Sunday, April 1, 2012
Freedom Fund Update - April 2012
Well, the time has come to update the Freedom Fund once again as we start another month. The Freedom Fund is my portfolio, and I think it's aptly named. My portfolio is my way to freedom; freedom from working at a job I don't enjoy to purchase goods I don't need to impress neighbors I don't care about.
I feel extremely fortunate and thankful that I'm able to post these updates every single month which shows the power of monthly contributions to investments because of the high savings rate I maintain. It shows how a relatively large sum of money can be built through the power of time, patience and perseverance.
The stock market continues its historic run. It had its best first quarter start in 14 years as everyone seems to be buying into the economic recovery. Me? I'm not so sure that we're "recovering". I think that things have stopped getting worse, but it seems that wages have been stagnant and our unemployment rate is still extremely historically high. I think that we have a long way to go, and because of that I believe the market has gotten a little ahead of itself. I don't necessarily think that one needs to stop buying stocks. However, I do believe that one has to be a bit more careful and choosy as to which stocks one purchases. Instead of looking at the market as whole when deciding whether to continue purchasing stocks, I look at the individual securities. There will be equities that are performing better than the overall market, and of course there will be individual equities performing worse. Some will be overvalued and some will be undervalued.
Due to the market's strong performance YTD, my portfolio has been very strong and has performed very well. This is not necessarily a good thing, as appreciating stocks provide a bigger fund value which looks good on a net worth statement, but unfortunately creates a situation where it's difficult to find value. This just creates a challenge that needs to be overcome by either building up a sizable cash position for when the market corrects itself, or by being a bit more diligent in your purchases as I mentioned above.
I made a couple small changes to the Freedom Fund since the last update. I made no sales, as is my preference, but I did add to my positions with McDonald's Corporation (MCD) and Vodafone Group Plc (VOD). I felt both were trading at attractive valuations in a strong market and took advantage.
The current market value of the Freedom Fund now stands at $65,666.59. This is a large increase since the last published value of $62,145.02. This increase is due to both the strong performance of the market, as well as my purchases in the aforementioned securities.
I'm currently still invested in 25 positions. This is unchanged since last month.
I'm very excited and lucky to be able to continue to publish these updates to my Freedom Fund. So far, in the two years since I started my journey, I've had no major setbacks and everything has gone pretty smoothly. I feel increasingly proud of my diligence in sticking to my plan and not allowing myself to be blinded by short-term success. I continue to believe in delayed gratification and I feel I'll be richly rewarded once I'm able to attain financial independence.
How are your portfolios doing?
Thanks for reading.