markets.

What do you guys think of VBMFX and VGTSX? Should I buy into those next? Should I wait until I have $10k for each and go with  VBTLX and VTIAX for a decreased fee?

As always, your input is appreciated!

First Stock Purchase: Coca-Cola (KO)

Coca Cola It’s official! I have purchased my first stock ever!

After going over all the fine advice offered in my last post (thanks so much, guys), I’ve decided to go with 10 shares of Coca-Cola Company.

Honestly, it was a huge help reading the Coca Cola (KO) Dividend Stock Analysis post from Div4Son. While I’m getting my own analysis sheets going, it definitely helps to have friends!

Jason from Islands of Investing also gave me a great link to dig into PE ratio to remove some of the mystery from that term, so I also appreciated that.

Oh, and to give a few details, I bought just 10 shares of KO at 41.1599 ($411.60). Combined with the $7 trading fee, it cost me $418.60. Man, I can see how that starts to add up. Still, it’s better than the $20/trade I’d have to pay with Vanguard after the honeymoon period is over.

What an exciting day! And, of course, it went way more smoothly than I thought it would.

Now I’m looking into what to purchase next, but apparently there are only certain hours where trades can happen (I tried buying some Union Pacific stock as well). I’ll wait to see what the price looks like in the morning and perhaps give that a shot then.

Thanks for all the help, guys. I’ll update once I figure out what to buy next!

Update: After buying 5 shares each of UNP, WMT and MMM (in that order), I just created a Portfolio page like all you fancy people!

Learning the Ropes – Starting up my Brokerage Account

Hey guys. So I’m still focusing on building my side business this week, but I also don’t want to let my primary goals go either.

Today, I’ve been getting things set up for taxable investing. Last week, I set up a brokerage account with Vanguard for this very purpose and went through the trouble of transferring some money over only to learn that, for an account the size of mine, they only allow $7 trades for the first 25; after that, they become $20 each. So I decided to use Scottrade in the mean time while my Vanguard + Brokerage add up to more than $50,000. After that point, the trades become $7 each with no limit.

Once that happens, my plan is to consolidate everything over to Vanguard so that both my taxable and non-taxable accounts are there. Whether that will actually happen is up to future me and how much it will cost me. Ideally, it would be nothing since I’d want to hold on to the same stocks and such. Worst case, I can keep trading with Scottrade.

On the other hand, the reason I’d like to keep things with Vanguard is that once you have $500,000 with them, all trades become $2! I’m sure there’s something even more amazing out there, but for someone who’s as green as I am to stock trading, that seems like a pretty great deal.

And as some of you are probably paying close attention, you’ll note that I already have a brokerage account through Chase, but my plan is to also consolidate that. I hate having so many accounts all over the place. I’d rather have everything set up simply so there’s less for my simple mind to worry about.

All that being said, my account with Scottrade should be ready for funding this week and I should be ready to get things started with some dividend growth stocks. From what I’ve read recently, Coca Cola isn’t a bad one to start with, so I’ll probably go with that and a few other familiars just to get things rolling. I’m only starting with $2500, so I’ll probably invest in a handful of stocks in addition to KO (most likely borrowed from the amazing Dividend Growth blogs I follow). I’m still trying to come up with my own vetting process which, admittedly, is also largely borrowed from the blogs I read.

For those of you who I’ll be stealing from, please accept it as flattery more than outright theft! I just want to be more like you fine people.

I’ll probably update once things are actually set up and I’m ready to start buying, but while we’re on the subject…

Any recommendations for my first five or so stocks?

Any links to a checklist I should go over to vet each one before buying?

Any general advice?

Making Money on the Side

Yeah, I could used to this view.
Yeah, I could get used to this view.

You know what’s not easy? Making money on the side.

At least for me it isn’t. For the past few days I’ve been looking into a whole bunch of different business ideas, and I think I’ve stumbled on something that works.

Of course, I’ve tried things in the past and they worked okay I guess. Mostly, I dabbled in Internet Marketing a few years back and that … didn’t end well. Yes, I made money. That was the upside. But the downside was stress. Lots of stress. I was spending thousands of dollars just to churn out a couple hundred dollars or profit margin on the other side. In fact, that margin was always a moving target and knowing when to stop, say, a pay per click campaign became an art. It’s what I imagine day trading to be like, except on fast forward. On top of that, there was a nagging feeling that I was doing something wrong and so I stopped. Some of the things I was selling seemed to promise the moon without much substance.

I don’t ever want to be in a business that could possibly screw people over.

No, relax Kermit.
No! Relax, Kermit. Like I said, I’m not a monster.

So I’ve been focused on legitimate businesses, which are rightly more difficult to build and more prone to failure. That risk of failure is what scares me. Ideally, I’d like to build my own brand of something I wouldn’t mind selling to my mother. Er, well, I’d give it to my mother, but sell it to other people.

I’m not a monster.

For a long while, I’ve had a good name for a potential e-commerce business with not much more than a name to show for it. Mainly, that’s been because I wanted to either build products myself or find a supplier that made products I wouldn’t mind putting my name on. Well, building products myself has a steep learning curve, especially if I want to scale my business. It’s not out of the question, but I just don’t have the time.

After all, I haven’t become financially independent yet.

So, now it comes down to finding a supplier. Or two. You know, just to get things rolling. And that’s been the hardest part overall, because I just don’t know where to look. And from what I’ve read, wholesalers generally don’t want to get involved with those of us who are a little green behind the ears (only established businesses need apply). Jerks.

What I’ve been looking into this week is just the material I’ve been looking for to jump start that part of the business, so as you might imagine, I’ve been soaking it up like a sponge.

The next part is buying actual products that I can put either on an e-commerce site or even use Amazon FBA (Fulfillment by Amazon) for, or … both!

Decisions, decisions.

I’ve read about people who do okay with Amazon FBA using arbitrage, but I don’t have time at this point for such low numbers. I’m really after higher numbers, which means I’m going to need to put more money into purchasing and branding up front. I’m convinced that building your own brand of quality products (that people already use) is the way to go. That way there’s no competition for the same product, which means higher profit margins. Then I could laser-beam focus on marketing while Amazon takes care of all the other things.

That's rude, Kermit.
Be cool, Kermit. You’re supposed to be my analogy for being new to something.

So, for now, I’m still trying to find products but at least I have a better idea of how to vet them. I feel closer now to the prize at the end of the rope because I’m not just going blindly about it anymore.

It’s sort of like having a mentor. Mentors, as it turns out, are super important. Having someone who knows the ropes and has gone through doing what you want to do will decrease the distance from start to success because they remove many of the unknowns, including the unknown unknowns! As much as I may know about programming, web application development, Internet marketing and the like, these are only pieces to a larger puzzle.

Generally, programmers aren’t exposed to the business side of the things they build. I know I’m not. So by the time I get to work on something involving, say, e-commerce, the real hard part has already been done so there is this illusion that it’s easy to get things going, when clearly … it is not.

I mean, programming isn’t super easy for everyone. I’m definitely not saying that. Actually, let’s throw an analogy at this thing. Those always work, right?

I’m not saying building cars is easy for everyone. I’m just saying that as well as an engineer or mechanic can put a car together, selling the car — especially in large quantities — is a different beast altogether. That’s why there are car commercials and pushy salesmen to deal with. You could have a lot of a million cars, but without someone selling the brand and the experience that is your car, they’re just going to sit there.

So branding and marketing are the missing pieces.

And brand-building is what I know virtually next to nothing about. That’s something I wasn’t aware of previously! First, that I needed to brand at all. I thought branding was optional — something you did once you were tired of eking out profit from selling other peoples’ already-popular product lines. Second, that  branding was important. I was also of the mind that you could just sell things sort of haphazardly and just build your name up (which is sort of branding), and people would trust you, the salesman, no matter what you sold.

Hey, I never said I was bright. And this stuff hasn’t really been my serious focus until now, so forgive me being green. It certainly isn’t easy.

Green Will Hunting. I'd watch it.
Green Will Hunting. I’d watch it.