This is the summary of Episode 1 of our Roaming Returns Podcast.
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Podcast Summary
If you want to skip our backstory and go right into the outline of how our income investing strategy works (aka what future podcasts are going to cover), click here.
How We Got Here
Tim Grew Up With Abuse And In Poverty
Tim grew up on a 35-acre farm near Denver, Colorado. His family was poor and he got picked on at school because it was a hick.
His parents physically abused him so he spent a lot of time with the animals and in nature surrounding the farm. At age 11 Tim was taken away from his parents and put into foster care. Foster care wasn’t much better and eventually his grandparents took him in.
His grandparents organized family road trips with some of the extended family where Tim got to visit almost every state. Tim didn’t like being on someone else’s agenda, so he moved to Pennsylvania to go to college.
Carmela Grew Up With Forced Expectations
Carmela grew up in a family that forced conformance to traditional life expectations like going to college, getting a steady job, getting married, having kids, etc.
She struggled all throughout her education and her 11 years at a job because she felt unfulfilled despite getting good grates and performing well.
She got swept up into someone else’s idea of life until she discovered her passion for learning through self-directed interests and allowing herself to explore her curiosities.
Adventures In Nature
We both got lost in the rat race and forgot how much we liked to explore until we met each other and started hiking. Our adventurous spirts grew the more we explored new places.
On one trip in Hocking Hills State Park in Ohio, Tim fell 20 feet off a ledge into a frozen creek. And then during our first night on a backpacking trip in the Smokies, Tim had a hypothermia scare.
After recouping in a hotel we spent the rest of the trip sleeping in their car, which made us realize how much more we could travel by saving money sleeping that way.
New Lifestyle Goals
So we traveled a ton in 2019, going balls to the wall while traveling and recouped when we came back to work.
But soon we realized how difficult and depressing it was to come back to work after an exciting trip. We also realized we wanted to upgrade to a van to be able to bring the cats along and live more nomadically.
Based on these new lifestyle goals, we began trying to find ways to earn more money and free up time to travel more.
Failed Attempts To Earn More Money
Carmela haphazardly tried a lot of things to provide income by starting businesses like doing Amazon FBA, real estate flipping, rental income, stock trading, private labeling for tools for her father’s landscaping company, etc.
Most of these ventures were really time consuming which didn’t fit what she was looking for. Tim knew he wanted to focus on making money in the stock market, so Carmela turned her savings over to him while she kept searching.
Tim started out with chasing growth stocks, which didn’t work out so well. Then he pivoted to trading based on earnings reports. This worked quite nice for a while until the economic climate changed and he lost over $20,000.
Carmela stumbled onto a startup toy company. The first year we made a 40% return so we invested a lot more money. The company ended up being a scam, so in they end, we lost $60,000 which taught us to avoid going so heavy into one investment.
Many people say rental income is the way to go, but Tim had a nightmare experience with his tenant. He left after trashing Tim’s house, so it was an easy decision to sell it off versus renovating and renting it out again.
Dividend Income To Fund Van Life
Tim continued to explore and trial-and-error in the stock market. Eventually, he stumbled onto income investing in the book Beyond Wealth, which changed everything.
Once he changed his focus to passive income from stocks, everything started lining up. We started to see how feasible it is to consistently earn at least $1,500 a month to fund an intentional nomadic lifestyle.
The Plan
So we formulated a plan while Tim honed his income investing strategy. Then the economy and stock market took a dive during the pandemic which forced us to change plans.
Carmela got so burned out over the course that we decided to quit jobs and do a trial run in the van for 5 months. That was the best decision we ever made.
After confirming that this is the type of lifestyle we wanted, we returned refreshed and are now in the process of downsizing everything including a massive condo renovation that will give us a big equity payout once sold.
Tim’s Income Investing Strategy
Take Control Of Your Own Finances and Retirement
Your best opportunity to live comfortably in your retirement years is to take your finances into your own hands. No one’s going to care about your financial wellbeing as much as you will.
Be careful about relying on the Social Security system. It might not be there when you plan to retire. And for those who are drawing on it soon, the payments can be inconsistent based on Carmela’s mom’s experience.
You also don’t have to wait until age 60 to retire. If you set your investments up right using a dividend income approach you can retire sooner. You don’t need to hit $1Million and you don’t need to sell 4% of your portfolio each year.
How To Minimize Risk When Investing
Don’t invest money you can’t afford to lose. Set up emergency funds and savings accounts so you don’t need to rely on pulling money out of your investment account for short term needs.
Investing in the stock market is a long term game. When you have to pull money out in the short term, you’re subject to price dips that reduce the value of your investments. These are normal swings, but the market always goes up over the long term.
Risk is mostly caused by the individual not allowing a long enough time horizon, a flawed strategy like growth chasing, not doing their research on the company they invest in, or not diversifying their portfolio.
Tim and Carmela describe how they have been able to retire early by downsizing their lifestyle to live off passive dividend income stocks. They intend to let their income grow over time so they can enjoy life more.
Income Investing Is A Different Strategy
When you invest for dividend income, you focus on owning good companies with a history of paying great dividends throughout history. You get consistent income for owning shares of these companies.
When prices go down or markets crash, it’s better to buy more shares at discounted prices and let dividends reinvest. The more shares you own the more you get paid. Lower prices allow income to compound faster.
Since you don’t sell shares often, your investing in a more tax friendly way. You don’t pay capital gains taxes if you hold a stock for over a year.
You can own real estate by investing in REITs without the headaches of owning and managing physical real estate.
What Does Tim Look For In A Company
Tim prioritizes high-yield investments with a minimum yield of 10%. Some investments are less than this and some are higher. They average out to over 10% across each portfolio.
He conducts a thorough fundamental analysis that encompasses revenue, history of dividend payouts and increases, price per earnings, debt and many other things.
Then to mitigate risk more, he waits until these good companies are undervalued to buy them. He also looks for preferred shares and close ended funds.
Other Things To Pay Attention To
Diversification and asset allocation are other big components of a healthy stock portfolio. And these can change based on the economic climate.
Tim keeps up with new and current events to find profitable niches well ahead of market sentiment. This provides better buy in points and a better position before analysts and other investors start lighting up news feeds.
Inflation and interest rates also affect things which they’ll get into in future episodes.
Roaming Returns Goal
Tim and Carmela want to share their experience and information for anyone who is looking to become financially savvy and learn to invest.
The investing and finance industry is spammy and uses tactics to pray on people’s emotions. Their number 1 focus is on providing value and being transparent.
They want to teach you the strategy so you can achieve financial independence so you can pursue your passions and help make the world a better place.
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