Freedom Fund Update – July 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 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 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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.

The Fund was busy during the month of June. I initiated a position with Digital Realty Trust, Inc. (DLR) very early in the month, and then shortly thereafter followed that up with an investment in Oneok, Inc. (OKE). Finally, I happily initiated a position with General Electric Company (GE). Whew! That’s a lot of capital invested into the market at a time when some people are predicating calamity. I don’t know what’s going to happen tomorrow or the next day, or 6 months from now. I only know that it’s a proven fact that a surefire way to build wealth is to invest in high quality assets, preferably those that produce prodigious cash flow which can be distributed back to the owners. My method is to invest my heard earned capital into high quality companies that have a good track record of returning higher dividends to shareholders because they’re earning ever higher profits on the back of a wonderful business.

The current market value of the Freedom Fund stands at $117,096.07. This is an increase of 3.8% over last month’s published value of $112,842.62. I’m extremely excited when my portfolio can grow by that much in a month, mostly due to new capital and dividends. It would be a dream to grow it that much every month, but alas I earn a middle class income and I still have to pay for rent, food and other basic expenses.

Looking forward, I’m hoping we see some fantastic buying opportunities over the next month. Certainly Mr. Market has not been kind to those of us who are interested in purchasing high quality equities, as great deals are few and far between. I’ll continue to scan for value where I can find it, as I talked about very recently.

I’m currently invested in 36 companies. This is an increase since last month’s updates to the aforementioned new investments.

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 DLR, OKE, GE

Thanks for reading.

Photo Credit: Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net 

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31 Comments

  1. DM… Glad to see the Freedom Fund continuing to grow. Even with your “middle class” income you are rockin it out!

    Hope the next half of the year treats you as good as the first.

    The Stoic

  2. The Stoic,

    Hey, thanks for the kind words!

    I hope that the new venture in real estate treats you very well also. Keep up the great work!

    Best wishes.

  3. Hey DM,

    You had a great month and added some new companies that look pretty solid to your portfolio. You’ve probably mentioned it before but do you have a target in mind of how many total stocks you want to hold in your portfolio? For me I’m trying to build up current positions instead of add many new ones. It also creates more work in keeping up with them all.

    Take care and keep up the good work!

  4. AAI,

    Well, it’s hard to say exactly but I’m targeting somewhere around 45. I don’t think I’d like to be much over 50. That’s about my limit.

    The way I see it is I already have 36 high quality companies under the Freedom Fund umbrella and there are still a good number of wonderful businesses that I have not invested in. I can think of at least 10 right off the top of my head, so it’s going to be selective choosing from here on out. We’ll see how it goes, but I’d hate to cut a company or two out of my portfolio to make room for more. For instance, I only have one utility holding. I planned on having 2-3, but I don’t see much room. It’s amazing how quickly a portfolio grows! I guess these are good problems to have, no?

    Keep up the great work on your end too!

    Best regards.

  5. Great work! I always remind myself that the next bear market is right around the corner, and so as you said, “focus on the dividend income” and buying stable companies that have endured bear markets before.

    I think it’s really good that you do this, mostly for psychological reasons because at some point, the market WILL crash. Maybe tomorrow, maybe next month, maybe next year, or maybe in 5 years. We always have ups and downs(and I’ve been through quite a few!) but if you focus on the dividend stream then the account value feels less important when you are down 15%. Keep in mind we have been in a glorious bull market since March 2009, so it’s coming eventually.

  6. DM,

    what are your thoughts about the dollar that is losing his value? America is one of the biggest debtor nations in the world so when the Chinese dont want to pay for our debts anymore we go bankrupt.

    Why are you only invested in the us and in the dollar?

  7. Seems like just yesterday you were announcing crossing the $100k threshold and now you’re pushing $120k. I think you added to some quality names last month and the higher yields from DLR and OKE will help to fuel further purchases. Keep up the good work!

  8. nice job! just when i get a little more frugal and knock my portfolio up a few notches you go and post an outstanding month like this, there is no catching you 🙂

    Btw out of curiousity, are you considering OKE your 1 utility?

  9. Kraig,

    Thanks so much for the support. I really appreciate it brother. I’m definitely doing my best to rock on! 🙂

    Let’s definitely catch up. I’ll give you a call soon. Hopefully all is well up there. You have a great 4th too! 🙂

    Best wishes!

  10. Dividend Guy,

    I’m completely with you. Focusing on the dividend income is where you want to be. I only like to track portfolio value to really see where my individual investments are and whether any are attractive to add to. Other than that I’m just a part-owner of a great collection of businesses and I don’t really care what someone else is willing to pay for my share.

    Best regards.

  11. Fedde,

    I don’t really get caught up in macroeconomics too much. That’s for fortune tellers and market pundits on TV. There’s a good living to be made out of it if you’re interested, which I’m not.

    The U.S. dollar will lose value over time as our economic system, and the fiat currency we use, predicates itself on that. The Fed looks for a healthy amount of inflation (2-3% per year) as a sign of a good economy so you can bet your bottom dollar (pun intended) that the dollar is going to lose value over time.

    It’s precisely because of this that I really like to invest in high quality companies that can raise prices and/or grow to keep up with inflation. Almost every single company I’m invested in will likely raise their dividend at a rate that exceeds inflation over the next 10 years. So even as the dollar becomes worth less, my purchasing power increases.

    That’s just my very quick take on it for the sake of brevity.

    Take care!

  12. MFIJ,

    Thanks for stopping by!

    Slow and steady definitely wins the race. I’m absolutely the tortoise rather than the hare. 🙂

    Keep up the great work on your end too.

    Best wishes.

  13. Pursuit,

    Yeah, the progress has been amazing. I’m really blessed. I’m making a little more money right now than I’m used to (my historical average), so that’s definitely helping.

    You’ve been adding a lot of high quality names as well. It’s good to be a long-term investor! 🙂

    Take care.

  14. Took2Summit,

    Haha, I’m sure you’ll catch up to me in no time. I remember you posting that you were saving incredible amounts of money. You’re doing great! Besides, there is no use in comparing ourselves. We all have different goals, timetables and means. I have a very aggressive goal on somewhat limited means, so I guess that’s what makes this really exciting for me.

    I didn’t actually consider OKE my 1 utility. AVA was what I was considering, but that’s a good point. Although they have moved on from their core utility operations with the OKS business, it’s still a utility at heart. Great point!

    Best regards.

  15. Robin,

    You’re off to a fantastic start! You’ve got a very nice watch list and you’ve made some excellent purchases with XOM and WMT. I think both are fantastic companies and both are attractively valued here.

    Keep up the great work and I’ll be sure to stop by!

    Best wishes.

  16. DM another great month has passed for you! You continue to inspire me with every post. My day job pays under 50k per year, and I still manage to see light at the end of the tunnel with the help of solid investing strategy.

  17. Although you are pursuing an income-focused investing strategy, it’s nice to see a $5K jump in the principal. That shows that you are swinging hard! That’s the sort of muscle that’s needed to reach FI before you reach 40.

  18. Great Job DM… Because of you I have started a Blog and ready to show the world my portfolio and to keep me honest. Congrats on passing the $100k mark hopefully you will pass $200k faster than the first $100k.

  19. Great job DM, I can’t believe how fast your account has grown. It seems like yesterday you were at $35k.

    I’m looking to be at the 40 stock portfolio myself. I have recently started putting my new company purchases in another broker as mentioned in your previous post of diversifying brokers.

    I thought it might be easier to track if I have JNJ at one broker instead of spread out in multiple brokers. So looking for something like 10 companies per broker if they are all weighted the same.

  20. Investing Early,

    Thanks so much. I’m really glad that there is some inspiration to be found here. As you know, that’s why I do this.

    You’re doing a great job too. I’m on pace to make about $60k this year now due to a particularly strong summer (higher than normal), but I think this strategy is robust and could be replicated on almost any income scale. It’s all about patience and persistence. 🙂 Keep it up!

    Best regards.

  21. me myself and I,

    Thanks! It has been a wonderful journey. It happens quicker than people think. It does seem like just yesterday that I was starting down this path. That’s exactly it: time flies by. It’s important to start as early as possible and keep at it. The future you will be thanking the you of today for it.

    I’m not sure how I’m going to diversify brokerages yet. I think when I hit $200k I’ll have to seriously look into it. I’m not sure if I’ll be able to diversify across positions like that, but probably just look to replicate the same thing at another firm, and basically start all over again. It’ll be fun! 🙂

    Best wishes.

  22. jdavis4982,

    That’s really awesome! You have a great blog started already. I wish you the best on your ‘Dividend Journey’!

    I’ll be sure to stop by and say hi.

    Best of luck with the blog. 🙂

    Take care.

  23. This is interesting, I made a post this morning and it accepted it and all…but it’s not showing. Ah well.

    I just wanted to congratulate you on achieving a 5K jump in a single month. Although our focus is on the income, this shows that you are “swinging hard”.

  24. Spoonman,

    Thanks for bringing this to my attention. Your comment went to the spam bin for some strange reason? I need to monitor that more often. Too sensitive. 🙁

    I took it out of spam and it’s live now. Terribly sorry about that.

    I’m with you though. The focus is definitely on the income, but the income doesn’t come if you’re not investing a ton of fresh capital. As always, the savings rate will dictate your success at early retirement/FI, not necessarily your rate of return.

    Thanks for stopping by twice! 🙂

    Best regards!

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