Financial Independence Progress Report for March 2016

March is the first quarterly dividends month i.e. month of good news. And some more good news on the¬†job front….I got one ūüôā After a month of hard fought interviews, I have started on a new job. Learnt a lot of lessons in the period of unemployment…will put these lessons to work this year. But, March has been a super positive month for me!!

Lets look at the numbers now.

Emergency Fund ($72K) 100.0% 100.0%
College Fund (80K) 37.11% 39.33%
Passive Income Streams ($4000 pm) $744.05 pm (03/2015)% $1016.87 pm (3/2016)
Retirement Fund ($900K) 57.76% 57.96%
Roof for our Family($750K) 00.00%
Medical Fund 00.00%
Life Insurance Done (term life insurance payments initiated)

Main Takeaways this month

  • Unemployment Induced portfolio changes
    • Unemployment lead to almost two months of no income ūüė¶ But, some good came from this. I had almost $40K invested in one company stock…part of an Employee Stock Purchase Plan from one of the companies I had worked in the past.
    • I wanted to de-risk this ¬†investment by selling it and moving it to a fund of many different stocks but could not for fear of capital gains and resulting tax inefficiency.
    • In the two months of no income, I sold half¬†of the $40K bundle. This keeps the total income the same. I distributed the money into a couple different mutual funds and hence reduced the risk of $40K riding on one company’s stock.
  • New investment vehicle
    • I took part of the¬†de-risking money from my ESPP sale and put some unused money in my checking account into¬†Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares (VWITX).
    • My design of passive income streams is based on 6¬†key design principles. The second of the five is:¬†For each risk bucket, have a minimum of two investment vehicles….get some competition going you know ūüėČ
    • For the MUNI bucket, I already have an investment in VCADX, the California only muni fund. I wanted to add some competition and also diversify the MUNI bucket by adding a National MUNI fund (no federal tax). I would still have to pay CA state tax for VWITX, but the CA munis ¬†have gotten so expensive that it is crazy to invest in it now. So, I am diversifying with a National MUNI fund.
  • Dollar Cost Averaging
    • Did not have cash to dollar cost average (DCA) my funds this month…but I did boost my investments to dollar cost average VTMGX (anguard Developed Markets Index Fund….my non-US¬†exposure mutual fund). I want to have some of my passive income streams to not come from US companies. VTMGX diversifies my passive income streams to include companies from Greater Europe, Greater Asia and Canada.
  • Passive Income Stream
    • Passive income for March¬†2016 ($1016.87) continued the winning trend vs March 2015¬†($744.05).
    • 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.
      • March¬†Passive Income = (total passive income in this year) / 12 == $156.62
      • 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.
    • My intermediate goal is to get $1000 pm in passive income first. My estimation for 2016 is that I will reach $750 pm. Lets see if I can push it some more ūüôā