8 Investments I Made Last Quarter

The Portfolio page on my blog has been updated as of December 31st, 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 goal of retiring completely at age 55.

I keep my retirement accounts and net worth private but track them every day with 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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Still Investing While Unemployed

I lost my job in early October. Since then, my main focus has been on my kids and online business.

Since I’ve had no salaried income for the past three months, the earnings from investments and my side business have gone mostly toward living expenses, so I didn’t have much money to invest. The stock investments I made this quarter were on the smaller side and were meant to try out a new online broker.

The bulk of my investment money this quarter went into improving this website which should hopefully return some cash to my pocket in the future.

On to the numbers.

Investment Income Received in Q4 2017

The S&P 500 index settled at 2,673.61 on the last day of 2017, up 6.12% for the fourth quarter of 2017 and 19.42% for the year.

This gain was after a 9.54% increase in 2016, and -0.73% decrease in 2015 for the S&P 500 index.

Here are the numbers for investment income I received in Q4 2017 and for the entire year:

Income Stream October November December Q4 Total 2017 Total
Dividends  $252.10  $562.57 $775.83 $1,590.50 $5,625.88
Interest on Cash $25.37 $21.74 $22.45 $69.56 $252.76
Rental Property $107.84 $107.84 $107.84 $323.52 $1,253.31
Lending Club $14.10 ($64.82) ($166.17) ($216.89) ($89.79)
RE Crowdfunding $250.93 $42 $47.50 $340.43 $533.49
Total Received $650.34 $669.33 $787.45 $2,107.12 $7,575.65

Compared to Q4 2016, my investment income increased from $2,001.35 to $2,107.12. Annual income decreased slightly from 7,731.93 to 7,575.65.

Not a huge decrease, but I’m always disappointed to see lack of growth. The annual fall can be mostly attributed to diminished Lending Club returns which were basically flat for 2017 due to a bad batch of loans. I’ve pulled some money out to cover living expenses, but still have about $5,000 on the Lending Club platform. More on that below.

Making up for most of the Lending Club losses was a healthy increase in annual dividend income, the onset of real estate crowdfunding income, rental income, and interest on cash.

My real estate investments with Fundrise, RealtyShares, and PeerStreet are all paying healthy dividends and I expect overall growth to continue in the coming months. I now have $17,000+ invested in real estate crowdfunding platforms and plan to continue to reinvest and grow those holdings.

Summary of Investment Activity for Q4 2017

Investing activity was very slow this quarter, but I still made small investments in five stocks and an ETF in my new M1 Finance account.

Also, one of my PeerStreet loan investments was paid off which gave me the opportunity to invest in a new loan. This loan isn’t included in the table below because it wasn’t a fresh cash infusion.

Even though I added $1,000.00 in new working capital to my taxable investment portfolios, my forward 12-month investment income (F12MII) decreased to $9,191.26 or $765.94 per month. This was a –$32.81 and –0.36% decrease over last quarter, and a $1,424.25 and 18.3% increase year-over-year.

I consider the $9,191.26 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 December 2017 since the start of RBD:

M1 Finance

I opened a new M1 Finance account in November to try it out To my surprise, one month later they completely eliminated all fees for all investors.

Since you can now dollar cost average into any stock or ETF for free, M1 Finance is my new favorite online broker. Way better than the old Loyal3. It’s more geared toward long-term investors instead of traders (like Robin Hood).

Check out my full M1 Finance review here.

Because I’m unemployed, I’m not adding more money at the moment. But I did start investing with $1,000. I decided to invest half in my favorite ETF the Vanguard Total US Stock Market Index Fund (VTI). Then I created a pie called Five Stocks and made that the second half of my overall portfolio, each stock making up $100 of the total portfolio.

Now anytime I put cash into this account, M1 Finance will automatically invest in these six holdings until I change it up. You can see my pies are below. The first is my overall portfolio with VTI highlighted. The second pie is my Five Stocks pie which makes up the right half of the first pie.

I plan to get more creative and diversified in this portfolio once I have more money to invest (when I go back to work). But this starter portfolio is working nicely for now. Cool stuff.

PeerStreet Reinvestment

Though not new capital, I did reinvest $1,000 back into a new loan on the PeerStreet real estate crowdfunding platform.

PeerStreet has enabled automatic investing. You set your criteria and when a new loan hits the platform that matches your preference, it invests your money for you. Then you have 24 hours to complete your due diligence.

A previous loan was paid off early so my $1,000 was put back to work within one day.

The automatic reinvestment put my money into a refinance loan based in California. It’s a 12-month loan, meaning I’ll get my money back sometime within the next 12 months. The interest rate is 8.5% net of fees.

PeerStreet is simple to use, but sophisticated behind the scenes. For anyone skeptical of real estate crowdfunding, I think you’ll find this platform very transparent. PeerStreet is only for accredited investors at this point.

BONUS: Retire Before Dad readers receive a 1% yield bump on your first investment.

Read my PeerStreet review here.

Lending Club

Lending Club was a significant drag on my passive income in 2017. To compare, in 2016, I earned $1,097 from Lending Club.

In 2017, I lost $89.79.

Sucks, but I’ve had much worse years investing in the stock market.

The diminished note returns of 2017 were a result of a bad batch of loans at the end of 2016. I’m still feeling the fallout from those loans, and December may have been the worst of it as I lost about $166.

For now, I’m letting my account ride and watching my returns begin to bottom out. Based on what I’ve read elsewhere, my account is still performing well compared to others.

During my unemployment period, I’m withdrawing the principal and interest I receive each month to help fund our lives. Last month it provided $500 in income for my family, even though I lost money in the account overall. You can see the losses in the chart at the top of the page.

Read my latest Lending Club review here.

The Eighth Investment

If you’re counting, that’s only seven investments this month. The eight investment was the money and time I invested into this blog.

I’ve made a number of financial investments into RBD to make it faster/better/cleaner. Most of you won’t notice much of a difference. But in order to help grow my readership and to position RBD to earn more over time, I chose to invest in certain parts of the blog including hosting, my email provider, and SEO (search engine optimization).

To help speed things up, I’ve switched my website hosting to BigScoots from Bluehost. BigScoots came highly recommended to me by an industry expert. The performance of my site has improved dramatically and it’s never down. The migration and set up was a breeze. I recommend BigScoots for any beginner to advanced bloggers.

I still recommend Bluehost too. In fact, I still think it’s the best blog hosting site for beginners because 1) it’s cheap, and 2) you can set up your blog or online business in about five minutes.

Motivating yourself to get started with a blog is the biggest hurdle.

Bluehost makes it easy. It was good for me for a solid four years. However, to take this site to the next level I felt the need to go with a boutique host with better service and reliability.

Now that I’m a semi-pro blogger, I also decided to upgrade to an email provider called ConvertKit.

I had a chance to see the ConvertKit founder speak at a conference and he was an impressive guy. Not to mention, the service is highly recommended by many other bloggers. While more expensive, it’s a necessary upgrade to make this website more viable for the long term.

I’ve already seen an uptick in subscribers. Today was the first email to my subscriber list using CovertKit. Hopefully, you didn’t notice much of a change. If you are a subscriber and didn’t get the email, check your spam or junk folder.

Click here to subscribe to RBD.

Lastly, I removed, updated, and combined some old content to clean things up a bit. This is known as an SEO audit, and I paid a professional to guide me through it. This isn’t something that provides immediate results and it takes a lot of work, but it’s an important investment every year or two to maintain a professional website.

Next up is a site redesign which I hope to complete sometime in 2018.

A Quick Look at Last Years Goals

I didn’t get around to writing a goals and resolutions post this year. Plus, I’ve found that most readers aren’t interested. But I’m going to quickly go over my goals and resolutions from last year since I publicly disclosed them. In 2018, I’m waiting to get a job before making any goal estimates.

So I guess my goal for 2018 is to get a good job with excellent benefits. Here’s last year’s list.

Resolution #1 – All workdays I will shut off my smartphone between the hours of 4 pm and 7 pm. Can’t say I was perfect about this one. For the first three months, I believe I achieved this. But it became 5pm-7pm after that because I always had blogging and investing stuff to do after work. In October when I lost my job, I was often working during the hours before dinner.

This year I’ll be re-upping this resolution because it’s important.

Resolution #2 – I will develop plans and start preparations for a near-term, pre-retirement lifestyle adjustment. Pass.

Goal #1 – Complete Goal #4 from the prior year – reduce top holdings weight and income percentages to below 20%. I got to 27% for this number. Losing my job didn’t help. But I did diversify away from stocks with real estate.

Goal #2 – Save $30,000 in tax-advantaged accounts. Fail. Hit $26,000 via 401(k), IRA, and VA 529. Losing my job didn’t help.

Goal #3 – Invest no less than $2,000 of new (taxable) capital each month into stocks and Lending Club. Fail.

Goal #4 – Receive $5,200 in dividends and $1,000 from peer lending activities. Dividends were a pass. I received $5,625.88 in dividend payments. Peer lending was a fail.

Dividend Increases

A core part of my early retirement plan is still to buy dividend-paying stocks that increase their payouts annually.

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 at a rate higher than inflation.

Of the 49 dividend paying stocks in my taxable portfolio, ten companies increased their dividend payouts by an average of 10.61% in Q4 2017. All but four dividend-paying companies I own increased their dividends this year. The four non-increasers were CVX, HP, HCP, and GPS.

Below is a list of dividend increases in my portfolio announced in Q4 2017:

  • ABBV – 10.9% to 2.84 annual
  • ABT – 5.7% to 1.12 annual
  • ACN – 9.9% to 2.66 annual
  • BEN – 15% to 0.92 annual
  • NKE – 11.1 to 0.80 annual
  • SBUX – 20% to 1.20 annual
  • T – 2% to 0.50 annual
  • THO – 12.1% to 1.48 annual
  • UNP – 9.9% to 2.66 annual
  • VFC – 9.5% to 1.84 annual

Thanks for reading and happy new year!

Disclosure: The author is long all stocks and ETFs mentioned in this article. 

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10 Responses to 8 Investments I Made Last Quarter

  1. Brian Feroldi January 4, 2018 at 8:10 am #

    Was the losses on your LendingClub just a matter of not getting paid back in time on your loans? Any additional insights to share? Do you still think LendingClub is a decent place to put your money? That’s one avenue that I’ve yet to explore but have generally heard good things about it up until this post.

    • Retire Before Dad January 4, 2018 at 8:41 am #

      Hey Brian. Always glad to see you here!

      A few things have changed at Lending Club since I started investing in May 2013. For starters, LC has lowered its overall expected returns to 4%-6%. This range used to be 5%-9%. Myself and many other earned more than 9% for quite some time. Then in 2016, returns started decreasing. Lending Club announced they had “mispriced” some loans which led to increased defaults, especially for F and G graded loans. So anyone that was investing in those took a significant hit that continues to punch today. Once LC caught the mispricings, they updated the credit model but the damage was done.

      Fast forward to last month, LC has announced they are no longer giving individual investors access to F and G graded loans. Only A through E. Plus, they’ve tightened their credit model which should lower volume but decrease default rates. The company is making a new push to attract individual investors because that is its core investor base. By lowering expectations and decreasing portfolio defaults, investing should be a lower risk venture for new investors.

      However, many investors are weary about the next recession. Many believe the next recession will dramatically increase default rates. Remember, these are unsecured consumer debt loans. Most of it is credit card debt refinancing. While that’s good for consumers to get a lower interest rate, they can default and often do. Investors must weigh the risk of investing in notes to get 4%-6% vs. interest on bonds or risk-free savings accounts (now around 1.5% yields).

      The bottom line, I continue to hold my notes and I do see my portfolio bottoming out. Once it stabilizes, which I believe it getting close to, I may start investing new money again. But I don’t have a ton of money to do so at the moment. My preference for now is to invest in real estate debt because it is backed by real assets. When a borrower defaults, investors acquire the property protecting your investment. PeerStreet is the best way to access real estate debt. So for new investors, I’d go there before LC. But PeerStreet is for accredited investors only (Net worht > $1 million). The easier way for everyone to access high-quality real estate investments with higher yields and fairly low risk is Fundrise. That’s why I’ve been recommending that platform quite a bit.

      I do think it’s OK to dip your toes into P2P lending with LC right now. But I’d start with lower-risk loans like A and B and see where it goes. These notes are fairly illiquid, so expect to be investing for the long term.
      For more on defaults, check out this 35-page forum topic over at LendAcademy:
      https://forum.lendacademy.com/index.php/topic,3551.0.html
      -RBD

  2. Oldster January 4, 2018 at 11:17 am #

    Good report RBD. Under the circumstances (job loss) you appear to be well positioned.

    I’m with you on Lending Club. I had around $40k there and got hammered with the issues created by their lending practices. I’ve moved all but $10k to PeerStreet. I’ll leave the rest at LC in the hopes that they can fix what looked to be a very interesting model. My returns on LC were between 2% and 3% in 2017. No where near what was advertised.

    PeerStreet was a great find as was M1 (thank you for that by the way). I’ve moved some of my automatic investing to that platform and we’ll see how it goes.

    Hope your New Year works as planned. I’ll be reading along and cheering for you.

  3. Financial Velociraptor January 4, 2018 at 6:07 pm #

    Gogogogogogo! Hope you get back to work soon. Having 5,200 a year in passive income must really soften the blow.

  4. Dividend Diplomats January 5, 2018 at 9:09 pm #

    RBD –

    Very interesting on the M1 Finance, very cool, intuitive, easy and… FREE. May have to think about it.. Hmm…

    -Lanny

    • Retire Before Dad January 6, 2018 at 10:13 am #

      Hey Lanny,
      Yeah, M1 is the real deal now that it’s 100% free. Nice fit with dividend growth investing. Message me if you guys have any questions about it.
      -RBD

  5. insculpta January 6, 2018 at 5:24 pm #

    I do enjoy your posts. Mostly, it is your honesty…I’m not the only one that fails at financial goals!? Well, “fail” is too strong a word – they are simply delayed for a time. I set up an M1 account because the fees for buying my list of about 60 companies a share at a time ($100 – $1,000 + / share) was definitely eating profits. So, thank you for that!

    • Retire Before Dad January 8, 2018 at 2:09 pm #

      Good to hear. A lot of people are curious about M1 since they eliminated fees. It’s a different way to invest, but can’t beat the price. Thanks for the kind words.
      -RBD

  6. Dividend Diplomats January 7, 2018 at 12:15 pm #

    I think the 8th investment is going to be the one that pays the most dividends going forward 🙂 I’m excited to see how your blog improves now that you have invested much more and are taking off the reigns. Lending club has always interested me by the way, but seeing the results that you and others have posted this year haven’t surprised me. I’m curious when this excellent economic cycle is going to end here and I’ve always wondering if Lending Club investors will know when it will start to slow down before others. Were your losses due to one bad relationship or a series of loans slowing down?

    Bert

    • Retire Before Dad January 8, 2018 at 2:14 pm #

      Bert,
      I hope so. I’ve put a lot of time into this thing over the years and especially over the past 3 months. Entrepreneurship can pay off much more than investing. But failures are higher. I must say, I’ve liked the conservative aspect of dividend growth investing. Tracking income instead of returns is a lower volatility way to invest.

      Lending Club investors had a bad year. There’s a lot of skepticism because of it. I’m a long-term believer in both the lending and business model. However, it is based on borrowers and their ability to pay back loans. During the next recession, that will be more difficult. My losses were due to many defaults. I never invest more than $25 per note. So if any loan defaults, I lose no more than $25. Often, it’s less than that because borrowers usually pay down the loan some before defaulting.

      This was a pretty widespread downturn. LC blames the credit model and some mispricings and have made adjustments. Perhaps it’s a sign of bigger things to come. It could be just blip. I can say that my returns do seem to be bottoming out, so that is encouraging.
      -RBD

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