The Portfolio page on my blog has been updated as of September 30th, 2017. This page outlines my portfolio of taxable investments and the income generated on a yearly and average monthly basis. Click here to see all previous updates.
I’ve tracked my investment income (aka passive income) in my non-retirement accounts on this website since October of 2013. Sharing my passive income streams is aligned with reaching my primary financial goals of reaching financial independence in 2022, and to retire completely and never work again at age 55.
I keep my retirement accounts and net worth private but track them every day the free tool Personal Capital. It’s the best free financial website I’ve come across.
While you’re here, 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.
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New and Improved Recommended Page
Occasionally, I receive emails about products and services recommendations. Over the years, I’ve recommended a few here and there, ones that I like and use, and others that I’ve checked out and endorse, but don’t use because of my long-term goal to simplify my finances.
The recommended page was long overdue for a facelift. So I recently prioritized some time to sort through and organize all my recommendations to make it look kinda organized both on a desktop and smartphone. Plus it covers a bunch more services than the old one.
I broke these out into six categories:
- Money Tools – to make your financial life easier
- Real Estate Crowdfunding – add yield and diversify your assets
- Online Brokerages and Investing – top investment platforms for your specific needs
- Loan Resources – refinancing can save you a ton of money
- Blogging Resources – tools to accelerate your online business
- Taxes – DIY online tax software
Most of these services are affiliate partners of mine, so if you sign up for a service using the links on that page, I may be compensated at no additional cost to you. Those referrals are what keeps this blog up and running, so thanks for the support.
Investment Income Received in Q3 2017
The S&P 500 index settled at 2,519.36 on September 30th, up 3.96% for the third quarter of 2017 and 12.53% year-to-date.
Here are the numbers for investment income I received in Q3 2017:
|Income Stream||July||August||September||Q3 Total||2017 YTD|
|Interest on Cash||$20.67||$21.40||$23.47||$65.54||$83.20|
Compared to Q3 2016, my investment income decreased from $1,997.84 to $1,890.35. 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 $7,000 on the Lending Club platform. More on that below.
My real estate investments with Fundrise, RealtyShares, and PeerStreet are all starting to pay dividends and I expect overall growth to improve in the coming months. I now have $17,000 invested in real estate crowdfunding platforms and plan to continue to grow those holdings.
Summary of Investment Activity for Q3 2017
This was a somewhat slow quarter of investing because I’ve been building up cash holdings to prepare for some potential full-time job insecurity (more on this next week). But I still managed to make some new real estate purchases and sold two smaller holding that wasn’t paying me very much in dividends.
By adding $2,5687.16 in new working capital to my taxable investment portfolios, my forward 12-month investment income (F12MII) increased to $9,224.07 or $768.67 per month. This was a $188.45 and 2.1% increase over last quarter, and a $1,447.30 and 18.6% increase year-over-year.
I consider the $9,224.07 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 September 2017 since the start of RBD:
Three Investment Themes This Year
As 2017 is progressing, my investing strategy has fallen into three themes. These are mostly consistent with the plan I laid out for the year.
1. Increase real estate investments
So far in 2017, I’ve been diversifying away from stocks into real estate. I didn’t buy another rental property. Instead, I’ve been making small loans to professional real estate investors via RealtyShares and PeerStreet. Both of these platforms are for accredited investors (i.e. millionaires) for the time being. But they are an easy way to own real estate from the comfort of your computer. Read my RealtyShares review here.
This past quarter, I invested $2,000 in one deal at RealtyShares and $3,000 in three separate deals at PeerStreet. I also built a $10,000 position with Fundrise, a platform for non-accredited (i.e. not millionaires) real estate investors.
By investing in real estate crowdfunding, I can increase the yields on my overall portfolio and shy away from stocks.
I’m still bullish on stocks over the long-term. But a significant chunk of my net worth is already in stocks. My retirement accounts are heavily invested in index funds and my taxable accounts are mostly in dividend growth stocks. So I’m fully participating in the year’s 12.5% gain so far.
One of the main reasons I’m so positive on real estate crowdfunding is because it’s very similar to peer to peer lending, except backed by real assets. Actual properties, not consumer debt. Which leads me to theme #2…
2. Pause peer to peer lending until stabilized
My most recent Lending Club review spells out why I’ve paused my peer to peer lending activities. Returns have sharply decreased across the board. I’m watching my portfolios continue to fall, now in the 6.4% range, down from almost 9% at the beginning of the year.
My account has lost value over the past two months. The losses are represented in the featured chart at the top of this article. This loan under-performance has hurt my F12MII.
Lending Club has updated their credit model to perhaps instill confidence back in their individual investors base. It’s clear they mispriced loans in 2016 and scared off many investors. When my existing portfolio stabilizes, I intend to put money back to work in peer to peer loans.
However, at this point, I’ll let the robo-advisors like LendingRobot adjust to the new credit model. In the meantime, I’m withdrawing returned principal and interest into savings. Which leads me to theme #3…
3. Build a cash position
The third theme of this year is to build a larger cash position. The bigger cash position is, in part, to be able to act upon any significant market volatility. We haven’t seen much so far. And if tax reform is achieved before the end of the year, the bull market may very well continue upward.
But that’s a big IF, and I don’t want too much of my financial life hinged to the whims of politicians.
Cash is king in any market. I always keep some ‘dry powder’ in case investment opportunities arise.
I’ve been anticipating an upcoming opportunity that appears to have landed on my lap just last week. Some of this cash is needed to make it work. More on that in next week’s post.
Sold Some, Bought one
Despite the lack of investing in stocks, I still made a few portfolio moves. These moves were driven both by lack of excitement and to free up some extra cash.
First, I decided to sell the second half of my Myomo (MYO) holdings. This was a speculative IPO investment that gave me a quick 100%+ gain last quarter. I sold the rest at a profit, albeit a much lower one.
Next, I sold my position in Kohls (KSS). This stock has a nice yield, but my holdings were under $1,000 and the growth prospects aren’t all that enticing. With a large retail footprint and competitive forces from a certain online retailer, I chose to liquidate.
Last, I sold my small position in Yum Brands (YUM). This follows my sale of Yum China (YUMC).
These two sales have a few similarities. Both are remnants of my former no-fee portfolio at the now-defunct Loyal3 (Stockpile is the closest replacement broker I’ve found). Also, neither of these are stores I shop at, and so I can’t stay excited about them over the long-term. I prefer Target (TGT) and Costco (COST). Kohl’s stores, Taco Bell and Pizza hut just aren’t for me. That’s not my only investment thesis, but it’s the only one I’ll bore you with today.
Finally, the Redfin IPO was a major event over at my other site AccessIPOs.com. We sniffed this one out before the masses learned about it and alerted AI subscribers to give them a head start on reserving shares. Unfortunately, Motif took way too many orders and our IPO allocations came in at just 5%. So my $5,000 reservation request only netted me $287 worth of shares at a $15 IPO price.
As the stock price approached a 100% after just four trading days, I forced myself to liquidate my shares. Fortunately, I bought another 100 shares in my Roth IRA on the opening day at $19.50 so I am still long and intend to stay that way.
I used a Redfin agent for both my failed real estate investment purchase, and to evaluate my rental property when my tenants recently moved out. The company is changing the real estate sales industry for the better.
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/529/401(k)).
My goal is for each company in my portfolio to increase their dividends every year.
Of the 43 dividend paying stocks in my taxable portfolio, seven companies increased their dividend payouts by an average of 4.8% in Q3 2017. That makes 26 companies so far this year.
Below is a list of dividend increases in my portfolio announced in Q3 2017:
- DCI 2.9% to 0.72 annual
- DOV 6.8% to 1.88 annual
- KHC 4.2% to 2.50 annual
- MSFT 7.7% to 1.68 annual
- PM 2.9% to 4.28 annual
- VZ 2.2% to 2.36 annual
- WTR 7.0% to 0.8188 annual
Disclosure: Long all stocks mentioned in this article except YUM, YUMC, MYO, KSS