Wednesday, May 1, 2013
Freedom Fund Update - May 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 a traditional 40-year career to purchase goods I don't need to impress neighbors I don't care about. This journey is all about freedom and flexibility. One day the dividend income this portfolio generates will fully replace my day job's income and my time will be completely my own. What could you possibly want to own more than your time?
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It's important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.
Another fantastic month here for the Freedom Fund. I really believe that the key to building wealth over the long-term is to ignore the noise (consumer confidence reports, the latest political arguments coming out of Washington, pretty much whatever was on the 11 o'clock news) and focus on the things you can control. I can control my ability to limit my expenses, thereby increasing the amount of fresh capital I have to invest in high quality businesses. I can control my ability to stay dedicated to a plan. I can control my ability to reinvest my dividends and I can control where my funds go by fundamentally analyzing companies and focusing on which ones are attractively valued no matter the broader market's valuation.
The past month was a busy one for the Freedom Fund. I initiated a position in Air Products & Chemicals, Inc (APD) and also initiated a position in BHP Billition PLC (BBL). I also added to my position with Wells Fargo & Co (WFC). It was a very active month and I wouldn't have it any other way. Some investors are waiting for a broad market pullback which may or may not occur. I'll simply continue focusing on high quality businesses and building my dividend income stream that will only give me more capital in the future to reinvest if we do get that elusive pullback.
The current market value of the Freedom Fund stands at $110,508.00. This is a nice increase of 7.2% over last month's published value of $103,131.12. The increase was mostly due to the aforementioned equity purchases, with the remainder being capital gains and dividends.
I'm extremely excited for what the next few months bring. Some are trying to predict trends, while I simply try to stick with what's worked over the last century or so. I'll continue building the Fund by investing my hard earned capital into equity positions with the highest quality companies I can find that are trading for attractive valuations. The market can go up by 10% or it can decline by 15%, but my focus remains on the dividend income my investments provide.
I'm currently invested in 32 companies. This is an increase from last month due to the two new positions I initiated as discussed above.
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 on 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 APD, BBL, WFC
Thanks for reading.
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