Freedom Fund Update – July 2014

piggybank1Well, the time has come to update theΒ Freedom FundΒ 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 job I don’t desire 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 theΒ dividend incomeΒ this portfolio generates will fully cover my expensesΒ andΒ my timeΒ 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 andΒ 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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.

June was yet another solidly boring month for the Fund, much as I prefer it to be. Watching paint dry would probably be more exciting for some people than tracking my portfolio, but it’s a thing of beauty for me. Slow and steady is the name of the game. As such, I continue to make one or two strategic equity purchases per month whichΒ fosters the growth inΒ passive income the Fund is able to generate. And June was more of the same.

After updating my watch list for the month of June, IΒ decided to add to my position in Baxter International Inc. (BAX) at what I thought was an attractive valuation for the long term. This is a high-quality company, and bolsters my exposure to the healthcare segment, which is a segment of the economy that I’m always interested in investing in. I had no sales, which is par for the course for me.

The current market value of the Fund stands at $166,288.88, which is a 2.14% increase over last month’s published value of $162,809.40. A pretty solid showing;Β however, the portfolio’s value was hurt over just the last few days of the month by the recent weak performance in shares of Philip Morris International Inc. (PM).

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Looking forward to July, I’m planningΒ to invest in at least one of the companiesΒ currently on my watch list.Β However, if a really strong opportunity presents itself elsewhere then I certainly wouldn’t be opposed to investing fresh capital there instead. We’ll see what kind of mood Mr. Market is in over the coming weeks!

I’m currently invested in 47 companies. This is unchanged since the last update, as the investment in BAX was an addition to a current position. I continue to remain selective about investing in new companies as I near 50 positions.

These updates are mainly designed to show the increase or decrease 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 BAX and PM.

How does your portfolio look? Was June a good month for you?Β 

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

Edit: Added chart for visuals perΒ a reader’s suggestion.Β 

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84 Comments

  1. I wonder if you are over diversified. 47 stocks seems kinda high to me, but I greatly respect what you are doing. I have a significant investment portfolio as well, but am much less diversified. I wonder if your approach will simply revert your overall performance back to the mean? Buffett said one time that you should treat each investment like it was one of ten you could make in your entire life. After you make it, you would only have 9 more stocks to invest in. His main point was that is your 47th idea really as good as your top 3 ideas?

    Get inspiring! I like to read about all you are doing, including the fitness goals.

  2. SE,

    I actually get asked that question quite a bit. I wrote an article a while back that explains why I have so many positions, and it basically boils down to income diversification:

    https://www.dividendmantra.com/2014/04/why-i-eventually-want-to-be-invested-in-50-companies-income-diversification/

    Warren Buffett actually referenced what he referred to as a “punch card” with 20 punches available. Of course, that’s assuming a different investment strategy than the one I’m using. I’m not attempting to beat the S&P 500. I’m aiming to build up enough passive dividend income so that I can become financially independent. But if you are indeed looking to beat the market consistently you might be better served betting big on high-conviction investments. Of course, that increases your risk.

    Appreciate you stopping by!

    Best regards.

  3. Nice done Jason. Do not worry about diversification. I think you are quite right to do not put all your eggs in the same basket. I believe that this lowers the volatility of your holdings. You are doing a fine job and I wish many financial advisers (the helpers as Warren Buffett calls them) were doing as well. Nobody will take better care of your money than you. Cheers !

  4. Better to under trade than over trade I think. Some times a lack of activity gives u more time to analyze your current holdings. 2% gain a month is pretty damn good. Hopefully Pm can turn it around and not affect the current dividend ( crosses fingers). Thanks for the update. I will be watching.

    Good Day and Grind On!

  5. Congrats on another good month DM!

    I’m with you on diversification too – I’m aiming for up to 50-ish stocks in total, maybe 4-5 in each sector. I wouldn’t want to lose a major dividend stream for one company deciding to cut dividends.

    From my individual dividend stocks in June, I increased $1,700 in value; $375 of which was capital gains; the rest was added investments, for a total of 21% above my total cost basis.

    I’ve just estimated that my “Work Freedom Day” when I’ve earned enough dividends through the year to pay for the remainder of the year’s budget is 20th November, which I’m looking forward to celebrate!

    Keep up the journey and here’s to an even better half of the year!

  6. A 2% gain doesn’t sound like much, but the dollar amount gain is quite high! That’s like a monthly salary right there! It’s going to be higher as the portfolio amount increases. Congrats and keep up the great work!

    Cheers.

  7. Another good month for you – congratulations! Looking forward to seeing what you add to your fund in July πŸ™‚

  8. Great to see your progress! Do you have visual graphics of the rise of your portfolio and dividend?

  9. I’m more of a fan of diversification than opposite and for me it’s rather good thing to see your well diversified portfolio. Nice work DM!

    I’ve been in a situation where I had badly diversified portfolio. It sucked, because I saw portfolio value drop by 50% just in seconds. After that I honestly don’t understand why smaller diversification rate should be better.

    If we choose stocks to our portfolio then we make assumptions based on the information available, like financial documents. But do we really see inside the company what is really happening in there at this very moment? I would say no and therefore I would like to reduce the risk of single company. Even more: financial documents give us the past history. But we can’t assume that future will be the same what was past.

  10. Another good month. The rise in portfolio value is nice of course, but I wouldn’t mind at this point to see my portfolio decline in value if this means being able to buy more dividend paying companies at a better price! In that light we seem to be winning either way. Either the portfolio goes up in value, which makes me sleep well. Or the portfolio goes down in value, which means we get more interesting investment opportunities!

    Best,

    DW

  11. I urgently need counseling!! …….Friends came for lunch at the weekend, they too are ex-bikers, the conversation inevitably turned to buying another bike for one last adventure, the wives all say “No”. But my friend and I cant let it drop, being an ex-biker for those who dont understand, is the same as being an ex-smoker or an ex-alcoholic, or an ex-druggy, the desire/cravings never leave you, haven’t slept since Saturday, I’ve been trawling the web for bikes.

    I think the only solution is to quickly buy some more RDSA and empty my bank account, I’m one of those who’s reached FI (Just!!) but now I’m here I dont know what to do with myself, the time,the days,the weeks,the months…..Need toys, need adventures!!

    Cheers,

    Dave….

  12. I am a big fan of diversification. Noone knows in advance what their best idea or worst idea would be. If you invest all your money in a concentrated portfolio of ideas, and you turn out to be flat out wrong, you are toast. The future is unfortunately always unclear, which is why a strategy of intelligent diversification works to the benefit of the investor, protecting them. I believe I only need to get rich once, but I need to stay rich for many decades after that

  13. The total value of my portfolio increased 5.9% over the course of June, about half of which was a capital injection.

    Regarding diversification, I like to have a diversified portfolio. I don’t have a set number of stocks I plan to buy (currently sitting at 27) but I strive to have equal weight in the 10 sectors plus REITs. This may limit upside, but it should mitigate risk as well. Not looking to beat the market, but build a safe, steady, reliable income stream.

  14. I agree trying to track and follow 47 stocks with an average balance of under $4000 each is lot of extra work.

  15. I think the idea is that with reasonable effort, you can outperform the Dow Jones (on the metric of dividend growth, anyway) by investing in numerous companies even beyond the 10.

    I agree, that TOTAL RETURN starts to revert toward the mean (index or average) return once your holdings increase to a high enough amount, but that’s not the case here…

  16. Isn’t it wild to think that 2% of your assets could be greater than your income for a month?

    You must be onto something with this whole frugal living, saving, and investing system… πŸ™‚

  17. Well done Jason.

    2.14% increased in one month is pretty damm good man. It looks small when you look at the gain in percentage,
    but it is pretty good dollar gain because of your larger portfolio.

    I will update my net worth in few days. I guess my portfolios did really well last month because the Canadian stocks are doing really well this year.

    Happy investing and let the money work for us.

  18. Aspenhawk,

    Thanks for stopping by. Hope all is well over there!

    I couldn’t agree more with: “Nobody will take better care of your money than you.”

    Couldn’t have said it better myself. πŸ™‚

    Cheers.

  19. Asset-Grinder,

    I’m with you. I’d much rather have one or two transactions in a month than 10 or 20. More transactions means your broker is the only one guaranteed to win.

    I’m watching PM closely, but I’m not really all that worried. I like the recent moves to bolster their e-cig capability and exposure. They’re moving fairly quickly for a giant company trying to turn the corner.

    Thanks for stopping by!

    Cheers.

  20. Dividend Life,

    I like your “Work Freedom Day” idea. You’re now up to more than a month of complete freedom! That’s fantastic. πŸ™‚

    And congrats on a great month. Sounds like your portfolio is really rocking along. Keep up the great work!

    I indeed hope we both have an even better second half of the year. I’m excited to give it my best.

    Best wishes.

  21. Living At Home,

    Yeah, the % changes in both portfolio value and dividend income become a bit less impressive as the Fund scales. And that’s certainly not a bad thing. I’d rather collect a .001% change in Berkshire Hathaway’s portfolio over a 10% change in mine. πŸ™‚

    Of course, it cuts both ways. I expect the eventual market correction to cause far more unrealized capital loss than I can make up for with my regular fresh capital contributions, which would cause a negative month-over-month change in portfolio value. But that’s okay as long as the fresh capital is being put to better work via more attractive stock valuations.

    Best wishes!

  22. Nicola,

    Thanks so much. It was a solid month, overall.

    July should be interesting. I’m watching IBM and Visa closely right now, but I’m not opposed to another opportunity if it presents itself.

    Congrats on a very successful June, by the way. Great job.

    Take care!

  23. Rijke Buurman,

    I don’t have a graph of it, but maybe I should put something together for the visual aspect. Some people like visuals more than numbers, and I can understand that. Blogger was never very easy for graphs and charts, but I haven’t much looked into it since I moved over to WordPress. I should see what I can come up with!

    Best regards.

  24. Tauri,

    I’m with you. I like diversification. They say it’s the only free lunch an investor has, and that’s probably true. It protects you from the downside, while not really limiting your upside. Sure, if one company becomes this huge winner I won’t participate as much if I’m broadly diversified, but if one company becomes a total turd I also won’t lose my shirt. More likely, most of the companies I’m invested in will continue to profit and become more valuable and send me more dividend income, and I’ll participate in all of that.

    Thanks for adding your thoughts. And the past is not necessarily correlated with the future. Great point.

    Best regards!

  25. Dutch Dividend,

    I visited the site, and it offers a free trial? It must be a freemium service or something like that?

    I know there are some solid plugins out there for charts and graphs. I was on Blogger for years and that platform wasn’t nearly as friendly for charts and graphs. But I suspect I’ll have an easier go of it on WP. I’ll check around.

    Thanks for the suggestion! I do like their beautiful site.

    Cheers!

  26. DW,

    It’s a win-win, my friend. A higher value increases one’s net worth and the psychological benefits are clear. A lower value means one’s fresh capital goes further by buying cheaper stocks. πŸ™‚

    I also hope we see a cheaper market in July. Not starting off so great, however. Stocks are up yet again.

    Best regards.

  27. Dave,

    Financial independence is whatever you want it to be. If that’s a life full of adventure, then so be it. If it’s a quiet life full of books and lemonade, then it can be that as well. If it’s an adventure for six months, then six months of down time, then that’s what it is.

    You know deep down inside of you what you want. The question is whether or not you’re going to follow that.

    If you need an adventure, then go on an adventure. Maybe the road is calling. And maybe one day the road won’t call anymore.

    Have fun. πŸ™‚

    Cheers!

  28. DGI,

    Couldn’t agree more. Our “best idea” might not be all that great of an idea. Hindsight is 20/20. I’d rather be somewhat correct than precisely wrong, and broad diversification allows me to be such.

    Thanks for stopping by!

    Best wishes.

  29. BCS,

    Very nice! That’s a fantastic month-over-month improvement. πŸ™‚

    I have the same goal. I’m not in this to beat the market. I’m in it to build a reliable and rising income stream that will exceed my expenses. My rent and food bills will be one day paid with dividend income, not boasts of beating the market.

    Thanks for stopping by!

    Take care.

  30. Dave,

    My strategy isn’t for everyone. But I think it should work pretty well for those aiming for similar goals (FI via passive dividend income). And I explained my reasoning in the article referenced.

    Cheers!

  31. Ravi,

    I’d like to think I’m on to something. πŸ™‚

    Thanks for the support. The snowball is definitely rolling downhill at this point. I just wish the thing would take a breather! I need a chance to add some fresh snow to the thing. πŸ™‚

    Best wishes.

  32. Finance Journey,

    I saw the TSX is on fire YTD. That’s good stuff for the net worth, but unfortunate for those trying to put fresh capital to work.

    Appreciate the encouragement. And let’s indeed let the money work for us! πŸ™‚

    Take care.

  33. Rockin’ Jason πŸ™‚

    Keep up the great saving and investing. I need to catch up!

    At this rate, your “retirement” is about ten years away….

    Mark

  34. Mark,

    Ha, I’m the one who needs to catch up. Your dividend income is fantastic.

    I was on pace for FI by about 39, which is seven years away. But the recent changes in my life probably postponed that until after 40. But I wouldn’t mind missing the mark by a couple of years if the road there is much more enjoyable. We’ll see how it goes. I’m still staying as aggressive as possible. πŸ™‚

    Cheers!

  35. Thanks Dr.Jason, that was a close call!!….Maintaining the discipline necessary for dividend investing is never easy (For me anyway.) if I stick with it for another year, then next year I can get a better bike πŸ™‚

    Another thing thats triggered this near relapse of discipline is another set of friends here are suddenly departing in a few weeks time to travel around Spain/Portugal/Hungary/Romania/UK etc. in an old van for several months.

    Maintain the discipline.
    Maintain the discipline.
    Maintain the discipline.
    Maintain the discipline.
    Maintain the discipline.
    Maintain the discipline.

    Cheers,

    Dave….

  36. Another successful month and I liked the BAX purchase. Still looking for a chance to add to my own position. I can’t remember who wrote about them but man the great companies that have come out of the BAX line is pretty amazing and I expect the same with the upcoming split. I expect to see a huge month of dividends for you when you announce your June dividends! Keep up the good work and keep on inspiring!

  37. I picked up 1k shares of GSK last month @ 54.10 via selling puts on them @ 55. I am hoping PM keeps falling to high to mid 70’s that will be my next purchase. As for diversification I hold: LO, MO, GSK, selling long term puts on PG & PM.

  38. Great progress DM.
    PM has been down lately and I might look to add to my position if it hits less than 80.
    My portfolio increased by little over 4% including new investments, but the base is small compared to yours. I didn’t invest much in June and with the market not taking a breather, it is getting difficult to find stocks at reasonable valuation.

  39. JC,

    I think BAX will be a solid long-term holding for me. I continue to think there’s value here, especially before the split.

    Appreciate the ongoing support and encouragement. You’re doing great over there as well. Continue to be amazed at your savings rate! πŸ™‚

    Best wishes.

  40. frank,

    Wow, that’s a hell of a purchase there in GSK. I’ve never actually taken a real strong look at the company, and that’s only because I prefer to invest in broadly diversified healthcare companies. As I understand it, GSK is mostly a pharma business. But you have to love that yield. πŸ™‚

    I like PG, PM, LO, and MO as well. I think PM makes the most sense right now, but it also has some short-term headwinds its dealing with.

    Take care!

  41. DGJ,

    Talk about things getting difficult. IBM and V (my two picks for July) are currently leading the Dow Jones. I can’t catch a break.

    Great job there last month. Your portfolio is coming along very nicely, and I love the BAX purchase. I think we’ll do well with that. Congrats on crossing over $60k! πŸ™‚

    Best regards.

  42. I really hate holding my nose and buying what looks like a “fair” value at the moment but i know its for the long haul. This last 5 years has really really spoiled me/others on gains in addition to bargains. I truly wonder what peoples fortitude will be should a decent drop, maybe occur (5-20%). Boring isn’t always bad πŸ˜‰

  43. Zol,

    I’m with you. It’s tough to buy a stock when there’s no apparent margin of safety. So either you stick to the highest quality you can find, or you hold cash and wait for a better day. Unfortunately, we don’t know when a better day will come around. So I just continue to buy what I think is both high in quality and at least fair in valuation.

    Of course, I’m not happy as I see Visa and IBM (my two picks for July) are already tearing it up. First world problems, of course.

    Best regards.

  44. Thanks! One day I’ll be able to talk about my portfolio – once I get my head around which account I should have… πŸ™‚

  45. oh fearless Dividend Leader,

    I enjoyed your post…as usual. I’m glad that you have this system working for you and hope it works for you as you’ve been having some recent career and life changes.

    I’ve had a good month for my dividend portfolio too… I call it my “Pension Growth Plan (PGP)” (okay, I just made up that fancy name). The capital appreciation part was good and the dividends were icing on the cake. As we are still in a bull market, the portfolio appreciation is sweet and the dividends are icing on the cake but I’m always wary of a correction or a protracted bear market so some cash will be built up from here.

    * I reinvested my dividends here and there in bits and pieces. I currently hold 28 stocks. I’m trying to stick to not more than 30 stocks. I’m overweight a few stocks and that has helped with capital appreciation.

    * I sold all my holdings Time Warner (TWX) for a 25% gain because I did not want TIME stock post split. TWX had an yield on cost of 2.2%. With those funds, I bought a small cap financial institution – Tomkins Financial Corp (TMP) which has a history of growing dividends and a yield of 3.5% and I felt it was fairly valued.

    * I added to my TGT position because it reached a new 52 week low. Further, they announced a 19% dividend hike after the addition.

    * I sold my holdings in Family Dollar (FDO) which I bought in April and yielded 2.2% at the time. Since then, Carl Ichan’s announced a 9% stake which pushed up the stock by around 15% and I felt the stock had gone up too fast and would come down when the talk of and FDO sale dies down. And this proved to be true in the last couple of days. FDO was a bear play I bought because it was a dividend aristrocrate and the recent beating it took brought the stock down to 52 week lows.

    * With the funds from the sale of FDO, I started a new position in Baxter International (BAX). I want to go overweight in healthcare and my current holdings in ABBV, MDT, CVS, WAG and OHI needed some more healthcare plays. I was debating between JNJ and BAX and decided to go for BAX as I felt JNJ has stretched a lot. I will add more to BAX at some later point before the split if the price still looks attractive.

    I don’t usually do a lot of selling but some stocks looked ripe for some churning.

  46. oh Dividend Leader,

    Have you checked Personal Capital? They have some interesting visuals that helps me a lot.

  47. I’m up 2.7% from 5/30 to 6/30.
    I also accidentally left my automatic investing through Sharebuilder turned on and spent capital I was intending to put towards a home. Oops.

  48. DM,
    I’m still enjoying your research and recommendation on OHI, which is the first stock I’ve purchased without a recommendation from Value Line. It’s exceeded my expectations, and I’m now looking forward to its first dividend, which given past trends, should be a .52 payout. Thanks!

  49. DM,
    I’ve been reading your blog for awhile, and am just starting to get into investing up here in Canada. I opened an account with a discount broker VB (Virtual Brokers), they have a program that allows recent graduates to make monthly cash contributions and purchase up to 5 stocks commission-free each month. I’m looking at Canadian companies to start with so I don’t have to deal with foreign exchange fees. I have a bit of cash saved up in my checking account (~10k) and all of my credit is paid off. I’m hesitant to buy any stocks now because of the high market values and am wondering how you begin to shortlist stocks to research, and if you would recommend a bulk buy with my cash or to spread out the purchases to take advantage of dollar cost averaging.

    Thanks,

  50. George,

    That’s funny – we used to call our boss at the dealership “our fearless leader”. πŸ™‚

    TMP is interesting! I haven’t heard of the bank before, but I just now took a real quick look. Looks very solid. Reminds me of my investment in SBSI.

    I think you probably made a pretty wise decision there with selling FDO after the run. I don’t often sell after runs, but if things get a little crazy it might make sense to exit and look for another time to possibly re-enter the position. I did something somewhat similar with LO, but only because I also am concerned about both my exposure to tobacco in general, and more specifically with the potential for further regulation against menthol.

    Obviously, I’m a fan of BAX at today’s price. I’m not adding to TGT because of what I feel is already enough exposure there to that company specifically and retailing in general. But you have to love the shareholder culture there.

    Thanks for stopping by!

    Cheers.

  51. George,

    I actually haven’t used their services, but I’ve heard good things about them. I’ll have to take a look when I get some time.

    Cheers.

  52. walletengineers,

    Aww, that kinda sucks. I’m all about dividend reinvestment, but if you had those funds earmarked for something else I can imagine that feeling in the pit of your stomach arising when you realized the funds got reinvested. Not a game changer or anything, but every dollar helps when you’re buying something as expensive as a house. I guess the dividends next month will definitely help! πŸ™‚

    Best regards.

  53. Dear Dividend,

    Thanks so much. I also enjoy seeing other people strive to exceed their goals. That’s one thing that’s so great about this community – you’ve got all these people with unique aspirations setting and exceeding goals. It’s really inspirational. πŸ™‚

    Best wishes!

  54. ted johnson,

    Glad OHI is working out for you! It’s working out pretty good for me too. πŸ™‚

    I think OHI is really a great REIT for the long haul. I wish I would have perhaps bought a bit more, but I also don’t want to go too crazy with REITs. I feel pretty good about my allocation there right now, but I imagine I’ll be ready to add a bit more there in the coming months.

    Best regards.

  55. DividendNewbie,

    Congrats on starting your journey. This is a really exciting time for you. I still remember when I first started out and everything was so new. The interesting thing is that I still feel that way even to this day. This stuff never loses its excitement for me. πŸ™‚

    As far as investing in a lump sum vs. DCA, you’ll find most research recommends lump sum investing. However, I don’t. That will get you to your target allocation the fastest, but I just don’t feel good about that. I prefer dipping my toes in, especially if I’m just starting out. Nothing could shake your confidence quicker than investing $10k and seeing $500 or $1,000 disappear right away in the form of unrealized capital gains. I’d start with investing $2-$3k per month and picking the most attractively valued companies you can find and go from there. You’ll invest that capital over the course of a few months, and this gives you time to figure out your risk tolerance and get comfortable with valuing companies and investing.

    Have fun!! πŸ™‚

    Cheers.

  56. Mantra,

    Perseverance is key in this market. Keep focused on your strategy, your research and try to not let the “talks” and movements you can’t control alter your moves! No doubt that you’re not letting it, which is awesome. You buy when the time, price and valuation is right. Nice job working towards the 50 different companies. I know some individuals may think that’s a lot, but when they are financially/fundamentally sound companies – reviewing their movements, SEC filings and news becomes much easier. I have a feeling you’re getting a lot closer to the number to have invested to provide you the yield that you need, I’m excited for ya. Hope your July started off well today, thank you for the freedom fund update, talk soon!

    -Lanny

  57. The naming of the Freedom fund and the motivation described is Apt indeed!
    Love the comments!
    This combined with the choice of high quality dividend growth stocks will take you to your goal.
    Congratulations on another positive month!

  58. I just love it how things just seem like business as usual with the Freedom Fund, it’s almost as if you never left your job. I wonder what your former self from several months ago would think of all this. I think he would have said, “I’m quitting my job right now!”

    Congrats on continuing to plow forward. I think this will be one of the most interesting chapters in your life. I hope other people get inspired by all these cool developments.

  59. My portfolio increased again in June. I added some shares of Surge Energy and it went up a bit after I bought, along with the gains in other stocks. Im starting to wonder if this market will ever go down!

  60. I’m not sure That I understand. You said you reached FI. Is it the time or the money that is holding you back?

    My vision of FI is that I have enough $ and enough time to travel Europe in a beat up van if that is what I want to do.

  61. I’ve been reading your blog since about October last year and it’s one of my favorites. I switched over to DGI around that time as well. The more I read about it, the more confident I feel in the decision to switch.

    I would agree that a little over diversification is better than under diversification. Since the chance of one of your holdings not increasing their dividend each year is an event one should be prepared for, I was wondering what you and your readers think of the following asset allocation.

    Yearly income desired for F.I. divided by desired number of holdings equals the amount of income / year needed from each holding. Then allocate enough capital to each holding to where that holding provides the needed income per year.

    Example: You want $24000 / year income and you want 50 holdings. That means you would need $480 from each holding per year. When one of your holdings delivers $480 per year, don’t allocate new money to it and reinvest its’ dividends in the next holding. Repeat until all 50 holdings deliver $480 or more per year to be F.I. With this allocation, if one dividend was cut to zero – your income would only drop 2%.

  62. Lanny,

    Thanks for stopping by!

    I completely agree that perseverance is key to this market and this strategy. It’s about being consistent and persistent. You have to take what comes at you and make the most of it. πŸ™‚

    And I also agree that regularly reviewing 50 high-quality mostly large cap stocks is a bit different than regularly keeping track of even 20 small cap stocks that have a lot more going on. So it’s not just the absolute number, but also the type of stocks we’re talking about. That’s an important distinction.

    It’s just one step closer to the ultimate goal. I’m excited for you too. You’re getting closer and closer over there!

    Take care.

  63. Graham,

    Thanks for the support! Really appreciate it.

    Glad you like the title of my little fund over here. πŸ™‚

    Hope all is well over there.

    Cheers!

  64. Spoonman,

    Business as usual, indeed. I know you’re intimately familiar with the approach as you use it as well. Simplicity is a thing of beauty! πŸ™‚

    I’m definitely surprised and excited all at the same time that things are moving along as usual. But I don’t want to become complacent, so I’m continuing to work harder and harder every day at this. And I also have a little more cash in the bank than I’m used to because I wanted to save up a bit for this whole move and transition. So that cushion is certainly comforting me right now, allowing me the motivation to keep going.

    Thanks for stopping by! Onward and upward. πŸ™‚

    Best regards.

  65. Dan,

    Great job there. Congrats on another move up!

    I’m not familiar with Surge, but you gotta love that yield. If that dividend is well-covered you’re in pretty good shape.

    The market will eventually correct. Just a matter of when, not if. Could be a while yet, though.

    Cheers!

  66. Dan,

    Appreciate the support and readership very much. Glad you enjoy some of the content here!

    Your strategy is sound. In a perfect world, I’m aiming for the same. Of course, it’s not a perfect world and I’ll likely have a bit more weight toward certain stocks (say a KO or JNJ) and less toward others (like SBSI or ARCP). But I agree that your approach makes sense, as you truly don’t have to overly worry about a dividend cut/elimination from any one company as they’re all truly equal.

    While 50 stocks would theoretically be a 2% weight toward each one if they’re all equally weighted, I’ll likely have a 3% or maybe even 4% weighting with some while others might see 1% or slightly less. I’ll just have to see how it goes.

    Best of luck with the strategy. I’ll be investing alongside you. πŸ™‚

    Best regards.

  67. Well Done DM, considering you only added one position to your Freedom Fund, you still had a decent month with the 2.14% gain (or can also be seen as 25.68% annual growth potential). Many professional investors would be thrilled to achieve that kind of return. πŸ™‚

    Best wishes and continued success on your personal journey! AFFJ

  68. AFFJ,

    Thanks! I think it was a pretty successful month, all considered. It’s just slow and steady. πŸ™‚

    I hope all is just as well over there with you and your family. To our continued success!

    Best wishes.

  69. Congrat’s DM,

    It’s good to see the fund is moving in the right direction. Check you out with the visual displays (I love a chart/graph!) πŸ™‚

    My portfolio dropped by 1% from last month, which I’m not too concerned with as May was slightly inflated, and after the ex-div date passed on a few of my shares the prices dropped.

    A 2% increase a month is 24% over a year and that’s a very healthy increase indeed.

    Thank you for sharing your figures with us all!

    All the best
    Huw

  70. Good job Jason, month after month!
    Your consistency is inspiring. I have had a quiet year this far because I haven’t had much available capital, but I’m looking to add 4-5 companies to my portfolio in the next couple months. I can’t wait to be able to work full-time and make monthly purchases. Although I have to say that student life isn’t that bad πŸ™‚

    Best wishes,
    TDW

  71. Hey Jason, good post things seem to be going smooth so far.
    The convenience of Dividend Investing is that it is reliable.
    As reliable as shooting fish in a barrel; that is made of fish.
    How have things gone since the move recently?
    R/S

  72. Hi DM,

    I see you had a wonderful June as well. It’s incredible to think that your increase in June results in a valuation increase of roughly $3500. That’s the main beauty of having a big portfolio, while a positive market will reduce the opportunities to deploy fresh capital, it will definitely feel great to see such significant jumps in valuation.

    In my case I am still deciding what kind of diversification I want. I am really confident with my current picks and am suspicious that by looking to further diversify, I end up investing in “not as good” ideas. On the other hand, like you said, it’s better to be somewhat correct than precisely wrong. Definitely some food for thought,

    Congratulations on yet another great month!

    Best Wishes,
    Dividend Venture

  73. Huw,

    Glad you liked the chart. I understand some people really like them, so I guess it was time to put something up. πŸ™‚

    A 1% decline month-over-month is no big deal. I faced something similar myself a few months ago. The YOY trends are much more important, and in that regards you’re making huge progress. We’re in this for the long haul. Keep up the great work!

    Thanks for stopping by. Hope all is well across the pond.

    Cheers!

  74. Tom,

    I’m not sold on WFM. I remain concerned about dilution and the view on competition over the long haul. That being said, the stock has taken a beating so if you’re interested in this company it might be time to do some serious due diligence and see if the value is there.

    Best regards!

  75. TDW,

    Thanks so much. I like to say that consistency is my sole superpower. I remain committed to deploying capital regularly no matter what’s going on.

    I wouldn’t worry about not having capital available while you’re still a student. You’ll have plenty of time to put money to work once you have a regular supply of it coming your way. You’re starting off really early, and that’s what matters. By the time you’re my age you’ll be far ahead of where I’m at. Keep it up! πŸ™‚

    Take care.

  76. Matthew,

    Shooting fish in a barrel, indeed. And one made of fish. πŸ™‚

    Things since the move have been fantastic. I’m spending more time than ever with family and I’ve also seen my best friend a couple times since coming back home. It’s been really nice and I’m confident I made the right choice by coming back. Even better, my former partner and I are still talking and she’s potentially interested in moving up here at some point. So that could be really great as well. And, of course, I’m really enjoying writing more than ever and spending more time with putting ideas together. All in all, I’m really happy!

    I hope you’re having as great a summer as I am! πŸ™‚

    Cheers.

  77. DV,

    It’s really a win-win, right? The market goes up and our portfolio value increases which provides psychological benefits and an increase in net worth. The market goes down and cheaper stocks makes putting fresh capital to work easier. Can’t lose. πŸ™‚

    Proper diversification is pretty individualistic. What makes sense to me might not make sense to others. I simply look at it as an extra margin of safety, because once I’m living off of my dividend income I want to make sure that no one company puts me in a position to where I have to go back to work because the dividend policy changes. I just wouldn’t want to rely on a particular set of management like that.

    Thanks for stopping by! To a successful July for both of us. πŸ™‚

    Cheers.

  78. DM,

    Great job! A 2% monthly increase is fantastic. You have more in your fund than people who have much higher incomes will ever have saved. How many people can say they make $5,000/yr sitting on their butt?

    I had limit orders (buying a stock only when it hits a certain price) in for this month, but the market kept rising, so I wound up not buying anything. Do you use limit orders when buying stock, or do you buy what you want to buy regardless of price? I want to make sure I’m not overpaying on a stock, but I think this has caused me to lose out sometimes.

    Also, how do you decide when to add to your positions? I own some stocks that are way up from when I bought them, but are still fairly valued and have an attractive dividend. It feels strange buying more shares at such higher prices.

  79. Phil,

    It’s sad that many people will likely never have six figures invested in a personal account. Most people simply do not believe in delayed gratification, or the thought that delaying gratification is actually hastening true gratification (freedom).

    I don’t use limit orders. I buy what I want at the prevailing market price. And this is because I’m typically only engaging in one or two transactions per month. Trying to squeeze an extra $0.50 in price out of one transaction is probably meaningless in the long run, so I just don’t worry about it. If the price is right, I buy.

    As far as your last question goes, you have to separate price from value. If EPS is up 20%, but the price is up 10% where does that put you? Was it fairly valued before? I posted my transaction history with PM a while back and you can see how I systematically added to the position as the price went up. But that price increase was on the back of rapidly increasing profit and dividends. And the valuation remained relatively static because of that.

    Have a great holiday weekend!

    Take care.

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