The Portfolio page on my blog has been updated as of March 31st, 2017. This page outlines my portfolio of taxable investments and the income generated on a yearly and average monthly basis. Click here to access all previous portfolio updates.
I track my working assets and investment income publicly as opposed to net worth.
I still track my net worth and progress toward retirement (using the free and highly recommended tool, Personal Capital), but for me, sharing my portfolio and income streams is more aligned with reaching my primary financial goal, which is to retire completely and never work again at age 55.
Thanks to everyone who found this blog and continues to read my new material. Please take some time to check out the Blogfeed. It’s a great place to find related content written by my peers in the personal finance and investing worlds. Also, check out the new Dads Blog Money page for curated content from my Dads group board on Pinterest.
Strong Start to 2017
2016 proved to be a transitional year. Investing slowed due to increased preschool costs and committing to getting our financial lives back in order. We eliminated a suffocating car loan and refinanced our mortgage again to help change $hit up. Those moves helped improve our monthly cash flow for 2017.
Stocks appear a little overheated since the post-election run-up. The anticipation of tax reform and the perception of a pro-business environment in Washington D.C. seems to be the catalyst and there are no signs of slowing down.
I’m not eager to put more money into stocks at the moment. Not because I’m some market genius who knows something. But because I’d rather wait for some kind of market retraction. It’s been straight up for a while now.
That hasn’t stopped me from saving money through tax-advantaged accounts. I made a tax-friendly move filing our returns last month, adding $5,500 to Mrs. RBD’s traditional IRA instead of her Roth. This bumped our federal refund up by more than $1,500. Planning to put into index funds during the next market downturn.
Forward 12-month investment income (F12MII) for the quarter was strong. With improved cash flow and some refund money, I started the year by wading into a few real estate crowdfunding investments. Real estate crowdfunding is one of the most exciting trends in fintech today, enabling couch potato investors to invest in real estate from their computer.
Yield are excellent and the investments are backed by hard assets. More of those investments in a little bit.
Investment Income Received In Q1 2017
The S&P 500 index settled at 2,362.72 on March 31st, up 5.53% for the first quarter of 2017. For 2016, the S&P 500 index was up 9.54%.
Here are the numbers for investment income I received in Q1 2017:
|Income Stream||January||February||March||Q1 Total||2017 Total|
|Interest on Cash||$19.82||$17.95||$21.22||$58.99||$58.99|
Compared to Q1 2016, my investment income received dipped from 1,752.27 to $1,637.03. This is disappointing as I’m always looking for growth. However, the fall can be mostly attributed to Lending Club returns which are in a rut due to some expected charge-offs. Dividends were stronger, and next quarter I’ll start receiving my first dividends from real estate crowdfunding.
Next quarter I also expect increased cash flow from my rental property.
Summary of Investment Activity for Q1 2017
We put $5,500 toward Mrs. RBD’s traditional IRA this quarter leaving less for my taxable accounts (I only track taxable investments on this blog). But I still put significant new capital to work eight times over the quarter and sold off one holding.
By adding $6,257.44 in new working capital to my taxable investment portfolios, my forward 12-month investment income (F12MII) increased to $8,194.84 or $682.90 per month. This was a $427.83 and 5.5% increase over last quarter, and a $626.70 and 8.3% increase year-over-year.
I consider the $8,194.84 in F12MII the most important number because it represents an estimated amount of money I would earn via investment income if I stopped working today.
Here’s a chart tracking my progress as of March 2017:
Real Estate Crowdfunding
Real estate crowdfunding is the most exciting income stream for me since peer to peer lending. After the JOBS Act of 2012 was passed by the government, the floodgates are open for new innovation in investing.
There’s upwards of 100 real estate crowdfunding platforms. A few platforms were first movers and are doing most of the deals. Those well-funded startups are the most interesting to me.
Real estate crowdfunding is similar to peer to peer lending. But by investing in peer to peer lending sites such as Lending Club, you’re funding unsecured loans. Meaning, if someone defaults, you lose your money. We mitigate that risk by investing small amounts and diversifying.
With real estate crowdfunding, your money is backed by a hard asset. You can still diversify and invest relatively small amounts enabled by technology and innovative companies. But if a deal goes sour, the asset is there to help protect the investment.
I’ve decided to try two of these platforms to add to diversify my investment income streams and add more real estate to my portfolio. These have nice yields and really bumped up my F12MII so far.
I chose Fundrise as my first real estate crowdfunding investment for its ease. With Fundrise, you can invest in their “eREITs” with as little as $1,000. An eREIT is a collection of investor funds (up to $50,000,000) which are used to invest in commercial real estate deals. Fundrise partners with developers and real estate management companies to invest in apartment buildings and other commercial properties.
Fundrise is an innovative startup in based in Washington D.C. In addition to their early mover status on real estate crowdfunding, they’re the first company to crowdfund their own “iPO”. Fundrise developed a way for non-accredited investors (non-millionaires) to invest in real estate by filing each eREIT with the Securities and Exchange Commission (SEC).
To invest, you simply purchase the eREIT and collect a dividend every quarter. The dividends fluctuate based on the status of each investment, but tend to be in the 8%-11% range. Lower for newer funds, and higher for more mature or “stabilized” funds. Over time, investors also participate in potential capital appreciation.
The difference between an eREIT and a normal REIT is they don’t trade on exchanges. They are only available on the Fundrise platform. Fees are also much lower because there’s little corporate overhead.
eREITs are also less liquid. The investment horizon aims to be five-to-seven years to allow the real estate investments to mature. However, they now offer quarterly liquidity.
To date, Fundrise has offered five eREITs. Two are closed to new investors. The other three are split by region.
To get started with Fundrise, I decided to put $1,000 in each of the currently open eREITs. They are the East Coast eREIT (8.25% yield), the West Coast eREIT (8.00% yield), and the Heartland eREIT (8.25% yield). Choosing all three gives me nationwide exposure. They recently added dividend reinvestment capability which I’ve enabled on my account too.
If you’re not crazy about stocks right now and want an easy way to invest in real estate to diversify your portfolio without becoming a landlord or house flipper with higher yields than REITs, definitely check out Fundrise.
I’ll be writing more detailed information about Fundrise and the investment performance in the future.
There are three big differences between RealtyShares and Fundrise.
First, with RealtyShares, you choose specific individual deals you want to invest in. These can be debt investments for fix and flips or large equity investments like an apartment complex or commercial building.
For each RealtyShares deal, you can dig into all the numbers and do your own due diligence. With Fundrise, you’re entrusting your money to Fundrise to find good investments. Yields for both are similar, but with RealtyShares, some deals will have higher yields and the potential to earn more through price appreciation.
Second, RealtyShares is only available to accredited investors. That means you either need a net worth of $1 million (not including your primary residence), or an income of more than $200,000.
Lastly, the minimum to invest in RealtyShares is $5,000 (That’s the official number). However, my first deal had a $2000 minimum). At Fundrise, it’s only $1,000.
So if you’re accredited and you want to dig into the numbers and scrutinize each deal, RealtyShares may be for you. If you’re not accredited and are looking for a more passive but still high yielding investment, try Fundrise.
These are two of the leading real estate crowdfunding platforms. Others include PeerStreet, RealtyMogul, and Patch of Land. All of these have their pros and cons. This is a competitive and exciting space. Over the next few years, we’ll see which companies thrive.
Full disclosure: I’m an affiliate partner of both Fundrise and RealtyShares. Meaning if you open an account using a link on this page, I may be compensated at no additional cost to you. By being a user myself, I can give you real feedback on exactly how these investments are performing. So contact me or comment below if you have any questions.
Good news for TD Ameritrade customers this quarter. Feeling the pressure from Fidelity (who lowered trading fees to $4.95) and lower cost brokers such as TradeKing, Motif Investing, and Robin Hood TD Ameritrade has lowered its trading fees from $9.99 to $6.95.
In general, retail has been severely hit over the past few years. Growth investors are convinced that Amazon is taking over the world. Amazon is doing amazing things, but Target has grown its e-commerce and is still a staple for many Americans. Retail isn’t dead.
Target is a dog right now with people calling it “uninvestable” and with Cramer saying its e-commerce is taking market share from itself. That’s fine analysis for short-term investors. I see it as a good opportunity to buy shares for the long-term. Target isn’t the next Sears.
I’ll obviously keep an eye on the stock. But today, neither the business nor the dividend is at risk in my view. So I’m happy to add a 4% yielder to my dividend machine.
TD Ameritrade is my primary brokerage account. This is where most of my dividends accumulate. Every two months I receive enough dividends to buy more stock. I’ll be adding more funds next time we see a market pullback.
I’m not as active in my Loyal3 accounts these days. For a while, I dollar cost averaged into about ten stocks every month. This helped to build positions in excellent companies like Disney (DIS), Berkshire Hathaway (BRK-B), and Kraft Heinz (KHC).
Occasionally, I add new funds. But with an account balance at $15,000, I receive enough dividends to selectively reinvest every month.
This quarter I added to two stocks I already own. Nike (NKE) and VF Corp (VFC).
These were small dollar amount purchases. But since the transactions are free, it’s easy to make small investments.
I also sold off a small position in Yum China (YUM). I received these shares as a spin-off from Yum Brands (YUM). The position was only worth about $300 so I dropped it for VFC and Nike.
Loyal3 is a no-fee broker. But you can’t buy all stocks on the platform. If you have an account, check out this Loyal3 stock rankings tool I built.
Lastly, I like to end on dividend increases for the quarter. Dividend increases grow my annual investment income with zero effort. My goal is for each of the stocks to increase their dividends each year.
Of the 43 dividend paying stocks in my taxable portfolio, eight companies increased its dividend payout by an average of 5.9% in Q1 2017.
Below is a list of dividend increases in my portfolio announced in Q1 2017:
- ADM – 6.7% to 1.28 annual
- HAS – 11.8% to 2.28 annual
- KO – 5.7% to 1.48 annual
- KSS – 2.5% to 2.05 annual
- MMM – 5.9% to 4.70 annual
- O – 4.1% to 2.53 annual
- PH – 4.8% to 2.64 annual
- TROW – 5.6% to 2.28 annual
At the time of writing, the author was long all stocks mentioned on this page except YUMC and AMZN.
How was your Q1 2017? Have you tried real estate crowdfunding? What do you think about it? Are you building any other income streams in 2017?