Passive Income

Recent Buys

Posted by FI Monkey

So I’m on vacation, but I’m not dead. Before I go out and swim for a bit, I decided I’d execute some orders (sounds so much cooler than it is) on the stocks I’d been comparing/eyeing this weekend. As usual, I will preface this by saying I am new to this whole thing and if there were a gradient from completely green to Warren Buffett, I would be firmly in the green still.

That being said, I actually did my own analysis on the stocks I did purchase today, albeit nothing too deep or intensive. For example, I’m not to the point where I’m using P/E to determine whether I should invest. I’m sure I’ll get to that point, but for the moment I’m not going out on any crazy limbs by establishing myself with these companies. I’m keeping it simple.

So far, I’m using these metrics (which could be absolutely terrible, I’m sure) which I took largely from David Fish’s CCC list:

  • Reasonable dividend payout (2 – 5% yield)
  • Long history of increased dividends
  • An upward trajectory in stock price over the past 5 years

Feel free to point out my terrible strategy. I am completely open to learning — that’s what this whole thing is about. For now, I’ll get into which stocks I bought!

Realty Income Corp (O)

Realty Income Corporation

I’m sure many of you are quite familiar with this one. I read that it is described as the “Monthly Dividend Company” on its Wikipedia article. Honestly, I didn’t even comprehend that this was a REIT stock until after I purchased it. But hey, it looks strong to me. The company was founded in 1969 and was recently added to the S&P 500. It’s had 22 years of consecutive dividend growth and its current dividend yield is at 4.85% from what I can tell. I bought in at $47.12 with 10 shares. This was my second out of three commission-free trades on Scottrade (yay!).

Target Corporation (TGT)

Target Corporation

Last of my commission-free trades was Target. While I do own Walmart stock, it’s Target my family visits 4-5 times per week. Like Diet Coke, we have a personal stake in the success of this company and based on how it’s done previously, it seems like it will keep going strong for years to come, so by that measure I had no qualms going forward. It’s been around for over 100 years now and is also included in the S&P 500! Although I read that Target Corp’s dividend growth wasn’t so hot in recent years, it has still continued to climb over the last 32 years. The dividend yield is presently 2.46%, which is good enough for me. I bought 6 shares at $84.48.

This brings my total number of stocks owned up to seven (7) for a stock portfolio currently worth about $3,450.00.

Picking Products, Watching Stocks and Generally Hoping for the Best

Posted by FI Monkey

I’m taking a break from cleaning my house to post an update on my recent activities, partially as a reward but also to help me get some of my thoughts down.

How do I ... business?

How business makes me feel.

This past week, I’ve been trying to choose a product to start my side business with. As I mentioned recently in my post on making money on the side, I am in the process of getting things rolling with Amazon FBA and, subsequently, an e-commerce business. Featured prominently in that post was Kermit as I was trying to make it clear that I am very green to the process from the business side, although I have spent years working with various e-commerce shops from the engineering side.

So the first step in any commerce-based business, as far as I can tell from what I’ve been studying, is to choose a product. Well, for some that may be easy, but for me picking products has been nearly impossible. There are so many things to choose from and I definitely don’t want to recreate the wheel here. I have a list of products I plan to start with and later I will narrow that down by setting up a score for each — essentially going with the product that I think will sell best while maintaining a decent profit margin, all while being something that I can pivot off of for similar products.

All the things on my list are of high quality, which is extremely important to me. As I mentioned previously, I wouldn’t want to sell anything to other people that I wouldn’t sell (okay, give) to my mother. That qualifier has sort of narrowed my list of possibilities way down, which is nice, but there are still hundreds to choose from. It could take forever.

This is exactly why I’ve given myself a deadline. I have to have chosen five products by this Monday. And that’s after choosing many and narrowing down the list based on a series of factors both of my own and sort of plucked from various posts and videos I’ve been watching. I don’t want to take forever on this. The next goal is to find a supplier for said products, foreign or domestic. Either way, it has to be done and soon!

Another interesting thing has been watching my individual stocks and comparing them to my index funds. Obviously there hasn’t been enough time to compare them in a meaningful way, but still — the index fund has been killing the individual stock selection. Luckily, I’m a buy and hold kind of fellow and won’t be selling my stocks any time soon.

Despite the downward trend my stock selections have already entered, I have transferred another $1,000 to Scottrade for some buys on Monday. That money is to take advantage of my free trades which, inconveniently, have an expiration date. For me, I see that as free money.

At this point, I don’t think I will invest more into the companies I already have. Once I have a decent selection, perhaps 10 or 15, I think I will do that but while I have 5, my plan is to diversify my selection a bit more. I don’t have a hard and fast rule here, it just feels like what I should do. Maybe some of you fine people can weigh in on this with your valued opinions.

For now, I should get back to work. This place needs to be clean before I go (I hate returning to a dirty house). For this next week, I will be out of town on a much-needed vacation so I’m not sure how often I’ll be posting, but rest assured I will be back to keep you posted on where I take my portfolio and my side business.

Pushing Through Writer’s Block

Posted by FI Monkey

For some reason, I don’t feel like posting today.

Maybe it’s because of the holiday weekend, or because this is a Monday or because I’m only one coffee-cup deep into the day. Whatever it is, it’s giving me writer’s block. The best approach to the writer’s curse, I’ve read, is to just keep writing, so that’s what I’m doing today.

This weekend was a great little mental vacation. I barely touched the computer, didn’t look at my spreadsheets and didn’t even touch Mint. It felt very free. I did, however, spend some time (using my phone) reading over some posts from Steve Pavlina on his Passive Income Series. Who knows whether I’ll actually use any of that information, but it’s generally entertaining to read his stuff. I’m not much for “personal development,” but I also appreciate the way some things make me think.

I made some headway this weekend with my wife. I didn’t really post about it because I prefer to keep my personal problems personal, but we’ve been hashing out the approach we’re taking toward finances as a family. This happened because one day I mentioned how I thought a particular Groupon deal she was interested in was a waste of money. Keep in mind, I have been drinking some of the Kool-aid from the folks who are frugal, and sometimes I get carried away with ideas.

So this became an issue.

All of a sudden, I’m a penny-pinching miser who isn’t the man she married. And I’m not that guy, but she had a point. I was just reacting to things with negativity because I’m trying to maximize our savings. It’s easy to forget that we’re all people and we’re all in this together. Plus, I hadn’t really discussed where I’ve been lately. Sure, I tell her about every bloody thing I read whether she’s interested or not, but that’s not discussing things. It’s not making sure we’re on the same page.

So finally, I apologized for getting ahead of myself and explained where I was coming from. It’s not that I don’t want to spend money on things that are important to us, it’s that I don’t want to spend money frivolously. More succinctly, I want to spend money on things we love, but cut way back on things we don’t. So it’s not that I’m turning into Mr. Cheapskate, it’s that my intention is to turn into Mr. Mindful.

And some of you may think me stupid for carrying this mindset, but I don’t mind, because each of us is on a different path. For my life, I want to save money but I also want to be able to have things I like along the way. While I don’t want to save life enjoyment for typical retirement age, I also don’t want to live a life of scarcity leading up to early retirement. There has to be a balance.

So that eased the tension and we were back to normal. I even worked in some ideas for some slow travel in there, because a significant portion of our monthly income goes to paying a mortgage on one fat house. The false dilemma a lot of people fall into is that you either need to rent an apartment or buy a house, but as I read and learn, there are a variety of other options. For example, we could sell this house, buy a couple houses (duplexes maybe) in different locations and then maintain a home base (which is important to people apparently) while renting out the unused (by us) units. This way, we could still travel all over. We wouldn’t be homeless nomads — a very important mental safety net for my wife and children — just wandering the earth.

The success there wasn’t that she readily agreed, but that she didn’t put up an offense to it. Honestly, there are some great reasons to get out of the main stream and venture into the wild unknown. For one, life shouldn’t be the same thing on repeat. Maybe I’m crazy, but I also think it would be far more interesting for my kids if they could experience different cultures both inside and outside their native country. I don’t know if there are published statistics on mental health for those who have traveled and those who haven’t, but I would hope it would have a generally positive impact.

I’ll have to look that up after I finish writing this post. Er, wait. Hold on. My inner critic is reminding me of kids that get moved from state to state, school to school, causing them to leave their friends behind each time. This could probably cause some damage in terms of an ability to form long-term relationships.

On the other hand, I drove far, far away from home when I graduated high school and basically left all my friends behind. I still keep in touch with some, but we all live some distance apart. Still, there’s something to be said for getting through school with the same set of friends. I was definitely able to do that, so I don’t know that I’d want to deprive my children of that experience.

Of course, recently I met a well-traveled young lady who was wise beyond her years. Her father being a diplomat, she was moved from place to place while he was stationed for a few years in each location. Talking to her, I wanted the same thing for my children. I’m aware that there are no guarantees in life and that my wife and I are completely different parents in different situations to hers, but still, there is something alluring to that kind of life story.

I mean, if you could choose your sort of childhood experience, and you were given two choices, either — A, relating to most people by sharing in most of the same experiences or B, having unique and interesting stories to tell people — which would you choose? That’s not such an easy answer, and it might differ from person to person. It’s almost unfair to force it on children, one way or the other, but we do it anyway.

I’ll have to look into this a bit more.

 

A Series of Somewhat Interesting Facts

Posted by FI Monkey

Do you ever check how much interest, dividends and passive income you earn on a daily basis?

Ever since I started on my Financial Enlightenment, I’ve been keeping track of my interest and dividends. I’ve been tracking a lot of things actually (gotta love spreadsheets). I figure the more I keep track of things, the more aware I’ll be of my financial situation at any given moment. This kind of awareness helps in little ways, like when my wife asks me questions about how much we have here and there.

Interestingly enough, I started out this year earning about $0.35/day passively (Hey, don’t judge me. We all have to start somewhere.). As of the end of this month, I’m earning about $2.60/day. There are still some numbers that need to come in, but here’s the chart that corresponds with the growth of that number:

Daily Interest Graph as of June 29, 2015

 

And here’s the chart which corresponds with the annual projections based on those numbers as multiplied for the year:

Annual Projected Interest as of June 30, 2015

You know, at this rate, it’s almost to the point where I’ll earn over $1,000/year without doing anything. That’s a pretty excellent achievement on the path to making about 60 – 100X that amount. It’s basically like step one has been completed, which leads me to my next interesting fact.

Today, I Invested More

My monthly paycheck finally cleared, so I decided to do two things before I send money elsewhere. One, I started the transfer that will effectively complete my Emergency Fund goal of $50,000, so look out for the post on that achievement. Second, I moved another $2,500 into VTSAX.

Coincidentally, the price dropped today — from $53.06 Friday to $51.93, so I’m not sure how much that will impact my total investment but if it works out, great. If not, I’m in it for the long haul so it doesn’t matter in the big scheme of things. What’s important is that I’m not trying to time the market. Also, I’m trying to maximize how much I put into my SEP IRA before I transition into a salaried position. Hopefully that just means more daily accrued interest and more in dividends. Oh, right, and I also just learned VTSAX pays dividends (thank you Dividend Life!).

Interesting Possibilities

Now that these milestones are being hit, I am starting to consider what to do next.

Admittedly, part of what I’ve been considering is reducing my six month E-fund down to three, and investing the rest. I won’t do anything drastic, of course, but that doesn’t mean I haven’t toyed with the idea of putting that $25k somewhere to generate higher returns overall. It won’t do much to my net worth, but it would, for example, certainly help the interest rate if I put that much in VTSAX. Right now, the E-fund is earning 1% sitting in Ally, when it could be earning much more in the long run. That would probably push me closer to $2,000/year!

But what if I invested it in something else?

A friend of mine is thinking about investing in a franchise, which would be built in a nearby location I think is perfect. The overall start-up cost? Around $250,000. It just so happens that I could put in for 10% of that. Another friend has become a decent property manager, having purchased his fifth duplex and successfully renting all but one of the units, which he lives in himself. I’m actually set to talk to him about this very thing this week, so I’m excited about that. In this area, I don’t think $25k will get me into a duplex, but it will at least give me a target number to shoot for.

I’m also keeping an eye on some Flippa web “properties” for potential investments. It seems like $25k could get me somewhere in the neighborhood of $1,000 – 1500/month in passive income. The trick is finding sites that aren’t in an irreversible (without a ton of work) decline. And let’s face it, in a lot of areas, I am green. I’m still watching though.

Lastly, I have started the gears turning on a side business that could turn out to be pretty big.

You never know.