Tuesday, January 1, 2013
Freedom Fund Update - January 2013
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It's important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.
I can't believe 2012 is already behind us. Happy New Year! I'm really lucky in that 2012 was such a fantastic year for me. I certainly hope 2013 is just as wonderful for you readers as well as myself.
I had another stellar month of contributions during the month of December. I continue to remind myself that it's the power of fresh capital injections that will drive the long-term success of my portfolio, rather than outstanding investment returns. I was able to add to my positions with Intel Corporation (INTC) and Philip Morris International, Inc. (PM) at what I felt were attractive prices. Both stocks have been suffering a bit lately. Intel continues to face questions about its future as a viable company as it still lacks a significant footprint in the mobile semiconductor space. On the other hand, Europe is considering additional regulations on the packaging of tobacco products which can affect PM's bottom line in that region.
It's important to remember, however, that the best time to typically buy stocks is not when everyone is cheer leading for a company. Having everyone agree with your investment decisions can be expensive indeed. That type of consensus is most likely not worth the high price you'll pay for it. Every company faces occasional problems or headwinds. It's important to try and differentiate these from longer term fundamental issues when can lead to a permanent loss of capital, and buy when it's the former and sell when it's the latter.
The current market value of my Freedom Fund now stands at $87,985.11. This is a nice increase of 3.35% over my last published value of $85,129.19. This increase is completely due to fresh capital additions, with which I used to make purchases listed above, as well as dividends received. Otherwise I would be looking at a portfolio worth less than it was last month.
It feels good to start the year off with a portfolio value approaching the $100k mark, but what I'm most anxious to see is the dividends continue to rise. I'll be publishing the dividends received from December very soon (which were my biggest ever!) and I'll also be talking about how I did with some of my 2012 goals over the next week or so. Hint: I did so-so. I think one of the great things about a live blog is that it allows me to catalog my success and failures as they happen.
I'm still invested in 29 companies, as my purchases were with 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 PM, INTC
How are your portfolios doing? Off to a great 2013?
Thanks for reading.