8 Investments I Made In The Last 3 Months

The Portfolio page on my blog has been updated as of June 30th, 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 updates.

I track my investment income (aka passive income) publicly as opposed to net worth. I still track my net worth and progress toward early retirement using the free tool Personal Capital.

But sharing my portfolio and passive income streams is more aligned with reaching my primary financial goals of reaching financial independence in 2022, and to retire completely and never work again at age 55.

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, take a look at the Dads Blog Money page for curated content from my Dads group board on Pinterest.

Subscribe to RBD to receive new articles by email every week.

High Yield Alternatives to Stocks

This quarter I increased my exposure to real estate via real estate crowdfunding (REC) sites. Real estate investing isn’t new, but the way we can access it is. You can now invest in real estate from your computer without landlording or dealing with contractors, and without the bloat and debt that comes with traditional REITs.

In addition to my rental property, I’m now investing on three different REC platforms and earning 8%-11%. These investments are helping to accelerate my forward income at a rapid pace. Though mostly passive, due diligence is required when you initiate an investment in any real estate fund or deal on these platforms.

The three platforms are:

Fundrise is available to all investors for a minimum of $1,000. It’s easy to start investing and diversification is built into the platform. Your money will be mostly invested in a diverse array of apartment complexes around the country.

RealtyShares enables you to make debt investments into individual single family fix-and-flips or larger equity investments into commercial deals or apartment complexes. See my review of RealtyShares here. The minimum investment is $5,000 and it’s only available to accredited investors for now.

PeerStreet mostly focuses on debt investments on residential fix-and-flips and cash-outs. The minimum investment is $1,000 and it’s only available for accredited investors for now. My first investment should complete next quarter.

The 8%-11% returns on these platforms are on par with long-term returns of stocks. But the returns aren’t correlated to stocks. Plus these investments are backed by assets (the real estate property), so I see REC as safer than peer lending which is non-collateralize consumer lending.

I have plenty of assets in stocks, index funds, and ETFs, so my net worth (and dividend income) is heavily correlated to stocks. I’m comfortable with that and will hold stocks through the next downturn. And I’m still buying stocks, but less than real estate at the moment.

These real estate platforms are a good way to diversify away from stocks if your portfolio needs it. One caveat, investing in REC is less liquid. Expect your money to be tied up for 1-5 years, depending on the type of deal or fund.

Investment Income Received In Q2 2017

The S&P 500 index settled at 2,423.41 on June 30th, up 2.57% for the second quarter of 2017 and 8.24% year-to-date.

Here are the numbers for investment income I received in Q2 2017:

Income Stream April May June Q2 Total 2017 YTD
Dividends  $233.86  $544.07 $624.39 $1,402.32 $2,643.86
Interest on Cash $18.23 $20.40 $20.04 $58.67 $117.66
Rental Property $107.96 $107.96 $107.96 $323.64 $606.27
Lending Club $45.91 $74.43 ($2.12) $118.22 $172.09
RE Crowdfunding $13.29 $17.94 $14.17 $45.40 $45.40
Total Received $419.25 $764.68 $764.32 $1,948.25 $3,539.88

Compared to Q2 2016, my investment income decreased slightly from $1,980.45 to 1948.25. This is a little disappointing as I’m always looking for growth. However, the fall is mostly attributed to diminished Lending Club returns which are declining due to a batch of bad loans. I’ve pulled some money out for other uses, but still have about $10,000 on the Lending Club platform.

As some of my newer real estate investments start to pay out, I expect larger year-over-year gains in the coming quarters.

Summary of Investment Activity for Q2 2017

By adding $9,962.50 in new working capital to my taxable investment portfolios, my forward 12-month investment income (F12MII) increased to $9,035.62 or $752.97 per month. This was a $840.70 and 10.3% increase over last quarter, and a $1,345.60 and 17.5% increase year-over-year.

I consider the $9,035.62 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 June 2017:

Fundrise

Fundrise is the easiest real estate crowdfunding site to get started on for a few reasons. First, there are only seven funds available for investors. These funds are regulated by the SEC so there’s plenty of documentation for due diligence. Each fund is transparent with the real estate holdings.

Second, you don’t need to be an accredited investor. Any U.S. based investors can get started with as little as $1,000.

Lastly, Fundrise has implemented a new feature that basically chooses what funds are best for you based on your investment objectives. Meaning with $1,000, you can have a broadly diversified portfolio of real estate with very little effort.

After starting with $3,000 split between the East Coast, West Coast, and Heartland eREITs, I added another $1,000 to each this quarter, plus I opened two new positions in the Income eREIT and the Growth eREIT. These were previously fully subscribed at $50,000,000, but they modified their SEC filings to open them back up to more investors.

I now have $10,000 invested in Fundrise which is estimated to pay me about $860 in dividends annually, all of which is being reinvested. I won’t be adding any more new capital to Fundrise this quarter so I can focus on building my portfolios with RealtyShares and PeerStreet. Both take more time for analysis, and the best deals can fill up quickly. I expect one of the three to emerge as a favorite, but for now I’m impressed with all of them.

Loyal3 and Stockpile

For the past few years, I had an account with the no-fee broker called Loyal3. I also recommended this account to many readers and IPO investors over that time.

Well, Loyal3 was purchased in April by FolioInvesting which created a new platform called FolioFirst for Loyal3 account holders. After the announcement, I transferred all of my shares over to TD Ameritrade because I wanted to consolidate my dividend stocks and I didn’t like the subscription model of FolioFirst.

I later became aware of a company called Stockpile that operates similar to Loyal3, but charges one dollar for trades and has more than 1,000 stocks and ETFs available for purchase. They also make gifting stock as simple as buying a gift card. I’ll be looking further into this broker in the future but it looks like a suitable replacement for Loyal3. That $1 fee should make the business model more sustainable.

Use this link to take a look at the platform and to get a $5 credit to buy stock on Stockpile.

Sorry, no IPOs. You’ll have to go to Motif Investing for IPOs now. They’ve been getting a lot of them. See the list of previous and upcoming IPOs here.

TD Ameritrade

TD Ameritrade is the primary broker for my taxable holdings. I purchased three new stocks for my account this month.

The first is Cardinal Health (CAH). CAH is a drug distribution company that is a Dividend Aristocrat, having paid and increased its dividend for the past 32 years. The purchase further diversifies my dividend stock portfolio by adding a more recession-proof healthcare related company.

The second purchase I made was Costco (COST). I love everything about Costco. It’s been on my “must buy” list for a while. I finally made a purchase when the stock tumbled in response to Amazon (AMZN) buying Whole Foods (WFM). I liked that deal as a WFM shareholder, but it’s hardly a Costco killer. Costco stock fell from $180 down to $158 in a few days.

As a customer I love the free samples, beer prices, wide aisles, constantly changing products, nice selection of organics, and treatment of employees (they all get healthcare and annual raises). The investor in me likes the impressive inventory control, excellent balance sheet, propensity for special dividends, 14-year dividend growth streak, high average ticket price, and the fact that annual membership dues provide 80% of annual profits.

Lastly, I transfer my shares from the Myomo IPO over from the underwriter. I wrote about the Myomo deal in the post about speculative investments. I sold half my position for an 111% profit and I’m letting the rest ride for now.

Dividend Increases

Dividend increases grow my annual investment income with zero effort. These increases are the basis for dividend growth investing which is the primary investment strategy I deploy with my taxable investments (non-IRA/529/401k).

My goal is for each company in my portfolio to increase their dividends every year.

Of the 45 dividend paying stocks in my taxable portfolio, 12 companies increased their dividend payouts by an average of 11.25% in Q2 2017. That makes 20 companies so far this year.

Below is a list of dividend increases in my portfolio announced in Q2 2017:

  • AAPL: 10.5% to 2.52 annual
  • BAC: 60.0% to 0.48 annual
  • CLX: 5.0% to 3.36 annual
  • CSX: 11.1% to 0.80 annual
  • FLO: 6.3% to 0.68 annual
  • GIS: 2.1% to 1.96 annual
  • IBM: 7.1% to 6.00 annual
  • JNJ: 5.0% to 3.36 annual
  • PG: 3.0% to 2.758 annual
  • TGT: 3.3% to 2.48 annual
  • UL: 15.5% to 1.64 annual
  • UTX: 6.1% to 2.80 annual

Conclusion

There’s a definite shift happening in my portfolio toward real estate crowdfunding. I like creating multiple income streams, and REC is a perfect choice for being accessible, high-yield, and backed by hard assets. It’s not risk-free, but I like the long-term prospects. My overall portfolio has plenty of room to diversify into real estate.

I’m not selling stocks. But putting money into these new real estate platforms now should help to spread my risk and diversify my income streams. My exposure to stocks is very high among various taxable and tax-advantaged accounts. A major downturn will be painful regardless.

Lending Club is taking a back seat for now as I wait to see if my loan performance can recover from mispricings in 2016.

I expect to invest more money into RealtyShares and PeerStreet in the second half of the year. The debt deals on those platforms are shorter-term (6-18 months), meaning the money is more liquid and you can ladder your investments (space them out evenly for consistent income).

The higher yields attainable through REC should help approach the $10,000 in F12MII mark by the end of the year. $10,000 of passive income is a major milestone where compound interest should start to take off. Lots of work still to do, but I’m achieving good progress this year compared to a flattish 2016.

At the time of writing, the author was long all stocks mentioned on this page except AMZN.

,

18 Responses to 8 Investments I Made In The Last 3 Months

  1. Lance @ My Strategic Dollar July 6, 2017 at 8:03 am #

    Nice update! I’ll have to look into FundRise, RealtyShares & PeerStreet!

    • Retire Before Dad July 6, 2017 at 9:12 am #

      Hi Lance,
      I’m still in expiration mode on these. But so far, I like the underlying assets and the ease of investing. Underwriting standards are high on these platforms, but your own due diligence is still needed. That said, these are normal real estate investments that are now coming to the masses. Very exciting for income investors.
      -RBD

  2. brian503 July 6, 2017 at 1:12 pm #

    Looking good. I recently got introduced to stockpile. I’m having my 3 kids set up free accounts to get started. A good way to introduce them to the market.

    • Retire Before Dad July 6, 2017 at 9:34 pm #

      Yeah, they really make it easy for kids to start investing. It’s as easy as buying a gift card, which is pretty cool. I may look into it over the holidays.
      -RBD

  3. Tawcan July 6, 2017 at 2:05 pm #

    It’s so nice that you guys down in States have these multiple lending club options. These don’t appear to be available for us Canadians.

    • Retire Before Dad July 6, 2017 at 9:38 pm #

      Real estate crowdfunding options do seem to be available. Someone else emailed me about it and NexusCrowd and Sharestates both came up in a search. Considering there are about 100 of these companies in the US, you’d think Canada would have some too. Could be issues with regulation. Took the JOBS Act of 2012 to make it possible here.
      -RBD

  4. Dividend Diplomats July 6, 2017 at 10:47 pm #

    RBD –

    Damn, talk about massive movements you are making there. What are your thoughts on these crowdfunding sites from a macro level? Such as – the current banking situation and would these be the first ones to feel the cracks in a downturn? I am very, very close to starting the fundrise account, so am curious from your mindset. Thanks RBD, keep grinding and adding to your forward income – that’s what it’s all about.

    -Lanny

    • Retire Before Dad July 7, 2017 at 8:03 am #

      Lanny,
      Rising interest rates should not impact existing portfolio investments in the eREITs. These funds contain many deals spread over the entire country, though some concentration in LA and DC. Higher costs may make finding new deals more difficult. As long as there isn’t a spike in rates or deep recession, I think real estate development deals should carry on normally adjusting as rates adjust. Diversification is important as real estate is local.

      The 2007-2009 real estate/banking/stock market crisis is fresh on our minds. But if you think back to the dot com bubble in 2000, investors poured money into real estate afterwards, trigger the insane price increases from 2000-2005. These are real properties we’re investing in. So the economics of local real estate is what drives these deals. If the numbers work and the units are rented, the deal will cash flow. Message me if you have any questions about FR.
      -RBD

      • Dividend Diplomats July 9, 2017 at 9:11 am #

        RBD –

        Well point made on the interest rates – as even the Fed 25 basis point increases haven’t increased long-term rates, yet and that would be the pure driver of any “shake” in the markets. Very good point. I definitely will message you on any questions about FR, truly appreciate it.

        -Lanny

  5. FerdiS July 7, 2017 at 6:18 pm #

    Thanks for sharing your experiences with Fundrise, RealtyShares and PeerStreet. The yields offered seem great and provides good compensation for tying up your money for up to 5 years.

    I’m slowing getting out of my LendingClub investment because of the falling interest rate. Initially, I made 10-12%, but now it is closer to about 6%. In my view, that is not enough compensation for having my money tied up in many different notes.

    • Retire Before Dad July 8, 2017 at 9:17 am #

      Ferdis,
      Yeah I’ve noticed a lot of people doing the same. Me too. It’s consumer debt, not backed by any assets. That’s why I like the REC. Similar in the way the operate and allow you to diversify. But backed by real estate. My LC returns are now at 7.65%, but that is over the life of the investment. That number was above 10% for three years.
      -RBD

  6. oldsteronfire July 8, 2017 at 3:48 pm #

    I’m with you on the move from Lending Club to real estate based investments. I was troubled by LC’s seeming inability to be straight with investors and have moved a good bit of that money to Peer Street. Other than the $1000 minimum investment threshold, which can leave some funds inactive for a while, I’m pretty happy with the move.

    Great post, and kudos to you on your progress.

    Oldster

    • Retire Before Dad July 8, 2017 at 8:29 pm #

      Hey Oldster,
      I’m not ready to completely abandon Lending Club. I do think they’ve made the right adjustments with their model, but it’s bloody out there right now. So many defaults for a lot of us. Hoping things simmer down a bit and I’ll start back up. However, they are still not asset backed. So my new preference is REC. But I’m leaving my LC notes alone for now. Just no new investments for a while.
      -RBD

  7. Turning Point Money July 11, 2017 at 10:24 am #

    Great job at pulling the trigger and buying some COST. I have been watching from the sidelines for far too long, but the recent pullback is more appealing. I think all retail investors are frightened to see which way Amazon goes next. This should provide additional buying opportunities.

    • Retire Before Dad July 11, 2017 at 11:32 am #

      Even lower now after a downgrade. May pick up some more if it stays here or falls further.

      Realized I needed a case of beer the other day. Had it in my hands 10 minutes later at Costco. I don’t think drones can best that.

  8. Natalie July 13, 2017 at 1:06 pm #

    What are your thoughts on the Stash Invest?

    • Retire Before Dad July 13, 2017 at 2:40 pm #

      I’ve seen the name around but haven’t investigated yet. Need to check that one out!

  9. Money Tree man July 27, 2017 at 10:46 am #

    some of these numbers are nothing short of incredible…

    My Month on month passive income currently stands at £32/month from all sources… so yeah… you’ve definitely Usain Bolted me in that arena XD

    On a serious note, this is incredibly inspirational stuff and i really hope you keep it up.

    p.s. I’m rooting for you to blow Dec ’15 and Dec ’16’s incomes out of the park this December!

    ~MTM

Powered by WordPress. Designed by WooThemes