Sunday, December 2, 2012
Freedom Fund Update - December 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.
It's important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.
The S&P 500 is priced today almost exactly what it was 30 days ago, but that doesn't mean there wasn't a pretty good buying opportunity. The middle of the month sagged fairly significantly, and there was a good week there for long-term investors to scoop up shares on high quality businesses for attractive prices. I seen the drop start to occur right after the election news was announced and President Obama was re-elected. I got in a little early, and deployed capital quicker than I should have. However, hindsight is always 20/20. I don't really try to time the market, rather I just value shares and try to buy as far under what I feel fair value is as possible. When an attractive price on a high quality stock comes my way, I have free capital and my allocation is proper, I purchase.
I made several purchases in the aforementioned post-election market sag. First, I added to my positions with McDonald's Corporation (MCD) and Norfolk Southern Corp. (NSC) and I shortly thereafter purchased additional shares with my Vodafone Group PLC (VOD) holding. I found the shares with these companies trading for attractive long-term prices, with acceptable yields and strong operations. My allocation for all three allowed room for additions, and the shares of all three companies had weakness greater than what the general market presented due to company-specific issues like reduction in coal shipments for NSC and a write-down for VOD due to losses in southern Europe from larger macroeconomic issues.
The current market value of the Freedom Fund now stands at $85,129.19. This is a nice increase from last published value of $81,043.57. This 5.04% increase is due to fresh capital allocation with which I used to purchase shares mentioned above. It's especially fantastic that I've been able to grow the Freedom Fund from the $54,852.73 I started off 2012 with. If I can grow my portfolio by over $30,000 on my income level every year I'd be very happy indeed! I could have probably grown it even more this year had I not taken the summer off, but I really enjoyed everything I did this year.
This will be my last update for 2012. I'm so thankful that I've had such a fortunate year and I've been able to continue to document my progress towards early retirement/financial independence for all of my readers. Thank you for continuing to follow the journey. Sometimes I wonder if I can continue to walk the path, as it's extremely difficult to work over 50 hours per week at a stressful job that I don't have any passion for. But, I keep going because I know that my future self 5-10 years from now will thank the me of today for putting in the work necessary to have a free life for the next 40 years. 40 years of freedom is certainly worth 10 years of hard work, but the light can be hard to see when you're still so far from the end of the tunnel.
I'm still invested in 29 positions. The additional shares I purchased during the month of November were for companies I was already invested in.
These updates are mainly designed to show the increase in the value of the underlying equities I'm invested in, but the main purpose of investing in dividend growth stocks is for the rising stream of dividends over time. So, with that said I don't put too much emphasis in these monthly updates on the value of my portfolio. I think it is a good idea, however, to keep track of the rising (or falling) value of one's securities and be aware of where they are in terms of the marketplace and whether or not certain stocks are attractively priced. It proves to be a useful exercise, for me at least, to update the values monthly. It gives me fresh perspective on which equities are performing well and which aren't, and from there I can make educated decisions (based on further due diligence) on which stocks I'd like to add fresh capital to (while considering portfolio weight as well).
Full Disclosure: Long MCD, VOD, NSC
How are your portfolios doing? Had a great 2012?
Thanks for reading.