Categories
Economics

Stock Market Week in Review – 10/7/22

This weekly market recap is brought to you by Sharesight, a portfolio tracking tool that I am happy to partner with. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. Click the link above to get a special offer only for Dividend Dollar readers!

Weekly Review

2022 Q4 is off to strong start! There was a decent rally on Monday and Tuesday as the market assumed the Fed would slow their rate hike approach soon. A pullback in Treasury yields from last Friday’s close helped push upside higher in the beginning of the week.

The 10-year T notes was at 3.79% last Friday and fell to 3.62% by Tuesday’s close. The two-year note fell 0.12%. At the same time the S&P, Dow, and Nasdaq all had gains of over 5.5%.

The assumption that the Fed would slow was helped by the lower-than-expected ISM Manufacturing and Construction spending and the lower than expected 25 basis point rate increase by the Reserve Bank of Australia.

All did not remain sunny unfortunately, the week ended with a sell off. Treasury yields moved up and the September Employment Report was a reality check for the idea that the Fed would be less aggressive sometime soon.

The employment report showed continued strength in the job market, extra fuel for an aggressive Fed. There were also some hawkish Fed talks this week; Atlanta Fed President Bostic said that the inflation fight is still in its early days and the Minneapolis Fed President Kashkari said that he is not comfortable pausing until there is evidence that inflation is cooling.

Global politics also caused some worries that were in play for the week. OPEC+ announced a production cut of 2 million barrels per day starting next month. This sent oil prices surging with WTI crude futures rising 17.3%. The surge in oil prices kept the energy sector’s gains intact this week. It outpaced the other sectors in the S&P by a margin of 13.9%. On the other hand, the real estate sector suffered the most with a 4.2% loss.

The 10-year yield ended the week at 3.88%, the two year rose to 4.3%. Despite heavily losses on Friday, the market was able to hold onto some gains. The S&P was us 1.5%, Dow 2.0%, and Nasdaq 0.7%.

The data release schedule has some events to keep eyes on. Pay attention to the FOMC minutes on Wednesday, the CPI reading on Thursday, and the retail data on Friday.

As I said last week, inflation has not waivered much, the job market is still healthy, and the average consumer is still doing fairly well. The data continues to show this; however, the data is delayed by a few weeks or a month depending on the report. Because of this delay and because the effects of a hike take time to materialize in those areas, it’s becoming more likely that the Fed stays aggressive with their rate hikes and may push the economy off the cliff before they’ve had time to realize that we’ve missed the window to ease. Be ready for much more losses in the long term, in the short term we could see another somewhat flat week next week, or red if the market continues to be discouraged by the data that supports an aggressive Fed.

Though this week wasn’t too down, I took advantage of the discounts with some buys in Activision ($ATVI), Intel ($INTC), and a few others you can read about in the portfolio update here. Use that update to help you put together a shopping list of some solid dividend stocks to pick up for the long term.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.

Regards,

Dividend Dollars

Categories
Dividends General

Lessons From My First Year of Dividend Investing

One year of dividend investing! Can you believe it? I am happy to have partnered Sharesight for most of this year. Their platform makes tracking trading and dividend history, understanding your performance, and saving time a breeze. Click the link above to get a special offer only for Dividend Dollar readers!

One year ago, on 9/24/22, I started this blog and started dividend investing. Back then, some of the stocks I first bought were $SLG, $T, and $GNL. Of those three I only still hold $T. Over the past year, I’ve worked on building my own investing philosophy and putting together a dividend portfolio that will help me reach financial freedom (you can read about that strategy here). My strategy didn’t come to me overnight, instead it was the result of a long process and still continues to change.

What I really like about dividend investing is that you are never done learning. There is always a new situation that could generate new results in your portfolio. There’s always new positions that you can pick up, or let go of. As the economy changes, so do your thoughts on certain holdings and approaches to investing. It is never a one a done. After my first year of dividend investing, here are the most important investment lessons I’ve learned:

#1 I Love Receiving Money in my Account

Every week, I receive at least one dividend and I get to see my account naturally grow bigger. Receiving these payouts is a great feeling. Week after week, these payouts start to compound and have not stopped growing.

In my first year of investing, I raked in almost $285 in dividends. I expect to get close to $700 in my next year. Today, my portfolio is roughly a $10,000 portfolio that has an annual income of $504. This is almost a 5% yield. It is a modest amount so far, but it will greatly increase over the years to come.

#2 It’s Easier to Follow Dividend Stocks

When you buy a dividend stock, you usually buy a sound & healthy company. Therefore, following quarterly results is usually more than enough to make sure one stock doesn’t slip through the cracks and start rotting. From my experience with different types of investing, different strategies usually require much more monitoring.

#3 Don’t Chase High Yield

Everyone always says don’t chase yield. But I believe every dividend investor will make this mistake at least once, even if they are familiar with the saying. I made this mistake myself with $UWMC. It had nearly a 10% yield when I started buying into it and I made a substantial position. I lost more than 40% of that position as I continued to buy into its dips and hold on. I eventually got out, but this sucker still hasn’t turned around.

The lesson to learn from this is that high yield investments always carry limited growth potential and/or higher risk. There is a reason why you get a higher yield and it’s not just for shits n giggles.!

#4 Yield Doesn’t Matter if you Select the right pick

To be honest, I still haven’t fully committed to this lesson, but I know its right! At first, I used to select only companies paying over 2% in yield. It was my way of identifying “good dividend stocks” amongst other factors. I used to ignore lower yielding companies because I wanted to start having larger dividend payouts sooner.

I have since made exceptions with holdings like $MSFT, $EA, and $SPY. There’s lots of gems out there with low yields. Take AAPL for example, low yield but the price has appreciated like crazy.

The dividend yield is not the most important metric when you select a dividend stock. Instead, I look for companies with a solid business and the ability to increase its payout consecutively for many years to come.

#5 Patience is the Most Important Investor’s Asset

In my first year so far, I’ve bought several stocks that didn’t go the right way immediately. Starbucks ($SBUX), 3M ($MMM), Intel ($INTC) are great examples of this. In fact, a majority of my holdings are in the red right now. But some, like Starbucks, stagnated before turning green.

Sometimes you get lucky and your stock keeps going up the minute you buy it. But most of the time, the result of your trade is not instantaneous. On the other hand, patient investors will receive their rewards sooner or later. Especially with starting my portfolio on the cusp of a bear market, most things will not turnaround for some time.

I am excited to finish out this year with my current portfolio, as I believe I have a lot of great holdings. I also know I will have much more to learn in the coming years. It will be interesting to see how my portfolio changes and reacts as this bear market continues. Everyone says that wealth is made in recessions, so I am excited to continue putting my money to work and see what it can grow into.

Tell me, what have you learned from dividend investing in the current bearish market?

Categories
Net Worth Personal Finance

Net Worth – March 2022

Welcome back to Dividend Dollars! This monthly update is where we will see the fruits of our labor. All the smart spending, saving, regular investing, and dividends earned will all add up over time and make this number steadily increase. At least that’s the goal!

You may wonder “why not just watch and evaluate the stock portfolio”? We do review and evaluate the portfolio regularly on this website (read our most recent portfolio update here). However, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because my money generates passive income that I can live off of.

In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt, interest owed, or poor spending habits? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money, invest it in your portfolio, you’ll build passive income, and you’ll prioritize paying down costly debts.

March 2022 Net Worth: $151,609.58

We increased our net worth by 13.3% from last month with a gain of just over $17k. As you will see further in the post, much of that increase is thanks to the appreciation of my house in this crazy market. We increased the size of our dividend portfolio by 21% this month with some fun adds to positions. The portfolio is up 2.74% for the month. As the dividend portfolio grows, ages, and compounds that is where we will see more significant net worth gain in the future.

Now that we know where we’re at for the month, let’s dive into how Net Worth is calculated. It really is a simple formula; it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially in this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.

Below is my calculation broken out.

Assets: $472,136.28

This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets. Total assets grew by 3.6% this month. Below are all of the individual assets that make up that total.

  • Home: $448,500 – 3.9% Increase since last month
  • Cash: $6,947.66 – 29% Increase since last month
  • Dividend Portfolio: $7,425.73 – 21.6% Increase since last month
  • Acorns Portfolio: $760.58 – 19.5% Increase since last month

This is my favorite way of automating investments into a diversified, low expense portfolio. Acorns also provides options to hold this portfolio in a ROTH IRA. I hold two portfolios, a standard aggressive one and an ESG one held in a ROTH account. If you are interested in using Acorns to automate some of your investments feel free to click the link above for a bonus $5 investment.

Abra is the app I use to hold my crypto currencies in interest bearing accounts. Depending on the coin, they have 2-4% interest rates paid out weekly based on how much you hold. If you are interested in using Abra, click the link above and use my code RCL33PVGS for free $25 in CPRX. https://www.abra.com/ref/?deep_link_sub1=RCL33PVGS

  • Retirement Accounts: $465.12 – 84.8% Decrease since last month
  • Other Assets: $7,763 – 8% Decrease since last month

Liabilities: -$320,526.70

This is the total value of all of my liabilities which consist of one large debt and a few other smaller debts. Total liabilities decreased by 0.4% this month. Below are all of the individual liabilities that make up that total.

  • Mortgage: -$317,451.62 – 0.21% Decrease since last month
  • Credit Card: -$0 – 100% Decrease since last month
  • Garage Door Loan: $3,075.08 – 8.5% Decrease since last month

The mortgage is clearly my largest liability. I like to practice good budgeting in order to make sure I have enough cash to pay down higher rated, shorter term debts. Therefore, I like to keep my credit card balance low and focus on paying off my garage door loan while making regular mortgage payments.

It’s Simple Math

Now take the total assets and subtract the total liabilities and that is how you get your net worth. $472,136.28 for my assets minus $320,526.70 for my liabilities equals a net worth of $151609.58 for the start of March 2022. Overall, I love seeing the net worth increase a little and I hope I am able to continue doing that month over month.

This was a great month considering the market movement. The appreciation of the housing market really keeps my net worth looking good. My goal for this year is that we see more substantial gains and growth in my investments so that they start to have a greater weight on the net worth. It takes a lot of time and we are only getting started!

Categories
Net Worth Personal Finance

Net Worth – January 2022

Welcome back to Dividend Dollars and to the New Year! This monthly update is where we will see the fruits of our labor. All the smart spending, saving, regular investing, and dividends earned will all add up over time and make this number steadily increase. At least that’s the goal!

You may wonder “why not just watch and evaluate the stock portfolio”? We do review and evaluate the portfolio regularly on this website (read our most recent portfolio update here). However, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because my money generates passive income that I can live off of.

In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt, interest owed, or poor spending habits? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money, invest it in your portfolio, you’ll build passive income, and you’ll prioritize paying down costly debts.

December 2021 Net Worth: $128,355.17

Woohoo! We hit the $125k mark! We increased our net worth by 8.18% from last month with a gain of just under $10k. As you will see further in the post, much of that increase is thanks to the appreciation of my house in this crazy market. We increased the size of our dividend portfolio by 43.6% this month with some fun adds to positions. However, that capital came straight from my cash balance and is up 2% for the month, so that is not a significant impact to my net worth. As the dividend portfolio grows, ages, and compounds that is where we will see the real net worth gain in the future.

Now that we know where we’re at for the month, let’s dive into how Net Worth is calculated. It really is a simple formula; it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially in this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.

Below is my calculation broken out.

Assets: $451,047.67

This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets. Total assets grew by 2.03% this month. Below are all of the individual assets that make up that total.

Home: $428,400 – 2.12% Increase on last month

In February of 2021, I purchased my first house at the age of 23. The house had appraised for $350,000 but through a lucky situation and some very clever negotiating help from my mom (thanks mom), I was able to buy the house with a sales price of $335,000. Zillow currently, estimates the house is worth $428,400 which is where I pulled my value from. That is a 22.4% appreciation on the appraised value in less than a year! Even if I were to not use the Zillow estimate (which is fairly accurate) and instead used the appraisal value from time of sale, my net worth would be $49,955.15.

Cash: $5,311.07 – 19.94% decrease on last month

This value is the sum of my savings and checking accounts. I use this cash for paying bills and making purchases. My goal with the cash value is to slowly but surely increase it to an amount that can cover all of my living expenses for 4-6 months so that if a disaster (say loss of a job or a medical issue) were to ever happen I would have ample money to pay for expenses while trying to get things back to normal. We did not do well with growing cash this month, but due to the holidays and traveling that was to be expected

Dividend Portfolio: $3,637.03 – 43.64% increase on last month

The first account is my Robinhood account which is where I am housing the dividend portfolio that is tracked and experimented with throughout this blog. Currently the dividend account up 4.37% since starting Dividend Dollars.

I know that the trading community hates on Robinhood for their controversial part in the WallStreetBets situation, but I like to use it because it is the simplest and easiest platform to access for a straightforward dividend account. We won’t be buying and selling stocks often and Robinhood’s interface makes it super easy to track your dividends and your portfolio’s capital gains. If you do not yet have a broker account set up, I recommend starting with Robinhood. Feel free to use my referral link and we will both get a free stock.

My goal is to invest over $100 a week into the account and have been blowing that goal out of the water most weeks. This last week we put in $145 on some good buys! Read about those purchases here.

Acorns Portfolio: $547.73 – 39.44% increase on last month

The second account is my Acorns account. It is currently up 3.09% since starting Dividend Dollars. I have used Acorns for years as a way to automate investing and it is a cheap and reliable way to do so. My Acorns account used to be pretty substantial and had nearly an 18% gain right before I withdrew the funds for study abroad expenses a few years ago in college. I have since reopened it and am auto-investing every week.

It costs $3 a month (it is free to students), you can set up recurring investments and invest your spare change through auto-roundups in order to easily take advantage of smart dollar cost averaging on their selection of diversified portfolios. Acorns is a great way to start investing on top of using your broker for your personal portfolio. Again, feel free to use my referral link which gives us both a free $5 dollar investment into an Acorns portfolio of your choosing. I deposit $25 a week and have purchase round ups invested into their aggressive portfolio.

Abra Crypto Portfolio: $224.23 – 8.56% increase on last month

The third account is my Abra Crypto account. I started this account last month and have grown it by about 8% this month through my deposits and interest.

To be honest, I am a little intimidated by crypto currencies due to a mistake I made with a previous crypto account that cost me about half of a $10k gain. It was such a dumb error on my part! After that I took a step back from crypto but am interested in getting back into it. Abra seemed to be one of the most straight forward crypto apps and I really liked their interest-bearing accounts.

Using their platform, I buy and hold crypto currencies in an interest-bearing account and earn anywhere from 3-9% on interest depending on the currency. This interest is paid out weekly. Due to a recent promotion that I was able to catch, the interest on my account is also temporarily boosted by 5%!

Abra seemed to me like an easy way to take advantage of compounding interest and gains on the crypto market! I am depositing $25 per week into the account and am excited to watch how it performs. If you would like to use the app, feel free to use my referral link and code RCL33PVGS which gives us both $25 in CPRX (loyalty token rewarded for being active with the app) after you fund the account with at least $15 and hold it for 30 days.

Retirement Accounts: $3,291.44 – 3.56% increase on last month

My retirement account is provided by my previous employer. I had contributions set up to both a Roth IRA and a traditional 401(k). I focused on selecting low-cost funds and ETFs for these accounts in order to most efficiently appreciate my contributions. I recently started a new job and am not eligible for their retirement plan till 60 days on employment, therefore this number will stay stagnant for the next few months except for market movements.

Other Assets: $8,055 – 5.22% decrease on last month

Under the other assets category, I will sum up the value of all items I own that could be readily sold. My vehicle, which is paid off, is my only other asset with value that hasn’t already been listed and it is slowly depreciating in value.

Liabilities: -$322,692.52

This is the total value of all of my liabilities which consist of one large debt and a few other smaller debts. Total liabilities decreased by 0.22% this month. Below are all of the individual liabilities that make up that total.

Mortgage: -$318,780.23 – 0.21% decrease on last month

I generally follow financial responsibility guidelines set by people like Dave Ramsey. These guidelines include paying off all debt, having an emergency fund, investing a percent of household income in retirement, saving for large future expenses, paying off your home early, etc. I stick to most of these rules, all except paying off the home early.

With mortgage rates as low as they are, I believe it is more beneficial to invest extra funds rather than put those extra funds towards paying off the house early. If I can earn a profit on my investments greater than my 2.65% mortgage rate, than that money is better off being invested elsewhere.

This isn’t to say that I won’t ever put any extra funds towards my mortgage, I do plan on paying extra when situations like job raises and bonuses occur. I also round up my mortgage bill to the nearest hundred dollars and have those extra few bucks paying off the principal owed. However, for the most part I plan on making my regular mortgage payment.

Credit Card: -$270.84 – 662% increase on last month

This is my Chase Freedom Flex card which I pay off in its entirety every month! However, because of holiday and travel expenses, some of those charges still show as pending on my card and can’t be paid off just yet. Hate to see it! But $270 is not a bad balance to carry by any means.

Garage Door Loan: $3,641.45 – 7.01% decrease on last month

The last liability I have is a new one from last month. My garage door started malfunctioning last month and its panels were badly cracked. I had the door, opener, tracks, the whole system replaced and upgrade. The garage door company offered me 0% interest financing if it is paid of in a year. Because of the 0% interest, I decided to treat this expense as an upgrade to the house and selected the highest quality door and opener they could offer! I had my first month’s payment and will have this sucker paid off in a year.

It’s Simple Math

Now take the total assets and subtract the total liabilities and that is how you get your net worth. $451,047.67 for my assets minus $322,692.52 for my liabilities equals a net worth of $128,355.17 for the start of January 2022. Overall, I love seeing the net worth increase a little and I hope I am able to continue doing that month over month.

This was a great month and year. The net worth went up by over $20k since starting Dividend Dollars back in October. The appreciation of the housing market really keeps my net worth looking good, I hope that this year we see more substantial gains from the dividend portfolio as it begins to age and compound. It takes a lot of time and we are only getting started!

Categories
Net Worth Personal Finance

Net Worth – December 2021

Welcome back to Dividend Dollars and our third Net Worth update so far! This monthly update is where we will see the fruits of our labor. All the smart spending, saving, regular investing, and dividends earned will all add up over time and make this number steadily increase. At least that’s the goal!

You may wonder “why not just watch and evaluate the stock portfolio”? We do review and evaluate the portfolio regularly on this website (read our most recent portfolio update here). However, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because my money is starting to work for me.

In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt, interest owed, or poor spending habits? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money, invest it in your portfolio, you’ll build passive income, and you’ll prioritize paying down costly debts.

December 2021 Net Worth: $118,649.67

We are creeping up on that $125k mark! That is awesome! We increased our net worth by 6.64% from last month with a gain of a little under $7k. As you will see further in the post, much of that increase is thanks to the appreciation of my house in this crazy market. We did more than double the size of our investment accounts this month with some fun adds to positions. However, that capital came straight from my cash balance, so it really didn’t contribute to the new worth gain. As the dividend portfolio grows, ages, and compounds that is where we will see the real net worth gain in the future.

Now that we know where we’re at for the month, let’s dive into how Net Worth is calculated. It really is a simple formula; it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially in this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.

Below is my calculation broken out.

Assets: $442,043.57

This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets. Total assets grew by 2.47% this month. Below are all of the individual assets that make up that total.

Home: $419,500 – 1.80% Increase on last month

In February of 2021, I purchased my first house at the age of 23. The house had appraised for $350,000 but through a lucky situation and some very clever negotiating help from my mom (thanks mom), I was able to buy the house with a sales price of $335,000. Zillow currently, estimates the house is worth $419,500 which is where I pulled my value from. That is a 19.86% appreciation on the appraised value in less than 10 months! Even if I were to not use the Zillow estimate (which is fairly accurate) and instead used the appraisal value from time of sale, my net worth would be $49,149.67.

Cash: $6,634.19 – 26.99% increase on last month

This value is the sum of my savings and checking accounts. I use this cash for paying bills and making purchases. My goal with the cash value is to slowly but surely increase it to an amount that can cover all of my living expenses for 4-6 months so that if a disaster (say loss of a job or a medical issue) were to ever happen I would have ample money to pay for expenses while trying to get things back to normal. This month I received a tax refund from an adjustment I submitted to the IRS months ago. That was a nice surprise to receive!

Dividend Portfolio: $3,637.03 – 157.99% increase on last month

The first account is my Robinhood account which is where I am housing the dividend portfolio that is tracked and experimented with throughout this blog. Currently the dividend account is down 0.06% since starting Dividend Dollars. We were up 3.6% last week, but a new Covid strain called Omicron decided it had a different plan for the market!

I know that the trading community hates on Robinhood for their controversial part in the WallStreetBets situation, but I like to use it because it is the simplest and easiest platform to access for a straightforward dividend account. We won’t be buying and selling stocks that often and Robinhood’s interface makes it super easy to track your dividends and your portfolio’s capital gains. If you do not yet have a broker account set up, I recommend starting with Robinhood. Feel free to use my referral link and we will both get a free stock.

My goal is to invest over $100 a week into the account and have been blowing that goal out of the water most weeks. This last week we put in over $400 on some good buys! Read about those purchases here.

Acorns Portfolio: $392.79 – 56.77% increase on last month

The second account is my Acorns account. It is currently down 1.98% since starting Dividend Dollars. I have used Acorns for years as a way to automate investing and it is a cheap and reliable way to do so. My Acorns account used to be pretty substantial and had nearly an 18% gain right before I withdrew the funds for study abroad expenses. I have recently reopened it and am auto-investing every week.

It costs $3 a month (it is free to students), you can set up recurring investments and invest your spare change through auto-roundups in order to easily take advantage of smart dollar cost averaging on their selection of diversified portfolios. Acorns is a great way to start investing on top of using your broker for your personal portfolio. Again, feel free to use my referral link which gives us both a free $5 dollar investment into an Acorns portfolio of your choosing. I deposit $25 a week and have purchase round ups invested into their aggressive portfolio.

Abra Crypto Portfolio: $206.54

The third account is my Abra Crypto account. I just started this account this month so I have no gains to report. However, on the next net worth update, we will be able to look back on this article and use it as our starting baseline for measuring our success with crypto.

To be honest, I am a little intimidated by crypto currencies due to a mistake I made with a previous crypto account that cost me about half of a $10k gain. It was such a dumb error on my part! After that I took a step back from crypto but am interested in getting back into it. Abra seemed to be one of the most straight forward crypto apps and I really liked their interest-bearing accounts.

Using their platform, I buy and hold crypto currencies in an interest-bearing account and earn anywhere from 3-9% on interest depending on the currency. This interest is paid out weekly. Due to a recent promotion that I was able to catch, the interest on my account is also temporarily boosted by 5%!

Abra seemed to me like an easy way to take advantage of compounding interest and gains on the crypto market! I am depositing $25 per week into the account and am excited to watch how it performs. If you would like to use the app, feel free to use my referral link and code RCL33PVGS which gives us both $25 in CPRX (loyalty token rewarded for being active with the app) after you fund the account with at least $15 and hold it for 30 days.

Retirement Accounts: $3,178.35 – 6.51% increase on last month

My retirement account is provided by my previous employer. I had contributions set up to both a Roth IRA and a traditional 401(k). I focused on selecting low-cost funds and ETFs for these accounts in order to most efficiently appreciate my contributions. I recently started a new job and am not eligible for their retirement plan till 60 days on employment, therefore this number will stay stagnant for the next few months except for market movements.

Other Assets: $8,499 – 9.84% decrease on last month

Under the other assets category, I will sum up the value of all items I own that could be readily sold. My vehicle, which is paid off, is my only other asset with value that hasn’t already been listed and it is slowly depreciating in value.

Liabilities: -$323,393.90

This is the total value of all of my liabilities which consist of one large debt and a few other smaller debts. Total liabilities grew by 1.02% (bad thing!) this month. Below are all of the individual liabilities that make up that total.

Mortgage: -$319,442.36 – 0.21% decrease on last month

I generally follow financial responsibility guidelines set by people like Dave Ramsey. These guidelines include paying off all debt, having an emergency fund, investing a percent of household income in retirement, saving for large future expenses, paying off your home early, etc. I stick to most of these rules, all except paying off the home early.

With mortgage rates as low as they are, I believe it is more beneficial to invest extra funds rather than put those extra funds towards paying off the house early. If I can earn a profit on my investments greater than my 2.65% mortgage rate, than that money is better off being invested elsewhere.

This isn’t to say that I won’t ever put any extra funds towards my mortgage, I do plan on paying extra when situations like job raises and bonuses occur. I also round up my mortgage bill to the nearest hundred dollars and have those extra few bucks paying off the principal owed. However, for the most part I plan on making my regular mortgage payment.

Credit Card: -$35.54 – 16.14% increase on last month

This is my Chase Freedom Flex card which I pay off in its entirety every month! I do this to avoid paying interest. I use this card for everything in order to take advantage of it’s cash back rewards.

Garage Door Loan: -$3,916

The last liability I have is a new one as of this month. My garage door started malfunctioning this month and its panels were badly cracked. I had the door, opener, tracks, the whole system replaced and upgraded this month. They offered me 0% interest financing if it is paid of in a year. Because of the 0% interest, I decided to treat this expense as an upgrade to the house and selected the highest quality door and opener they could offer!

It’s Simple Math

Now take the total assets and subtract the total liabilities and that is how you get your net worth. $442,043.57 for my assets minus $323,393.90 for my liabilities equals a net worth of $118,649.67 for the start of December 2021. Overall, I love seeing the net worth increase a little and I hope I am able to continue doing that month over month.

This month was great, the house appreciated, and we made some great purchases that will pay us dividends for the long term, all of which will continue to add to my net worth in the long run.

Categories
Net Worth Personal Finance

Net Worth – Nov 2021

Welcome back to Dividend Dollars and our second Net Worth update so far! This monthly update is where we will see the fruits of our labor. All the smart spending, saving, regular investing, and dividends earned will all add up over time and make this number steadily increase. At least that’s the goal!

You may wonder “why not just watch and evaluate the portfolio”? We do review and evaluate the portfolio regularly on this website, read our most recent portfolio update here. However, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because my money is starting to work for me.

In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt, interest owed, or poor spending habits? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money, invest it in your portfolio, you’ll build passive income, and you’ll prioritize paying down costly debts.

November 2021 Net Worth: $106,675.50 – $111,260.16

We passed $110k! That is awesome! We increased our net worth by 4.2% from last month, that’s just a little under a $5k increase. As you will see further in the post, much of that increase is thanks to the appreciation of my house in this crazy market. We did double the size of our investment accounts this month with some fun adds to positions. However, that capital came straight from my cash balance so it really didn’t contribute to the new worth gain. As the dividend portfolio grows, ages, and compounds that is where we will see the real net worth gain in the future.

Now that we know where we’re at for the month, let’s dive into how Net Worth is calculated. It really is a simple formula, it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially in this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.

Below is my calculation broken out.

Assets: $431,393.80

This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets. Total assets grew by 0.9% this month.

Home: $412,100

The house increased in value by just under 1% this month!

In February of 2021, I purchased my first house at the age of 23. The house had appraised for $350,000 but through a lucky situation and some very clever negotiating help from my mom (thanks mom), I was able to buy the house with a sales price of $335,000. Zillow currently, estimates the house is worth $412,100 which is where I pulled my value from. That is a 17.7% appreciation on the appraised value in less than 9 months! Even if I were to not use the Zillow estimate (which is fairly accurate) and instead used the appraisal value from time of sale, my net worth would be $49,160.16.

Cash: $5,224.16

This value is the sum of my savings and checking accounts. I use this cash for paying bills and making purchases. My goal with the cash value is to slowly but surely increase it to an amount that can cover all of my living expenses for 4-6 months so that if a disaster (say loss of a job or a medical issue) were to ever happen I would have ample money to pay for expenses while trying to get things back to normal.

In the last two weeks, however, instead of growing this sum we dipped into these funds a little bit in order to add a bit more aggressively to the dividend portfolio.

Taxable Investment Accounts: $1,658.61

This value is the sum of two different investment accounts. We doubled the size of our investment account this month, this is where the decrease in my cash accounts came from! That’s a great start to this portfolio. As the portfolio grows it won’t be easy to double it every month, but we will continue to regularly invest per the plan!

The first account is my Robinhood account which is where I am housing the dividend portfolio that is tracked and experimented with throughout this blog. Currently the dividend account is up 0.58% since starting Dividend Dollars in September of this year.

I know that the trading community hates on Robinhood for their controversial part in the WallStreetBets situation, but I like to use it because it is the simplest and easiest platform to access for a straightforward dividend account. We won’t be buying and selling stocks that often and Robinhood’s interface makes it super easy to track your dividends and your portfolio’s capital gains. If you do not yet have a broker account set up, I recommend starting with Robinhood. Feel free to use my referral link and we will both get a free stock.

The second account is my Acorns account. It is currently up 2.57% since starting Dividend Dollars back in September of this year. I have used Acorns for years as a way to automate investing and it is a cheap and reliable way to do so. My Acorns account used to be pretty substantial and had nearly an 18% gain right before I withdrew the funds for study abroad expenses. I have recently reopened it and am auto-investing every week.

It costs $3 a month (it is free to students), you can set up recurring investments and invest your spare change through auto-roundups in order to easily take advantage of smart dollar cost averaging on their selection of diversified portfolios. Acorns is a great way to start investing on top of using your broker for your personal portfolio. Again, feel free to use my referral link which gives us both a free $5 dollar investment into an Acorns portfolio of your choosing.

I deposit $25 a week into each account to use for investing. For the dividend account, as detailed in the portfolio update last week, I deposited a good chunk of cash into the account due to some great buys being available on the market last week. Read more about the purchases using the link above.

Retirement Accounts: $2,984.03 (+21.68%)

My retirement account is provided by my employer. I have contributions set up to both a Roth IRA and a traditional 401(k). I focused on selecting low cost funds and ETFs for these accounts in order to most efficiently appreciate my contributions.

Other Assets: $9,427

Under the other assets category, I will sum up the value of all items I own that could be readily sold. My vehicle, which is paid off, is my only other asset with value that hasn’t already been listed and it is slowly depreciating in value.

Liabilities: -$320,133.64

My liabilities consist of one large debt, which is my home mortgage.

Mortgage: -$320,133.64 @ 2.65%

I generally follow financial responsibility guidelines set by people like Dave Ramsey. These guidelines include paying off all debt, having an emergency fund, investing a percent of household income in retirement, saving for large future expenses, paying off your home early, etc. I stick to most of these rules, all except paying off the home early.

With mortgage rates as low as they are, I believe it is more beneficial to invest extra funds rather than put those extra funds towards paying off the house early. If I can earn a profit greater than 2.65% on my investments, then that money is worth more if it is invested rather than putting it towards the house in order to pay less interest on my mortgage.

This isn’t to say that I won’t ever put any extra funds towards my mortgage, I do plan on paying extra when situations like job raises and bonuses occur. I also round up my mortgage bill to the nearest hundred dollars and have those extra few bucks paying off the principal owed. However, for the most part I plan on making my regular mortgage payment.

It’s Simple Math

Now that we have broken out the assets and liabilities, take their totals and subtract them and that is how you get your net worth. $111k is where we lie for the start of November 2021. Overall, I love seeing the net worth increase a little and I hope I am able to continue doing that month over month.

This month was great, the house appreciated and we made some great purchases that will pay us dividends for the long term, all of which will continue to add to my net worth and build passive income in the long run.

Categories
Net Worth Welcome

Net Worth – Oct 2021

As the second post of the Dividend Dollars blog, I think it is a good idea to establish a baseline of where we are starting and what better way to evaluate how close one is to financial success than determining one’s net worth?

You may wonder “why not just watch and evaluate the portfolio”? We will be reviewing and evaluating the portofio regularly on this website, however, the answer to the question lies in our website’s tagline: “Finding Reliable Financial Freedom”. Having financial freedom means different things to different folks, but for me it means being able to live the lifestyle that I want to live without needing to worry about money because your money is working for you.

In order to have your money work for you, you need to do more than just invest it. You need to be responsible with it. What good is a stock portfolio that provides you with a regular cash flow when that cash flow is eaten up by bad debt and interest owed? Calculating your net worth is a great way of checking in on that difference between your assets and liabilities in order to understand how responsible you are being with your finances. The more responsible you are, the easier it will be to reach financial freedom because you’ll be reinvesting dividends, you’ll continue to save money and invest it in your portfolio, and you’ll prioritize paying down costly debts.

Photo by olia danilevich on Pexels.com

October 2021 Net Worth: $106,675.50

We are just over $100k! Coming out of college and the pandemic, I’ve truly been employed for only a little over a year. Within that year I made a pretty aggressive investment and purchased a house which had caused me to expect my liabilities to eat up my assets more than it did. This number has pleasantly surprised me and I am excited to put efforts towards growing it while also documenting those efforts on Dividend Dollars.

Now that we have a baseline set, we are ready to experiment with developing a portfolio and chasing financial freedom!

Let’s dive into how Net Worth is calculated. It really is a simple formula, it is all of one’s assets less all liabilities. The answer to that formula gives us a solid understanding of where we stand financially at this moment. Tracking your net worth regularly also helps you know if you are trending in the right direction. It does not, however, give any information into how you got to that number, but we will explore that pursuit in other articles throughout this website.

Below is my calculation broken out.

Assets: $427,437.78

This is the total value of all of my assets which includes my home, investment accounts, and a few other various assets.

Home: $408,600

In February of 2021, I purchased my first house at the age of 23. The house had appraised for $350,000 but through a lucky situation and some very clever negotiating help from my mom (thanks mom), I was able to buy the house with a sales price of $335,000. Zillow currently, estimates the house is worth $408,600 which is where I pulled my value from. That is a 16.7% appreciation in less than 8 months! Even if I were to not use the Zillow estimate (which is fairly accurate) and instead used the appraisal value from time of sale, my net worth would be $48,075.50

Cash: $5,707.63

This value is the sum of my savings and checking accounts. I use this cash for paying bills and making purchases. My goal with the cash value is to slowly but surely increase it to an amount that can cover all of my living expenses for 4-6 months so that if a disaster (say loss of a job or a medical issue) were to ever happen I would have ample money to pay for expenses while trying to get things back to normal.

Taxable Investment Accounts: $829.2 (+0.46%)

This value is the sum of two different investment accounts. It has a modest gain of 0.46%. These accounts are fairly new for the purposes of beginning Dividend Dollars.

The first account is my Robinhood account which is where I am housing the dividend portfolio that will be tracked and experimented with throughout this blog. I know that the trading community hates on Robinhood for their controversial part in the WallStreetBets situation, but I like to use it because it is the best and simplest platform for dividend trading. We won’t be buying and selling stocks that often and Robinhood’s interface makes it super easy to track your dividends and your portfolio’s capital gains. If you do not yet have a broker account set up, I recommend starting with Robinhood. Feel free to use my referral link and we will both get a free stock.

The second account is my Acorns account. I have used Acorns for years as a way to automate investing and it is a cheap and reliable way to do so. My Acorns account used to be pretty substantial and had nearly an 18% gain right before I withdrew the funds for study abroad expenses. I have recently reopened it and am auto-investing every week. It costs $3 a month (it is free to students), you can set up recurring investments and invest your spare change through auto-roundups in order to easily take advantage of smart dollar cost averaging on their selection of diversified portfolios. Acorns is a great way to start investing on top of using your broker for your personal portfolio. Again, feel free to use my referral link which gives us both a free $5 dollar investment into an Acorns portfolio of your choosing.

Retirement Accounts: $2,615.95 (+20.09%)

My retirement account is provided by my employer. I have contributions set up to both a Roth IRA and a traditional 401(k). I focused on selecting low cost funds and ETFs for these accounts in order to most efficiently appreciate my contributions.

Other Assets: $9,685

Under the other assets category, I will sum up the value of all items I own that could be readily sold. My vehicle, which is paid off, is my only other asset with value that hasn’t already been listed.

Liabilities: -$320,762.28

My liabilities consist of one large debt, which is my home mortgage.

Mortgage: -$320,762.28 @ 2.65%

I generally follow financial responsibility guidelines set by people like Dave Ramsey. These guidelines include paying off all debt, having an emergency fund, investing a percent of household income in retirement, saving for large future expenses, paying off your home early, etc. I stick to most of these rules, all except paying off the home early.

With mortgage rates as low as they are, I believe it is more beneficial to invest extra funds rather than put those extra funds towards paying off the house early. If I can earn a profit greater than 2.65% on my investments, then that money is worth more if it is invested rather than putting it towards the house in order to pay less interest on my mortgage.

This isn’t to say that I won’t ever put any extra funds towards my mortgage, I do plan on paying extra when situations like job raises and bonuses occur. However, for the most part I plan on making my regular mortgage payment.

Now take the total assets and subtract the total liabilities and that is how you get your net worth. $106k is where we lie for October 2021. This will give us a good baseline number in order to track the progress of our finances and our investments. I’m excited to move forward with investing ideas and to regularly revisit the net worth calculation to see the results!