Freedom Fund Update – December 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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.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 relatively quiet during the month of November. I remain cautious about the valuation of individual securities, and attractive opportunities mostly evade me. I continue to pick my spots carefully while also remaining vigilant on keeping my perspective long-term in nature. I initiated a position in Target Corporation (TGT) mid-month, although this purchase was ill-timed as the stock fell a bit shortly after 3Q numbers were released showing a big drop in net income and reduced guidance. I wasn’t particularly surprised by this, as my analysis showed the numbers were likely going to be choppy over the next year or so as expensive expansion plans take their toll. I still like TGT for the long haul here, however. I had no sales during the month of November, as selling infrequently is my modus operandi.

The current market value of the Freedom Fund stands at $143,198.49. This is an increase of 1.8% over last month’s published value of $140,603.90. The market’s strong performance has lifted the general tide, and certainly my boat as well. However, I’m hoping for more shallow waters in the near future which would allow my current capital to buy more shares for the same amount of money, which means more dividends and a greater compounding effect over the long term.

I’m currently invested in 43 positions. This is an increase from last month, as my investment in Target Corporation (TGT) is new.

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 TGT

How about you? Have a great November? Make any big purchases? 

Thanks for reading.

Photo Credit: Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net  

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33 Comments

  1. You’re getting pretty close to $150k which is awesome. I’m slowly building my portfolio back up after divesting some funds for the downpayment. November was an okay month. I made 2 small purchases of O and GIS but other than that it was quiet. Hopefully the new year will bring some better value opportunities.

  2. You’re chugging along quite well, great progress. I think you’ll be hitting the two century mark before you know it. I also initiated a position in TGT and I’ve been busy trying to average down. Keep up the pace!

  3. Pursuit,

    I hear you on having a quiet November. Not much going for me, either.

    Good luck on building that monster portfolio back up. With your income and savings level you’ll be cruising past me pretty soon. 🙂

    Best wishes.

  4. D-S,

    Thanks! The portfolio as it stands today is the culmination of four years of really hard work. It’s wonderful to sit and look at what all of that hard work has accomplished.

    I’m not quite sure when I’ll hit 50 companies. I don’t really have a target date or anything like that. I expect I might hit that number by the end of next year, but it’s really difficult to say. It just depends on what’s attractively priced. If something I already own is attractive and the weighting still makes sense then I’m just as likely to buy it. Besides, if I’ve already done the research it just makes it that much easier.

    Best regards!

  5. Spoonman,

    Chugging along is the name of the game. 🙂

    I’m not sure when I’ll hit $200k. That would be quite a nice milestone. Maybe in 2015.

    TGT looks good here. I wish my timing was a bit better, but I did get in before the next dividend.

    Keep up the great work on your end too. 🙂

    Cheers!

  6. Investing Pursuits,

    It’s been quite an amazing journey. It wasn’t that long ago I hit $100k. I’ve seen enormous success this year, but of course the strong performance of the broader market helped quite a bit.

    I don’t think I’ll be seeing $200k quite that quickly. I think sometime in 2015 is realistic, however.

    Thanks for the support! I hope your pursuits are going well.

    Best wishes.

  7. An really impressive portfolio!
    I’m curious, when 50 companies are included …
    Can you do it in 2014?

    regards
    D-S

  8. Nice pickup on TGT. I got some PSA last month after a nice dip and still looks like a great buying opportunity. Keep watering that tree of freedom!

  9. I’m inclined to say great month Jason, but you and I both know we’d rather see flat to downward pressure at this point in the markets. Hopefully, something slows things down to open up some additional investment opportunities in the near future.

    That being said, the progress you’ve made during 2013 has been spectacular. You’ve come quite a ways in the last three years, with the next couple of years being the accelerating point, in my opinion, to your future growth. Your investments will keep rolling of course, but it is your entrepreneurial efforts that will really take off and accelerate and maximize your ability to invest and live the life you’d like to live.

  10. Hello-

    I enjoy your website and approach to enjoying life without constantly needing to buy “junk”. I grew up in an immigrant family and we were raised to always save half of your income. That helps you essentially save for 1 year of retirement for every year you work. Then using your approach to buying dividends, this compounds much faster with dividends.

    My question for you is, what about all the extra money you make from this website. MMM talks about how much he makes from his site and I think you are getting a lot of page views and have lots of Ads on your site. Is this income used to purchase stocks or are you only listed saved money from your car job?

  11. DividendVet,

    Buying on the dips is what it’s all about! I love few things more in life than buying equity in a high quality company for less than the stake is really worth; collecting dividends is one of the few activities I appreciate more. 🙂

    You keep watering that tree as well – it’ll turn into a monster one day!

    Take care.

  12. w2r,

    I’m with you. I’m hoping better opportunities come our way in the near future. I’ll certainly keep my fingers crossed, but in the meantime I’ll also try to scope out the most attractively valued equities I can find and strike when the time is right.

    Thanks for the support. 2013 has been great, as has the last few years. I’ve made more progress than I ever thought I would. I’ve stuck to my guns and stayed fairly strict with the budget. I feel like I’m living an opulent lifestyle now that I have a car and some new clothes. I guess that’s what living so cheaply for years does to you.

    I hope you’re right in regards to the entrepreneurial efforts. Although ultimately I’m aiming for dividend income to cover my expenses and then some, I’m hoping that I can one day replace my regular income with some type of self employment income in the meantime. That would make the journey to FI that much easier and sweeter. 🙂

    Keep up the great work on your end!

    Best regards.

  13. Anonymous,

    Great question there.

    The money I make from this site is documented on my income/expense reports for every month. I combine that money with my day job income and dividend income – and then use the combined sources of capital to purchase equities once all expenses are paid, or I save some of the capital for better prices. To me, money is money no matter where it comes from. I consider my day job income, dividend income and the income from this site as incoming money and save the difference after expenses for investing.

    I hope that helps!

    Take care.

  14. Roger H,

    Good question.

    I consider my benchmark my ability to one day pay all of my expenses via dividend income. That income will increase over time via new purchases as well as organically by way of increases from the companies I’m invested in. I have that overarching benchmark partitioned into yearly goals which you can view at the top of the page. This year, my goal is $3,500 in dividend income (which I’ll exceed).

    As far as comparing my portfolio performance against a traditional benchmark like the S&P 500 I don’t because my ability to outperform it will ultimately have no impact on my ability to reach my goals.

    Best wishes!

  15. You are just doing amazingly well! I remember starting to follow your blog, thinking we are doing the same thing. Well, you’re way ahead of me now! Congrats! Is your entire portfolio comprised of dividend stocks? I used to try and wait for a downturn to buy, but I ended up missing too many opportunities, so as long as the dividend yield is within good parameters, I buy. Keep up the good work!

  16. Anonymous,

    Thanks for the support! Glad to see you’re doing the same thing. We may not acheive independence at the same time, but as long as freedom is claimed one day that’s all that matters. 🙂

    My portfolio is comprised of dividend growth stocks exclusively. I’ll one day diversify into fixed income, but the time must be right. I don’t anticipate that time being right for me in the next couple of years, but you never know what could happen to interest rates.

    Cheers!

  17. Really amazing work!

    It’s really nice to see where you can get if you just stick to a plan and go after it, you are quite a pioneer 🙂

    It’s so strange to think that no one teaches you these things in school, atleast not here where I’m from 😛

  18. Great to see your Freedom Fund growing. Mine has been pretty static for November (UK shares have not performed as well as US last month).

    I would love to be able to invest directly in US companies as they are far more investor friendly than UK ones (e.g pay quarterly dividends, DRIP plan will allow re-investment of all the dividend by allowing part shares, UK ones don’t so some cash doesn’t automatically get re-invested)

    Anyway nice to see you working towards your goal

  19. Life In Center,

    Thanks for the kind words! I believe in persistence, that’s for sure. 🙂

    You make a great point there. It’s amazing that financial literacy isn’t taken more seriously in school. I can imagine that if good financial habits were taught early on there would be many people out there in much better financial condition.

    Hope your journey is going just as well!

    Take care.

  20. Martyn,

    I wouldn’t mind more static share prices at all. That would give me better opportunities with which to use my new capital. Of course, a large correction could happen tomorrow. You just never know.

    Can you not invest in U.S. companies via shares traded on your exchanges? I can invest in many foreign companies via ADRs or ADSs, which allows me exposure to great internationally based companies without having to worry about local exchanges and currency issues.

    Best wishes!

  21. Thanks for your reply

    I have not been able to find any way of investing in foreign shares other than through a broker, but this means I would not be able to use DRIP (would like to use DRIP while the value invested is reasonably low as I think it is a more cost effective method until there is enough regular dividend income to aggregate for a purchase).
    I will keep looking though, as it appears that the stock performance in the US for blue chop dividend payers is better over the long term than the UK. I guess that there is the benefit of less increase in share price resulting in buying more shares when you re-invest, but the dividend growth long term also doesn’t seem to perform as well as for US.

    Can’t really complain too much though, I don’t believe many people in the UK (except for the wealthy) will be receiving close to £5,000 annually in dividend (for next year).

    Good luck on your journey to FI, and I will continue to follow your blog with interest.

  22. Hypothetical question: with your monthly blogging income ($800 per month?) and average dividends of +$400/month ($5K per year) – are you nearing the point where you can push the financial independence button and quit work?

  23. $25000 Dividends,

    Great question. It’s something of a quandary for me. I won’t be able to identify myself as financially independent until passive income exceeds expenses, and blog income certainly isn’t passive. However, with that being said I am considering the idea of one day quitting my regular day job and making blogging my day job instead. At that point I’d still continue the journey to FI, but at a slower and more enjoyable pace. It’s an exciting concept. 🙂

    Thanks for the question! It looks like your journey towards freedom is also going very well. I remember you saying you would consider a career transition once you hit $175k or so with a good emergency fund saved up. You’re getting pretty close it seems. I’m sure this has been on your mind. Good luck, either way!

    Best regards.

  24. Hi DM,
    Wondering if you’ll start listing your overall cost basis per stock. I’m thinking it could be a good addition to your Freedom Fund page. I’m only asking because it takes a while to search your individual purchases and calculate the dollar amount.
    Thanks.

  25. Anonymous,

    Great suggestion there. Someone else was just mentioning that in another comment stream. Perhaps it’s something I’ll put together soon. I agree that it would be quite time consuming to figure out my cost basis for all of my positions if you’re searching through the blog. However, I would also argue that the difference between my cost basis and the current value (the capital gain) isn’t really as important as the dividend income the stocks are providing, but I still see the value in having that information consolidated in one location.

    Thanks for the suggestion!

    Best wishes.

  26. Jason,

    I’ve been reading your blog for the past month or two and am very impressed with you and what you are doing. You appear very level-heading, patient, and modest. I think those traits will serve you well as an investor. I have the same general goal as you: to reach financial independence where my income from investments exceeds my expenses. I’ve taken a slightly different approach to get there. I have a dividend growth portfolio, a passive index fund portfolio, and personal real estate.

    My approach is not any bettor or worse than your approach, just different and one that I am more comfortable with. The index fund portfolio is simply attempting to match the markets return. This year, of course, it has done very well. As I approach retirement, I will probably start to shift assets from the index fund portfolio into dividend stocks and bonds to generate additional income. Remember the S&P index funds I hold also pay dividends of about 2% – not as much as my dividend stocks, but still a nice boost.

    I noticed you have a rent expense in your list of monthly expenses. What are your thoughts on buying a home or condo? I’m not saying you should or shouldn’t. However, you will need a place to live the rest of your life. If you know you plan to stay in the same area for the foreseeable future, why not own a place and not have to pay rent? Once you pay off the mortgage, you have a rent free place to life for life. Yes you still have to pay taxes and utilities, but this is far less than rent on a comparable property. Without a housing expense (or a very small one) the need for income is significantly less.

    Just some thoughts. Congratulations again on your blog and investing progress. Keep up the good work!

  27. jfer,

    Thanks for the very kind comment! I really appreciate when people stop by and share their inner thoughts like you have. And the support is really welcome. Thank you.

    It sounds like your strategy is by and large similar to what I’m doing. You’ve chosen to diversify a bit into real estate, and there is certainly nothing wrong with that. I’m not totally sold on owning my own house. Although I can see the benefits over the long haul because rent is guaranteed to increase where a mortgage is locked in, my negative feelings toward ownership are more psychological in nature. For instance, the idea of being tied down to one location scares me a bit. Also, I have no desire to cut grass, shovel snow, rake leaves, fix things when they break, etc.

    Furthermore, it’s not always cheaper to buy. It all depends on your local market, as you’re already keenly aware. And I’ve often thought about cashing out a portion of my portfolio and buying a really small house, but the dividend income I’d lose after the sale (opportunity cost), and with the ongoing costs I’d be “buying” – taxes, maintenance, insurance – added in, I wouldn’t really be that much further ahead.

    I wrote an article a while back on this subject and concluded that I prefer renting. That may change in the future, but for now that’s where I’m at.

    Thanks again for the kind comment. I really appreciate your perspective, and I wish you the best of luck with your journey!

    Take care.

  28. Thanks for replying to my comment. About renting vs. owning it seems clear there is not one “right” answer for everyone at all times in their lives.

    While I like my house, your post got me thinking. . . There are definitely benefits to being free as a renter. You are not tied down to one place, you don’t have yard work and maintenance hassles, etc. Obviously, you know all this.

    Another interesting possible benefit is after retirement and the travel possibilities it might allow. If you decide to live temporarily in another city or even another country, you can leave and rent a place in the new city for a few weeks or months. You don’t have to worry about the taxes and maintenance on a house at home. You also don’t have your capital tied up in a property you aren’t using. Someday I would love to travel extensively. This would be easier without a house/ condo tying you down to one spot.

    I will keep following your progress and wishing you continued success.

    Take care.

  29. jfer,

    Excellent point there. I have great interest in perhaps traveling on a more full-time basis one day. I’d love to live in Ecuador or Thailand or somewhere else exotic and cheap for a year or so and really immerse myself in another culture. I wouldn’t even have to wait until financial independence to take a sabbatical and travel. It wouldn’t cost too much to fund a year somewhere cheap like that.

    Thanks for following along. I wish you the best in your journey as well!

    Best regards.

  30. Resman,

    Great question.

    I don’t employ stop losses. I don’t want to guarantee a loss, and I certainly wouldn’t want to be faced with massive sales when/if we see another flash crash. I’d rather just continue owning pieces of wonderful companies and not worry too much about the ups and downs.

    Cheers!

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