The Portfolio page on my blog has been updated as of September 30th, 2018. 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.
This quarterly update contains a summary of my personal investment activity for the past quarter. I’ve shared the investment income (aka passive income) I earn in my non-retirement accounts on this website since October of 2013, not long after I started blogging.
For details on how I track dividend income in an Excel spreadsheet, read this article. I automatically track my net worth and investment allocations with a free tool called Personal Capital. It’s the best free financial tool I’ve come across.
The information below does not include investments made in my employer-sponsored retirement plan, college 529s, and other tax-advantaged retirement accounts. I max out all tax-advantaged accounts before making these investments.
The holdings on this and any other page on my website do not equal recommendations. I’ve determined these investments to be right for my situation, but they may not be for yours.
Back to Growth
After negative growth in Q2, my forward 12-month investment income (F12MII) rebounded and is approaching $10,000 per year.
F12MII is the measurable income I earn from dividends, real estate, peer lending, and interest on cash.
The primary driver of growth this quarter is attributed to opening a high-yield money market account with CIT Bank which now pays 1.85% on cash deposits. The minimum to open an account is only $100.
Read my comprehensive CIT Bank review here.
My previous savings bank, Capital One 360, was paying me 1%. When I called to ask for a better rate, they were not able to accommodate my request without closing my account and opening another. And the new rate of 1.75% would have only applied to deposits over $10,000.
I use Wells Fargo for checking accounts.
The interest rate was my primary reason for switching savings banks. But I also met a Capital One employee at a friend’s house and he told me that all the company cares about is its credit card business which is much more profitable. He said Capital One was unlikely to try to compete on savings rates anymore.
The switch to a higher yielding account accounted for about 60% of F12MII growth this quarter. The other growth came from stocks, dividend increases, and an additional investment in PeerStreet.
Investment Income Received in Q3 2018
The S&P 500 index settled at 2,913.96 on the last day of September, up 7.20% for the third quarter of 2018 and 8.99% year-to-date.
Here are the numbers for investment income I received in Q3 2018:
|Income Stream||July||August||September||Q3 Total||YTD Total|
|Interest on Cash||$25.94||$39.90||$48.06||$113.90||$258.90|
Investment income received increased from $1,890.35 in Q3 2017 to $2,326.47 this quarter. That’s a 23% increase year-over-year.
Year-to-date, the amount I’ve earned is 19% higher than what I earned in the first three quarters of 2017.
Summary of Investment Activity for Q3 2018
Below is a summary of all investment activity in my taxable accounts in Q3 2018.
With the addition of $2,123.74 in new working capital to my taxable investment portfolios, my forward 12-month investment income (F12MII) increased to $9,698.41 or $808.20 per month. This was a $506.47 and 5.5% increase over last quarter, and a $474.34 and 5.1% increase year-over-year.
I consider the $9,698.41 in F12MII the most important number because it represents an estimated amount of money I earn via investment income without a job. This was tested recently and the investment income never stopped flowing while I was unemployed!
Here’s a chart tracking my progress as of September 2018 since the start of RBD:
Interest on Cash
As mentioned above, I’ve moved all of my cash savings to a money market account with CIT Bank. This gave me a nice one-time bump in F12MII since my interest rate is now 1.85% instead of 1.00%.
I’ll stick with CIT Bank as long as they continue to raise their rates with the Federal Reserve. Capital One stopped, so I left.
Another reason I switch to a higher rate is I’m increasing the amount of emergency savings since my parents had a recent string of bad luck with home repairs. I realized I don’t have enough cash set aside for an emergency or if an opportunity arises.
The higher rates help me earn more while building cash. And as rates continue to rise, so should the interest rate.
I’m a huge fan of M1 Finance ever since they completely eliminated all fees. It’s now a commission-free broker, far better for long-term investors than Robin Hood which focuses on trading.
Read my comprehensive M1 Finance review here. The future of personal finance is free!
I made a significant change to my account this quarter. If you’ll remember, my original account was split 50/50 between the Vanguard Total Market Index ETF (VTI), and a “pie” of five individual stocks.
Since I own so much of the VTI in my retirement accounts including IRAs and my employer-sponsored 403(b), I decided to shift this portfolio to remove VTI and add a second stock “pie” of five new dividend growth stocks.
Adding these long-term dividend growers increased my account yield above what VTI was paying me, and sets the account up for future dividend growth.
I focused on undervalued Dividend Aristocrats stocks that I didn’t previously own plus an undervalued airline. The new stocks are AFL, LEG, LUV, OMI, and PPG.
In addition to removing (selling) VTI, I added another $200 and $500 to the account on separate dates and reinvested all dividends.
My total portfolio now consists of two separate pies called Five Stocks and Five More Stocks. For now, each pie is weighted equally, 20% for each of the five stocks in each pie. For the total portfolio, the target is 10% per stock. I suppose I could have put them into one pie, but I did two pies instead.
Here’s what my portfolio looks like now:
And the new pie replaces VTI, which previously made up 50% of the total portfolio:
Any time I add new funds to my account, the broker automatically purchases all ten stocks to rebalance the portfolio back to 10% in each stock. So if one stock goes up a lot, M1 will buy less of that stock and more of a stock that decreased.
It’s a way to dollar cost average into many stocks at the same time, while buying more of the stocks that are out of favor.
Set up your model portfolio and let M1 do the rest. This works great for dividend or EFT investing. They keep adding new features, and I’ve recently learned that better dividend reporting is on the horizon so keep an eye out for that.
Despite enjoying a different way to invest with M1 Finance, TD Ameritrade is still my primary taxable brokerage account while Fidelity and Vanguard hold our IRAs and 403(b).
I own 48 stocks in the account, 46 of which pay a dividend. This quarter I added just one more, Illinois Tool Works (ITW). I added 10 shares at $141.2.
This industrial Aristocrat has been on my watch list for a very long time but was always fair or overvalued. It recently came down and I bought an initial position.
Here’s a current view of my projected F12MII in my TD Ameritrade account powered by their new Income Estimator.
I truly love receiving dividends. This account is really starting to deliver on a monthly basis. I supplement dividends received with new capital to compound my earnings. The plan is for this income to eventually cover my basic living expenses.
Real Estate Crowdfunding
I started investing on three separate real estate crowdfunding platforms in 2017. Overall, I’m very pleased with the returns on all platforms. In the name of simplification, I’ve decided to only continue investing on two of them.
My initial $10,000 investment on the Fundrise is now worth $11,467.26 after reinvesting all the dividends. I own five separate eREITs with an average yield of 7.15%.
Some exciting news from Fundrise this quarter, they’ve launched two new eREITs called Income II and Growth II, both similar to their very first eREITs.
It’s easy to invest in high-quality commercial and residential real estate at Fundrise via the Starter Portfolio with a $500 minimum investment.
Read my Fundrise investing review to get a better sense of what it’s all about.
This quarter, I also added $650 to PeerStreet to bump up my investments there. PeerStreet is similar to LendingClub in that you invest in multiple loans to diversify your portfolio. These are debt investments that help borrowers buy and rehab real estate.
I love the user experience at PeerStreet and it offers greater ease of diversification, automatic investing, reinvestment, and shorter investment durations. PeerStreet is still for accredited investors only, but it’s better for newly accredited investors (net worth ~$1 million) than RealtyShares, which I recommend for high net worth investors (net worth $2+ million).
In total, I’ve added $7,258.75 of capital to the PeerStreet platform at various dates since July 2017. The account is now worth $7,611.14.
$7,000 of that is currently invested in seven PeerStreet loans with an average yield of 8.21%. $611.14 is waiting for more cash to make another $1,000 minimum investment.
I added $650 in fresh capital this quarter.
Automation is built into the PeerStreet platform. When my cash balance reaches $1,000, it automatically makes selects a new investment for me based on criteria. I then have 24 hours to decide if I like the deal or not.
Read my comprehensive PeerStreet review here.
I like to end on dividend increases because they grow my passive investment income with zero effort. I’ve always loved that about dividend growth stocks and it’s one reason why I’ve invested in them since 1995.
My aim is for each company in my portfolio to increase its dividend every year at a rate higher than inflation.
I track my dividend income in excel. My method automatically calculates the increases.
Of the 55 dividend-paying stocks in my taxable portfolio, 10 companies increased their dividend payouts by an average of 11.1% in Q3 2018. That makes 40 increases out of 55 stocks so far this year.
Below is a list of dividend increases in my portfolio announced in Q3 2018:
- BAC – 25% increase to .60 annual
- DOV – 2.1% increase to 1.92 annual
- HP – 1.4% increase to 2.84 annual
- ITW – 28.2% increase to 1.00 annual
- MSFT – 9.5% increase to 1.84 annual
- PPG – 6.7% increase to .48 annual
- SBUX – 20% increase to 1.44 annual
- UNP – 9.6% increase to 3.2 annual (second 9%+ increase of the year)
- VZ – 2.1% increase to 2.41 annual
- WTR – 7% increase to .8760 annual
Thanks for checking out my latest quarterly update. Before you go, 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.
Disclosure: The author is long all stocks and ETFs mentioned in this article except APY, AMZN
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