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.


  1. says

    I agree with everything you said. “I’m not so sure that we’re “recovering”. I think that things have stopped getting worse” pretty much sums up what I’ve been thinking as well.

    You’ve made awesome progress. Imagine where you’ll be in another 2 years… keep it up.

    • says

      Compounding Income,

      Thanks for stopping by.

      I consider myself pretty fortunate for the progress I’ve made. When I was writing this article, I was looking at the first Freedom Fund update I posted on the blog back in April of 2011. The fund value as of 4/4/11 was $28,845.28. So, to grow it that much in a year is just awesome and I’m really grateful.

      I wish us both continued success!

      Take care.

  2. says

    DM your freedom fund has been great during this historic run with the markets. What preparations, if any, will you take to prepare this portfolio for rising interest rates?

    I believe REITs and high-debt companies will be hit hard immediately. As for the rest of the dividend-producers, I’m not sure how they’ll perform. Any advice would be great.

    • says

      Investing Early,

      Thanks! I’ve tried to manage my portfolio to the best of my ability, with limited turnover and a focus on owning high-quality businesses at attractive long-term prices.

      I don’t believe interest rates will rise immediately and dramatically. Once the Fed believes that the economy is recovering properly rates will start to rise and businesses will be aware of this. It will cause both benefits and drawbacks. The drawbacks being that bonds/fixed income securities on balance sheets will fall in value, while future investments will have a better rate of return. This is simplifying the matter, but I believe that the businesses I invest with can manage a rise in interest rates appropriately.

      I don’t invest with REIT’s (at the moment) or companies ridden with high amounts of debt (ever).

      Best wishes!

  3. says

    Congrats! I have been following your blog for a little while now and I have been impressed with how fast your balance has grown. It won’t be too long before you are going over $100k. And with your continued ‘frugalness’ you’ll be retired or semi-retired in no time!!

    • says

      P.S. What is the ending goal?
      $450k delivering hopefully $22,500/yr (which you would be able to comfortably live off with your continued frugality gene) would be a nice target?!?

    • says

      me myself and I,

      Thanks for stopping by. Hope all is well!

      Thanks for the congrats. It’s much appreciated. The balance has grown faster than I could have anticipated. A combination of my frugality, an increase in income and the strong market have all provided me a strong tailwind. Your continued support is welcome.

      I wouldn’t say I have a certain portfolio value in mind. The passive income is what matters most, and my end goal is to have that passive income exceed my expenses for six months straight, at which time I’ll consider myself financially independent and able to spend my time as I wish. I would say, based on my current expenses, that passive income in the range of $12,000-15,000/year should be fine.

      I’m also open minded to semi-retirement before I get to the point of 100% of my expenses being covered by passive income. Working 10-20 hours a week at something enjoyable doesn’t sound too bad. We’ll see. Life changes and happens fast.

      Best wishes!

  4. says

    Nice portfolio performance. It has indeed been quite a run for the market thus far this year. I feel the same way about the economic “recovery” and question its strength. However, like you said, one just needs to focus on individual stocks rather than the market as a whole, and try to find value where it presents itself.

    • says


      Thanks for stopping by.

      I’m glad you agree. I think it’s just a great time to invest with caution. I’m a huge bull on stocks long-term and even though the market is fully valued here, it’s still a great time to be in equities. With a lack of alternatives (other than perhaps real estate), stocks are where it’s at.

      Best wishes.

  5. says

    A great update and great news. Every penny is one penny closer to that sweet sweet goal of freedom. The ability to choose how, with who, and what to do with your life.

    • says

      The Kechi One,

      You nailed it on the head there. The ability to choose how to spend one’s time is an amazing ability to have and that kind of freedom is worth all the hard work.

      Keep in touch!

  6. the good shepherd says

    hey DM, i have been reading your blog for a few weeks now and i love what you have been doing. i also have started to invest in dividend stocks but i had one question to the strategy. Do you ever sell your securities when the value reaches a point you deem to be high or do you hold forever?

    • says

      the good shepherd,

      Thanks for following the blog. It’s much appreciated.

      I do not hold forever just for the sake of it. I monitor all my investments and I will sell if a company cuts the dividend, becomes grossly overvalued or if fundamentals change. The latter two are a bit subjective, but in the end I hold as long as the company I’ve invested in continues to do the things that compelled me to invest with them in the first place. I do sell, but it’s not often.

      I consider myself a buy-and-monitor investor, instead of a buy-and-hold investor. I do have exit criteria.

      Best wishes!

  7. says

    65K is no small chunk of change! A big congrats Mantra and you will be at 100K before you know it. :) Keep adding to your positions on the dips, even though its hard to do sometimes, and you will get there in short order. Also consider you got there without borrowing, that’s great!

    Keep up the good work mate 😉

    The Dividend Ninja

    • says


      Thanks for the warm congratulations. It’s most welcome!

      I definitely continue to plan adding to solid companies on the dips, and I’m anxiously awaiting to deploy some capital in April. We’ll see what Mr. Market presents me.

      I definitely did it all without borrowing a dollar, and in fact am doing it while paying down low interest rate debt.

      Best wishes!

      P.S. Still working on things.

    • says

      Dividend Fool,

      Thanks for stopping by.

      I’m enjoying seeing your progress as well. The wonderful community that has popped up among us fellow DG investors is really amazing and mutually beneficial and inspirational.

      Keep up the great work.

      Best wishes!

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