Financial Independence Progress Report for September 2015

09/30/2015
Emergency Fund ($72K) 100.0% 100.0%
College Fund (80K) 33.77% 33.94%
Passive Income Streams ($4000 pm) $178.58 pm (08/2014)% $439.96 pm (08/2015)
Retirement Fund ($900K) 54.66% 54.62%
Roof for our Family($1 mil) 00.00%
Medical Fund 00.00%
Life Insurance Done (term life insurance payments initiated)

Main Takeaways

Markets are continuing the roller-coaster ride…the DOW Jones index lost more than 200 points more than once this month. I did take advantage of this down market (another post on this coming up on how).
I expected a downturn and planned for it (here)…but, that did¬†not soften the blow much. At the end of August, my portfolio had taken a beating….so, how did September do?

  • September was a much better month for markets than August.
    • College fund stayed even
    • Retirement funds stayed even.
  • Passive income for September 2015 continued the winning trend vs last year.
    • I compute Passive Income per month as (total passive income in this year) / number of months completed this year.
    • Total passive income is a sum of dividends + capital gains distributions.
    • September Passive Income = (total passive income in this year) / 9 == $439.96 pm.
    • Doing it this way keeps the monthly passive income more realistic because I can instantly know which of my monthly expenses are covered by this amount. I keep a separate tracker for this which I will write about at a later date.
  • I did take advantage of the down markets and added to my investment in VDIGX and VTMFX. Both these investments dipped to their 52 month lows when the DOW Jones index dropped more than 200 points. These new investments will contribute towards dollar cost averaging my holdings. Yeah for that!
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VDIGX….an investment decision validated.

When I was travelling last couple weeks, I got time away from the day-to-day chores of family life. I kind of enjoyed this break….ssshhhh….don’t tell this to my wife ūüôā I used that time to read up on different articles related to my current investments. When the markets went down, I wanted to feel good about my investments!

One of my investments is in VDIGX (Vanguard Dividend Growth funds). I have talked about various dimensions of this fund in this blog.

  • My original rationale on picking this fund is documented here.¬†Don Kilbride, the manager of VDIGX, is a recognized name in the industry and has done a wonderful job with VDIGX.
  • VTSMX is Vanguard Total Stock Market fund.¬†I compared VDIGX vs VTSMX here. I wrote that both VDIGX and VTSMX have their rightful place in my portfolio.
  • I definitely see a recession coming and wrote about it here. As part of that, I did a¬†Risk Analysis of all my investments here. VDIGX had the second lowest Beta Coefficient of all my investments….only VTMFX (a tax managed balanced fund) did better. A low beta coefficient means that my investments will be less volatile than the market i.e. income¬†stability will be much better.

In addition to what I thought about, some other smart people have thoughts on VDIGX too. I read one such article from Morning Star while travelling and I really liked the content enough to post a link here.

This article argues that a fund may¬†not provide the greatest current yield (usually, this implies¬†less risk) but if the fund holds¬†quality holdings, it will provide a more stable income stream and potentially lead to more capital growth in the longer term. Read more directly from Morning Star link above…it is worth it.

PS: There is good marks for VHDYX (Vanguard High Dividend Yield) also…this makes me more happy because I have invested in this also. Wish me luck for continued good success in picking good investments.

Financial Independence Progress Report for August 2015

09/05/2015
Emergency Fund ($72K) 100.0% 100.0%
College Fund (80K) 35.00% 33.77%
Passive Income Streams ($4000 pm) $148.74 pm (07/2014)% $353.74 pm (07/2015)
Retirement Fund ($900K) 58.51% 54.66%
Roof for our Family($1 mil) 00.00%
Medical Fund 00.00%
Life Insurance Done (term life insurance payments initiated)

Main Takeaways

I came back after a two week travel on work related matters and every day of that trip was a emotional roller coaster. Markets up and markets down…sometimes, within the same day. I expected a downturn and planned for it (here)…but, that did¬†not soften the blow much. At the end of August, my portfolio has taken a beating….but so did a lot of people. So, what were my main takeaways this month?

  • August is a soft month for dividends…so, not much cushion to soften the blow from the down markets. September is a much better month for dividends…so, looking forward to next month.
    • College fund took a hit
    • Retirement funds took a bigger hit.
    • Last month’s zero gain is looking good now ūüôā
  • Passive income for August¬†2015 continued the winning trend vs last year.
    • I compute Passive Income per month as (total passive income in this year) / number of months completed this year.
    • Total passive income is a sum of dividends + capital gains distributions.
    • August¬†Passive Income = (total passive income in this year) / 8 == $53.74 pm.
    • Doing it this way keeps the monthly passive income more realistic because I can instantly know which of my monthly expenses are covered by this amount. I keep a separate tracker for this which I will write about at a later date.
  • I did take advantage of the down markets and added to my investment in VDIGX. My cost basis was close to $23 per stock before¬†the market hit a downturn…but I invested about $1500 at an average of $21.50 per stock. This new investment will contribute towards dollar cost averaging my holdings. Yeah for that!