How I Manage My Investments

I'm one of those neat freaky, everything in it's place kind of people. My investments are no different. I have three accounts total which have three different purposes: an IRA, a taxable account for options trading, and a taxable account for stock trading. I keep my position total in each account relatively small- I only hold 3-6 different equities in any one portfolio. I consider cash to be it's own position, and try to maintain a 10-20% cash in each of my accounts at all times. You never know when opportunity will knock.

My IRA:
In my IRA, I hold 3-6 stocks that are LT plays, meaning I do not expect to sell them for at least 3-6 months. As a biopharmaceutical investor, most of my holds have catalysts dates coming up, be it a clinical trial data release, a possible FDA approval of a drug or device, or a presentation at a major medical conference.

My TAXABLE ACCOUNTS:
Options
This account makes up 10% of my total taxable investment dollars. Many people will trade options and stocks from a single account. I utilize two accounts because I find it helps to keep the information organized and easily digestible when I separate the two trading instruments. I also find it keeps me from getting trigger happy and using more money than I might have planned when buying calls and puts. I think options are an amazing trading tool, but not one I'm betting the whole house on, in part because of my own level of comfort and experience with them. In my experience, I've found I have to be very aware of volatility, open interest, volume, and the options history of a particular symbol to trade options comfortably. Similar to my IRA, I hold between 3-6 positions at any one time.

Stocks
I trade stocks both short and long. My taxable account is 3-6 positions (ya get it, really I'm that kind of organizational nerd) and half of them are always long term, meaning 3-6 month holds. With the rest of the portfolio, I place shorter term trades. I find John Welsh to be very inspirational in terms of keeping my short term trades focused and limited in scope. I've set the goal for myself to do no more than 1 short term trade daily, but frankly I'd rather do no more than 1-2 weekly. Between mamahood and work, I've got remember to stay balanced.

Profits and Taxes
If you make money, and hopefully you will, you need to be prepared to pay taxes on it. Our investment income raised our tax bracket last year (absolutely no fun) and we had to be ready with a check for the IRS. Because I am self employed in my non stock career, I pay estimated quarterly taxes anyway, and include any share of taxes that will be due on my stock gains.

At the end of each month, I take a percentage of any gains out of my trading account and transfer it to a savings account specifically for estimated quarterly tax payments. I find this less painful to do in increments than once a quarter. I also take a percentage of any gains and move it into a LT savings account. I love the stock market, but I love diversification of my investments and liquidity more.