Here are my purchases for this week.
- WPC: 3.24 shares @ $61.64 --- Yield 6.18%
- BBL: 4.87 shares @ $41.07 --- Yield 6.04%
- BP: 4.94 shares @ $40.46 --- Yield 5.93%
- SO: 4.73 shares @ $42.31 --- Yield 5.13%
Total capital invested is $800 ($200 in each company). The combined yield is 5.82%% and will add $46.56 to my yearly dividends.
$17,000 Forward Dividends/Interest
It's not really an even milestone like 10k, 20k, or 25k, but it still feels pretty good. I was just looking at my portfolio and noticed that the balance is now a shade over $410,000 in my taxable account. I have never climbed a mountain, but I'm sure the first few thousand feet probably are no big deal. You are energized, well fed, warm, and eagar for the journey. Confidence, drive, and desire are at peak levels!
No doubt as the climber reaches new heights, certain fears start to creep into his mind. Can I make it? Will fatigue take its toll and cause me to lose focus or worse make a critical mistake? Is the end game worth all the effort, risk, and time? Will a random weather event cause me to turn around or perhaps perish?
Right now I have roughly 14 years worth of living expenses ($30k/year) invested in the market (stocks and bonds). On top of that I currently have a job that allows me to save rought $100k per year. So in theory, I could have 20 years worth of expenses covered (assuming no increase in expenses) within another two years. I am currently 44 years old which means at age 46 I would have the next 20 years covered. That is assuming a 0% return. Realistically over the next 20 years a 2-3% interest rate isn't unreasonable and that would actually add tens of thousands to my withdrawals over that time period. $600k could actually result in $800k in expense coverage.
In addition I have approximately $250k in my 401k (65/35 Index 500/bond mix). Finally I would receive some unknown amount from Social Security at age 62 or later. I may have actually oversaved and just haven't realized it yet.
Right now $17,000 would cover just over half of one years expenses. In time this amount would increase along with the capital base, but it could also get cut int half (1973-1975, 2000-2002, 2007-2009). $410,000 (bird in the hand) or $30,000 a year from dividends ten years from now (2 in the bush).
Right now I am enjoying the view from my current location, but these are things that I have been thinking about recently. I might just relax for a bit here and catch my breath.
Keep climbing or accept that I may have already reached my destination?
This is NOT meant to be a downer post
Sometimes when you are in the heat of the battle, you lose track of the bigger war. I have been in full battle mode for many, many years and I don't think I realize how much progress that I have made. At the same time, if I stray too far from the castle, I could potential lose a lot of the progress that I have fought like a Mother Fucker to gain. The only difference is fighting at age 30-45 is much easier than fighting the same battle from age 45-60.
I am just documenting some of my recent thoughts.
DEFY MEDIOCRITY
Hi DP,
ReplyDeleteI know how your feeling. My USA portfolio is $400K, UK portfolio £200K. I'm spitting out about £20K of dividends pa. I'm 48, just been made redundant. I'm questioning whether I should return to the job market or call it a day. Guess I need to do something. I also have significant cash, paid off mortgage and large pension (similar to your 401K). My wealth came in big lumps after working for a tech start-up and have been slowly putting it into the market over the last 4 years. Call me paranoid, but the reason for the massive cash buffer - 10 years worth living expenses, I fear black swan events - what if the stock market melts, computer glitches wipe out all broker records etc etc. Maybe tangible stuff like real estate is the way to go, but its not 100% passive. Regards, Jack
Jack,
DeleteThanks for taking the time to comment. You are doing great! It's good to know that someone else understands my point of view. I think in four years when I am your age, these financial concerns will weigh increasingly on my mind. Maybe I will just focus on a 10 year cash plan starting now. I actually have a pretty conservative hybrid strategy that I was planning on following over the next few years, but recently I have on a few occasions thought about dumping everything and just focusing on building up my cash savings.
Best wishes with your journey. It looks like you have planned things out very well.
MDP
I have been "running" the uphill climb since 2007. As my portfolio has increased, I find myself in a much more conservative mindset. I would much rather preserve wealth, than shoot for the stars.
DeleteI think a 20% - 25% allocation to US Government Bonds could be helpful down the road. The easiest way to do it is to just allocate dividends from your stock portfolio to fixed income for 4 - 5 years.
DGI,
DeleteI can see my portfolio having a 25-30% bond allocation during the next few years as well. Passive income is awesome, but having $1,000,000 at risk sometime in the future for a $30k in income seems a bit careless to me.
MDP
Keep chugging MDP! You're only a few years from FI it appears and boy won't you be loving life once you get there! But if the journey is causing you more angst than anything, take a month or so off from the plan, and come back to it. Maybe you'll feel refreshed and even more focused! Maybe take a little trip, get your mind off the numbers.
ReplyDeleteFF,
DeleteIt's funny you mentioned taking some time off from investing. I actually have been saying that I would cut back on investing. When I do, I usually fall of the wagon and make several large purchase.
Perhaps I'll start a new 30 day challenge....No investing
MDP
Hey MDP. Thanks for sharing the post and congrats my friend on reaching a17k in forward divies. You're on a great spot my friend and only you can answer your question on how much your end goal will be.
ReplyDeleteFrom a friend, since you've worked so hard to be here, it's always nice to take a little break from the plan. Refresh yourself so you have fun in investing and not feel like it's a chore. Maybe instead of investing all in, cut it down to 25 to 50 percent and so you stay consistent and continue on this journey. Look at the bright side, and count your blessings. You're still healthy, and in a position to save so much. Life's wonderful. Take care my friend.
Hustler,
DeleteAs alway, I appreciate your perspective on things. You approach your business/investing journey with nothing but joy and that is what I used to do. I have felt a bit consumed especially in the last year or so with the grind. Work grind, investing grind....there are a lot of grinds to deal with each day. :-)
I'm going to try and take your advice and ease up for a bit.
Thanks for the advice!
MDP
MDP,
ReplyDeleteCongrats on the huge milestone. That's not far off from my overarching long-term dividend income goal.
You seem to have a good handle on where you're at, but I bet you're probably further along than you might realize. If there's one thing I've picked up on over the years it's that savers/investors tend to overestimate what they'll need and the spenders tend to underestimate what they'll need. Tough to find that middle ground.
I personally plan to basically stop saving/investing once I hit $18k/year or so in dividend income. Factoring in dividend growth and SS income down the road means it's unlikely I'll want for wealth/income for the rest of my life. But saying and doing are different.
Either way, you're in an incredible position. Most people go their whole lives without that kind of wealth/passive income. To have it at your age puts you in rare company. Enjoy it!
Best regards.
Jason,
DeleteI agree wholeheartedly about your savers/spenders statement. Just a few years ago, I thought it would be great if I could supplement my SS income by $1,000 a month when I retired. Now I have $1400 a month TODAY and won't even receive a SS check for another 20 years.
Two years ago I stumbled upon your blog and it revealed a bold new path for me. Reading your posts accelerated my dividend investing strategy and more importantly, opened my mind to early FI/retirement. Thanks so much. You are (probably unknowingly in a lot of cases) helping many people search for a better life.
Thank you!
MDP
Ditto, MDP. I've never posted/replied before on yours or Jason's blog but I read and check both religiously. I am the same age as Jason when he started Dividend Mantra, making a similar income as he made when working full-time. You both opened me up to the awesome world of the dividend growth investment strategy and I relish every post or piece of advice you both have to offer. Kudos on your successes so far and thank you both for the inspiration!!!
DeleteDrew O,
DeleteYou made my day! No shit...you really did!!!
Best wishes on your journey!
MDP
Awesome! Glad to hear it and thank you so much! Just know that your readership/inspiration likely goes far beyond those who regularly comment and have blogs of their own. :). We're out there...just quietly plugging along doing our thing and following along with the same shared enthusiasm you guys have!
DeleteCheers!
MDP, if you please allow me to add an additional comment (I don't want to hi jack your blog). I think when you have amassed wealth after such hard work the fear of losing it is real. However to help overcome this paranoid irrationality & negativity (because that's what it is) I sometimes succumb to, I always re-read articles by the investment greats like Buffet, Munger, Lynch, Klarman, Yachtman. These guys invested and stayed invested in stocks through several wars and financial meltdowns and the stock market was still there. My favourite quote from Munger "I don't waste my time thinking of things that might never happen". I think once you've reached your goal, say $30K in dividends pa, you could just stop and build up cash reserves. CD rates should increase in next few years. Don't forget dividend stocks are automated compounding machines that will grow naturally without you. Keep positive, keep you chin up, the land of milk and honey is in site for both of us. Best Wishes, Jack.
ReplyDeleteAnonymous,
DeleteHijack away! I really like you line of thought. Thanks for the encouragement and feel free to stop by and comment anytime. It is good to hear from someone who is on a similar path as me although you are several years ahead. This is exactly what I needed.
MDP
MDP, it's okay to be tired. Just admire your view from up there! I bet many of us ( at the foot of the mountain) wouldn't mind to be where you are. Keep climbing.
ReplyDeleteD4S
Div Son,
DeleteI know what you mean. Ten years ago I was just thankful to almost be out of credit card debt. I never dreams things would unfold like they have. Keep fighting hard over there and the results will come much soon than anticipated.
MDP
Hi MDP,
ReplyDeleteCongrats on reaching the $17k milestone! I personally think every additional dollar is a beautiful thing. You should consider a nice vacation and really relax for a bit. I can understand your concern with having the values drop in half. Especially with the turbulence in the market recently! I try to keep a positive attitude about it and remind myself that it'll come back up if we do see a drop.
Best.
BB,
DeleteThanks for stopping by! I too think investing every dollar is beautiful. In fact, I may be a bit extreme in many instances. Sometimes I have days where I have to remind myself that bills come first then investments. :-)
MDP
Great milestone achieved. It's true that after slogging along for many, many years you might lose sight of what you're doing but the reality is that you are sitting from a position that relatively very few have achieved or will ever achieve. Another great week of high yielding buys. Keep piling on those dividends and you'll also create a financial legacy.
ReplyDeleteDivHut,
DeleteIt has been a crazy journey with many unexpected twists and turns. I do appreciate and am thankful for the many good times and the tough times as well. Both have helped define my strategies and strengthen my will to move forward. With that said, I am going to slow down a bit for at least the rest of the year.....I hope. :-)
MDP
Congrats on the $17k forward dividend mark. It's been a great and crazy journey for you I'm sure. Sometimes it's OK to step back a bit. Live in the present and enjoy what you have right now. Be appreciative of what you have today. When spending time with your loved ones, really enjoy it and be view it as a golden opportunity that you may not get again. This may give you a different perspective.
ReplyDeleteTawcan,
DeleteYou are right about enjoying time with the family. Last month while I was on vacation, I sort of came to the realization that I have lost track of priorities a bit. This is not a first for me. Now I just need to stop contemplating things and take action. I will most likely cut back on investing quite a bit and just enjoy the ride more. Good luck with that one right? We'll see how it goes.
MDP
Great job on 17k in passive income. I've struggled with the same kind of thinking this past year when we moved into our final home. I've been beating myself up about not being able to save as much as I once did. But I think we need to be able to step back a little and enjoy life a bit. It's not all about the end result as it is the journey that gets us there.
ReplyDeleteMRWF,
DeleteI think the description you gave is balance. I am not balanced and not just in spending/saving, but in asset allocation.
MDP
My passive income went over $158K per year on Jan 1. I only figure it out Jan 1 and Jul 1. If my passive income was $17K I would still be pushing it. I believe chained CPI is coming and social security will be means tested and all you will have will be your passive income. I just reinvest my dividends and contribute $500 each at Loyal 3 to MCD, MSFT, PEP, SBUX, DIS and AAPL. Have to keep my income below $200K or will lose the 15% QDI tax treatment. My advice is to keep push it while you have momentum. The job could go away tomorrow. Good luck.
ReplyDeleteAnonymous,
DeleteWOW! $158k per year in passive income is insane! You must have a portfolio in the $5-6 million dollar range. I am constantly thinking about the possibility of losing my job. That is one of the reasons I save so much....make hay while the sun shines. I will continue to invest, but at a slower pace. I would like to build up my cash over the next couple of years. We'll see how it goes.
MDP
I think you work in the energy field and you have a large energy holding. That could be a double whammy. I all ways cringe you buy more energy stocks just because of the yield.
DeleteMy largest holding is NFLX, third largest holding is FB and my sixth largest holding is ATVI (yield of .93%) my portfolio is not all in dividend stocks. My largest dividend stock holding is CLX, LMT and GD. Don't own any REITS, MLPs or bonds. So my portfolio is pretty big. Just worried about going over $200K and getting the higher tax rate on dividends.
But you have to remember prices basically double every 10 years. If you are living off the dividends you really only have about 7 or 8 years in today's dollars. Good luck. Love your progress. Don't slow down now!!!!!!!!!!!
Hi MDP, that's a really impressive level of dividend income! My 2 cents: you can't sprint a marathon -- just keep going and make sure the pace is manageable. Personally, I don't want to rely on any social security income for retirement -- there is much evidence that SS will run out of money soon, unless something drastically change, such as significantly reduced payments. I think its best to just keep going on the path you set yourself. Just mind the pace. :-)
ReplyDeleteFerdi S,
DeleteThanks a lot for the input. I have a lot to consider. Another option I have thought about it to just liquidate the rest of my mutual fund holdings, keep that amount in cash and then just keep investing new money into stocks.
MDP
MDP,
ReplyDeletelong time reader of your blog and first comment here. I am from Europe and as i have about the same amount as you invested i have the same interrogations. Moreover the more it grows the more your savings as very few impact on the passive revenue. One day up or down may now represents several months of savings.
But as you i am always afraid to have a cut in my paycheck each month i keep savings. I feel like a rat race of savings for not having to rely on the governement or anyone else if things go bads.
So my motivation now is not ER but keeping my independence whatever could happen. So i save as much as i can. As you sometimes i forget to pay bills to save more and more.
I think the biggest mistake is selling your shares even if the market may drop by 30% next month. In the long term you better have to forget the word sell. Keep buying .
Take some holidays, build up a cash position, keep buying shares but never sell what you've accomplished.
Good luck and it's a pleasure to read your blog.
Eurodividend,
DeleteFantastic comment! I will most likely stay the course and just reduce my purchases for a while. Once I have a 10-15% cash, I might pick up the pace again.
MDP
MDP,
ReplyDeleteRome was not built in a day, nor is that account you have there. Its just fine to look around once in a while to look and marvel at what you have built. However, I think you're more likely to have 10 birds in your hand by the time it is done. Its safer to have too much than not enough.
-Gremlin
DG,
DeleteGreat point about Rome. I need to slow down the construction a bit. I will most likely reduce purchase, build cash 15-20% and then resume larger purchases. 10 birds sound great!!!
MDP
MDP,
ReplyDeletePretty damn impressive... in 2 years to have that more socked away is awesome. Great job and congrats. I think with the combo of all 3 accounts - YOU ARE GOING TO BE MORE THAN SET MAN!!!! Cherish this and keep your focus hat on for the goals, no stopping you.
-Lanny
Lanny,
DeleteThe "focus hat" is on with the light shining bright to the front! The march continues upward.
MDP