From Margin Calls to Index Funds: How My Investment Playbook Evolved
At 60 years old, I can look back at my investing journey the same way I look back at the seasons I’ve coached on the soccer field. Some years we won a lot of games, some years we took a beating, but the biggest difference-maker was always the same: habits.
You don’t win championships because of one flashy play. You win because you show up to practice, run the drills, and stick with the fundamentals even when it feels boring. Investing works the same way.
Today, my playbook is simple:
- Spend less than you earn.
- Invest the rest in low-cost index funds.
- Avoid debt.
- Give it time.
But let me be honest: I didn’t start with this wisdom. I stumbled my way here, making almost every mistake you can think of. What follows is my investment story, complete with red cards, missed goals, and eventually, a hard-fought win.
The Rookie Season (1999–2000)
Back in 1999, I was fresh off a deployment to Bosnia and had saved up $10,000. I opened a Datek online account, ready to conquer the stock market.
It was the Dot-Com boom, and I treated investing like picking a starting lineup: grab some scrappy underdogs under $10 a share and hope one of them became the next superstar striker. To “balance” the risk, I put half my money in Eastman Kodak, a Dogs of the Dow stock. Because Kodak was in the Dow, I figured it was a safe defender.
And because rookies always think they can score from midfield, I borrowed on margin.
The result? Disaster. Some of my star picks were Enron and Worldcom. Within a year, my team collapsed. Every $1,000 I put in felt like conceding another goal.
Lesson learned: Just like in soccer, you can’t win games by playing reckless offense and leaving the defense wide open. Margin debt was my first red card.
Halftime Wake-Up Call (2001)
In 2001, I read Rich Dad, Poor Dad. The idea that assets put money in your pocket and liabilities take it out made sense to me. I decided dividends were like rent—or in soccer terms, like steady possession in midfield. They didn’t guarantee goals, but they kept me in the game.
So I loaded up on Worldcom, chasing their dividend. I bought so much that my June payout was going to be $1,500, enough to take my family to Disneyland Paris. I was already celebrating the victory.
The day before payout, Worldcom filed for bankruptcy and canceled the dividend. Just like that, my “game-winning goal” got called offside. We went to Disneyland anyway, on a credit card.
Lesson learned: A dividend is only as good as the company behind it. You can’t build your whole offense around one unreliable striker.
Playing the Possession Game (2001–2007)
Burned by margin and humbled by bankruptcies, I shifted my approach. I started treating dividends like possession: slow, steady, build from the back. My rule was simple: buy solid companies that paid around a 4% dividend and reinvest them.
I even started a Christmas tradition. Each year I’d buy my kids $200 worth of dividend stocks and let them pocket the annual dividends. By 2007, their accounts were paying out over $100 a year. That was the first time I saw compounding in action. It wasn’t glamorous, but it was working.
Lesson learned: Just like in soccer, building momentum takes patience. You don’t always see the payoff right away, but the habits stack up.
The Great Recession: Extra Time (2007–2009)
Of course, no season goes smoothly. The 2008 crash was brutal. Some of my kids’ Christmas stocks—Fannie Mae, Freddie Mac, Washington Mutual—collapsed completely.
But unlike my rookie mistakes, I wasn’t overextended. I wasn’t on margin. I didn’t panic. I looked for the companies still paying dividends and kept buying.
It was like playing extra time after a long, ugly game: you’re tired, the scoreboard looks bad, but you keep your shape, stick to the fundamentals, and survive.
Lesson learned: Resilience beats panic. You don’t win by avoiding mistakes. You win by not quitting after making them.
Trying Out Different Positions (2009–2015)
After the recession, I kept buying dividends, though most good companies only paid around 2%. I also took a swing at real estate. In 2013, I raided my brokerage account to buy a condo at auction. My logic? Rent was just another dividend.
A couple years later, I retired from the Army. I cut my expenses below my pension, which gave me freedom. That was like locking down your defense so your offense has the confidence to take risks. It didn’t matter what job I took, my base was covered.
Lesson learned: Financial freedom comes from playing solid defense (low expenses), not just flashy offense (high income).
Lifestyle Creep: The Fancy Footwork (2015–2020)
By 2019, my dividends were paying me over $2,000 a month. That felt like I had a star forward who could score at will. I used those payouts for vacations, a car, even a second apartment.
But here’s the problem: I stopped treating dividends like reinvestment fuel. I started treating them like extra spending money. I let lifestyle creep sneak onto the field.
Then COVID hit. We decided to buy a beach house in Virginia. Angry at the mortgage company’s delays, I sold a huge chunk of my dividend portfolio and paid cash. It felt great, like scoring a highlight-reel goal, but it wasn’t smart. Overnight, my $2,000/month in dividends vanished, and I had to relearn how to budget.
Lesson learned: Don’t let a few flashy plays trick you into thinking you’ve won the game. Stick to the fundamentals.
Reviewing the Game Film (2022)
When we sold the beach house and moved to Washington in 2022, I took a hard look at my investments. I compared my hand-picked dividend portfolio against four simple index funds (DIA, SCHD, SPLG and VTI).
The results were clear:
- My portfolio: 22.73% return.
- Dow Jones (DIA): 32.65%
- S&P 500 (SPLG): 49.05%.
- Total Stock Market (VTI): 46.09%.
The only ETF that I examined, which I beat was Schwab’s Dividend (SCHD) ETF at 8.05%.
Meanwhile, my government TSP account, where I had no choice but to use low-cost funds, was quietly outperforming everything I picked myself. More money went into my brokerage over the years, but my TSP grew bigger.
Watching that was like reviewing game film and realizing your fancy tricks cost you the match, while the fundamentals won every time.
My Final Playbook
After 25 years of investing—through bubbles, crashes, bad calls, and a lot of extra time—I’ve boiled it down to this:
- Spend less than you earn. Solid defense wins games.
- Invest the rest in low-cost index funds. Pass the ball, keep possession, let compounding do the work.
- Avoid debt. Don’t give the other team an easy counterattack.
- Give it time. Championships aren’t won in one match—they’re built season after season.
It took me decades of mistakes to get here. But just like coaching soccer, I’ve learned it’s not about perfect games. It’s about building good habits, sticking to the fundamentals, and letting time do the heavy lifting.
Boring? Maybe. But boring wins.
Coach Holdren’s Playbook to My Younger Self
If I could huddle up with my younger self before the opening whistle, here’s the game plan I’d draw on the chalkboard:
- Commit to a savings rate between 30–50%. This funds your Freedom Account. Think of it like your team’s conditioning—without stamina, you won’t last the full 90 minutes. If you can’t hit 30% right away, that’s fine. Start smaller, pay down debt, and dedicate your next raise toward savings until you get there. Once you’re conditioned, you can play the long game.
- Split your Freedom Account wisely. First, max out your TSP (or 401k); at minimum, capture the employer match (that’s free money, like a teammate making the perfect assist). Second, max out your IRA. Third, put any extra into a taxable brokerage account, but here’s the key: don’t raid this account. Treat it like your bench players, you’ll need them later in the game.
- Avoid debt. Debt is like giving the other team a free penalty kick. Only borrow when absolutely necessary, and only if the interest rate tilts the field in your favor.
- Enjoy the rest. Once you’ve locked in a 30% savings rate and avoided debt, how you spend the rest doesn’t matter. Spend with intention on what truly matters to you, whether that’s travel, hobbies, or family experiences. That’s how you play the beautiful game of life.
We created a Financial Freedom/Independence Calculator (Coach Holdren’s Simple Economic Model (SEM)) where you can test out your own path to Financial Freedom or Independence.
You will find the calculator under the “S.E.M. Calculator” tab or click this Link: S.E.M. Calculator – Simpli-FI.money.