Financial Independence Progress Report for July 2017

Belated July progress report. I was out of town on work related matters.

July is here and has the super tough goal of going against June…one of the best dividend months of the year! As expected, July got beat hands down ūüôā Lets look at the numbers for June 2017.

08/12/2017
Emergency Fund $60K 84.97% 85.34%
College Fund (80K) 54.72% 56.83%
Passive Income (2016 vs 2017) $579.61(07/2016) $486.86 (07/2017)
Retirement Fund 75.19% 76.87%
Roof for our Family($750K) 00.00%
Medical Fund (via HSA) 2.6% 4.14%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • My passive Income for June 2017 is approximately 20% lower than July 2016. This is an expected decrease. I sold off an investment which used to produce dividends off cycle in Jan, April, July and October. So, passive incomes for those months will be less.
    • But, since I re-distributed the sale proceeds to other funds that follow the regular quarterly payout cycle, my total dividends for 2017 year-to-date is higher than that for 2016 at the same time. So. nothing to worry!
  • Additional Investments
    • Captured gains in taxable account
      • Sold some of Euro-Pacific Developed Markets (via VTMGX) and Tax managed Balanced fund (VTMFX) to capture some capital gains and pad my cash fund. Details below.
    • Captured gains in tax-deferred account
      • Some funds in my IRA had developed some nice gains over the past 6-8 years since the last major downturn in 2008. Sold some portion of a few funds to capture capital gains and created a cash fund inside my IRA to fund a future dip.
  • Add to the cash fund..details¬†
    • I started a small cash fund accumulated a couple months back to take advantage of any market¬†dip(s) in the US market.¬†This month, I captured some gains in a couple of my investments to add to this cash fund.¬†
      • Captured some gains (10%) from VTMGX (Developed Markets in Europe and Asia
      • Captured some gains (12%) from VTMFX (Tax Managed Balanced fund)
    • Now, the waiting game begins for a significant stock dip. What is a big dip?¬†I will wait to employ my cash fund at least until the NAV drops 10% on any of my passive income streams.
      • Was disciplined enough in July…and was rewarded with a 1.5% drop in August…lets see how much more disciplined I can be on this one….waiting for a 10% drop!

Financial Independence Progress Report for June 2017

June is here and welcome to one of the best dividend months of the year! I had both good news and bad news. Good news was all the dividends coming in…bad news was that I could not resist raiding the home down payment fund and putting that money to work for me ūüė¶

Since I have to travel for work next week, I am publishing the report ahead of time….most of the dividends are deposited anyways…so, I am not going to miss anything. So, lets look at the numbers for June 2017.

06/23/2017
Emergency Fund $60K 84.73% 84.97%
College Fund (80K) 53.24% 54.72%
Passive Income (2016 vs 2017) $1741.69(06/2016) $2392.05 (06/2017)
Retirement Fund 74.27% 75.19%
Roof for our Family($750K) 00.00%
Medical Fund (via HSA) 2.6% 2.6% (site down)
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • June is one of the best months of the year for me (and all dividend investors I am sure!). My passive Income for June 2017 is approximately 37% higher¬†than June 2016.
    • I was weak this month also in that I stole some money from the house down payment fund to fund my passive income streams. The longer I delay the home purchase, the higher seems the risk of me stealing from it. In some ways, it is good…the money is employed in the market and working hard for me….but my flexibility w.r.t. home prices is lost. Lets see….
  • Additional Investments
    • International exposure
      • Just like prior¬†months, I have continued to increase my exposure outside the US market. US stocks seem so¬†overvalued that I just can’t bring myself to add to it.
      • I added some more funds to¬†my existing investments in Emerging markets (via VEIEX) and Euro-Pacific Developed Markets (via VTMGX).
    • Vanguard Intermediate Term Tax Exempt MUNIs (VWITX)
      • Dollar cost averaged my existing investment in VWITX.
        • Last June at this time, ¬†the price was $14.61….now it is $14.21. So, lowered my cost basis.
      • This will add to my monthly federal tax free income stream.
    • With this, I am done with monthly automated investments for this year….ran out of money ūüôā Except for the cash fund in case of a dip.
  • Build a tiny cash fund again
    • I want to have a small cash fund accumulated to take advantage of any market¬†dip(s) in the US market. I am done accumulating….no money left to steal anymore ūüėź
    • Now, the waiting game begins for a significant stock dip. What is a big dip?
      • Take a broad based index like the S&P 500. A well known fund that tracks this is¬†SPDR S&P 500 ETF Trust (NYSEARCA: SPY).
      • Compared to October of 2016, this fund is almost 20% more….for no good reason. The market seems to have gone crazy. To get a nice view that summarizes what I feel, take a listen to this wonderful podcast:¬†http://www.financialsense.com/when-things-get-crazy-dont-get-lazy¬†Valuations have truly gone crazy.
    • So, I will wait to employ my cash fund at least until the cost drops down to 10% on any of my passive income streams. Lets see how disciplined I can be on this one.

Financial Independence Progress Report for May 2017

May is a one of the super-special months in the year. Why? Because it comes before June….one of the two biggest dividend months in the year ūüôā Other than that, May was a dull month. And I have missed my update for April 2017….I do remember writing it…but I guess I forgot to publish it…I found it in my Drafts folder. So, it is going to be a 2-month update for some categories!

Let us look at the numbers for May 2017.

06/02/2017
Emergency Fund $60K 84.135% 84.73%
College Fund (80K) 51.35% 53.24%
Passive Income (2016 vs 2017) $371.51(05/2017) $470.72 (05/2017)
Retirement Fund 71.45% 74.27%
Roof for our Family($750K) 00.00%
Medical Fund (via HSA) 2.6% 2.6%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • Passive Income for May 2017 ($470.72) is appx 26% higher¬†than May 2016¬†($371.51).
    • I have stolen as much money I can from all my other goals to fund my passive income streams…especially from our home down payment fund. This has resulted in¬†double digit year-over-year gains. But, next year, I will not see this kind of gains…I will enjoy them while they last hey!
  • Additional Investments
    • International exposure
      • Just like prior¬†months, I have continued to increase my exposure outside the US market. Dividend investors are not supposed to look at the stock price…but US stocks seem so¬†overvalued that I just can’t bring myself to add to it.
      • On the other hand, I want my passive income streams to come from many countries all over the world to spread¬†the risk of a single part of the world going through a bad phase.¬†So, I added some more funds to¬†my existing investments in Emerging markets (via VEIEX) and Euro-Pacific Developed Markets (via VTMGX).
  • Build a tiny cash fund again
    • I am accumulating some money in a money market fund. I want to have a small cash fund accumulated to take advantage of any market¬†dip(s) in the US market.
  • Capture gains in my IRA/401K
    • Seeing the insane manner in which the US market stocks are going up, I¬†can’t shake the feeling that we are at the top. I see all the signs of a big drop except the market is going up and up. It is tapering now and I feel that a major dip is quite near.
    • My IRA lost a lot of its value (total return) in the 2008 downturn and I had to wait almost 6 years for it to come back up. I was a financial fool at that time and did not even attempt¬†any corrective actions….I could have moved to preserve some of my gains…but did not know any better.
    • For the upcoming¬†downturn, I do not want to lose the gains in my IRA. So, I cashed out¬†most of the gains¬†accumulated in¬†my IRA over the last few years and have parked them in cash inside my IRA. When the next dip happens, I will put them back to work. Until then, I am okay with losing 2-3% in¬†dividends versus losing 10-20% of the stock price.

Financial Independence Progress Report for March 2017

Three¬†months already over in the new year….this year is definitely going faster than last year! Nothing interesting this month. My passive income streams boosted by appx 16% but somehow I feel unsatisfied…not sure why. Maybe the pace of reaching my goals is slow ūüôā Anyways, let us look at the numbers for March¬†2017.

04/01/2017
Emergency Fund $60K 83.00% 84.135%
College Fund (80K) 50.57% 51.35%
Passive Income (2016 vs 2017) $1052.01(03/2016) $1219.83 (03/2017)
Retirement Fund 68.61% 71.45%
Roof for our Family($750K) 00.00%
Medical Fund (via HSA) 2.6% 2.6%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • Passive Income for Mar¬†2017 ($1219.83) is appx 16% higher¬†than Mar¬†2016¬†($1052.01).
    • I did not add more funds this month since all my investment vehicles are trading at peak values. Waiting for the next dip to invest more. One exception is listed next.
  • Additional Investments
    • International exposure
      • Just like prior¬†months, I have continued to increase my exposure outside the US. Stocks in United States seem too overvalued to my simple mind.¬†I want my passive income streams to come from many countries all over the world to spread¬†the risk of a single part of the world going through a bad phase.
      • So, I have added some more funds to¬†my existing investments in Emerging markets (via VEIEX) and Euro-Pacific Developed Markets (via VTMGX).
  • Build a tiny cash fund again
    • I am accumulating some money in a money market fund. I want to have a small cash fund accumulated to take advantage of any market¬†dip(s).

Financial Independence Progress Report for February 2017

Two months already over in the new year….somehow feels that this year is going faster than last year!

I am still not sure on¬†what should be my yearly goals for 2017. I am carrying forward some goals from last year…college fund, retirement fund, etc. Thanks to valuable comments on a blog post from¬†Vivienne, Baba Joga and AmberTreeLeaves, I am getting close to a decision. By next month, I will decide one way or the other…else quarterly update in in jeopardy ūüôā

Lets look at the numbers for Feb 2017.

02/05/2017
Emergency Fund $60K 100% 83.00%
College Fund (80K) 49.58% 50.57%
Passive Income (2016 vs 2017) $269.65 (02/2016) $408.50 (02/2017)
Retirement Fund 65.07% 68.61%
Roof for our Family($750K) 00.00%
Medical Fund (via HSA) 0.5% 2.6%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Emergency Fund changes
    • It is looking more likely that my next significant goal will be a real estate investment. Before that, I want to seed my passive income streams with as much money as possible to get it as close as possible to my intermediate goal of $1000 pm. My final goal is $4000 pm as documented here.
    • So, to get closer to $1000 pm, one change I made I reduced my emergency fund by appx $10K and pushed the money into a cash fund….to roll this into my passive income streams.
    • I have initiated a per-month contribution towards rebuilding my Emergency fund, but that can happen in the background.
  • Passive Income Stream
    • Passive Income for Feb¬†2017 ($408.50) is appx 51% higher¬†than Feb 2016¬†($269.65).¬†This increase is¬†an¬†expected one.
    • In July of 2016, I welcomed some new members to my mutual fund family.¬†One of the new arrivals was VWITX¬†(Vanguard Intermediate Term National MUNI fund).
    • A good¬†portion of the year-over-year increase in passive income for Feb comes¬†from VWITX. This pattern will repeat the rest of the year as well.
  • Additional Investments
    • International exposure
      • Just like prior¬†months, I have continued to increase my exposure outside the US. Stocks in United States seem too overvalued to my simple mind.
      • And I want my passive income streams to come from many countries all over the world to spread¬†the risk of a single part of the world going through a bad phase.
      • So, I added to¬†my existing investments in Emerging markets (via VEIEX) and Euro-Pacific Developed Markets (via VTMGX).
  • Build a tiny cash fund again
    • I am accumulating some money in a money market fund. I want to have a small cash fund accumulated to take advantage of any market¬†dip(s).

Financial Independence Progress Report for January 2017

The first month in the new year is done and it is time for the monthly update!

For the first time in the last couple of years, I am struggling with what should be my yearly goals for 2017. There are some basic goals that I will carry over from last year…like college fund, retirement fund, etc. But my struggle is mainly with the housing goal and that in-decision is affecting a couple other goals. But, I think I am getting closure on this issue and will update¬†on the decision soon.

But for now, lets look at the numbers for Jan 2017.

02/05/2017
Emergency Fund $60K 100.0%
College Fund (80K) 47.95% 49.58%
Passive Income (2016 vs 2017) $592.90 (01/2016) $441.42 (01/2017)
Retirement Fund 64.27% 65.07%
Roof for our Family($750K) 00.00%
Medical Fund 00.5%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • Passive Income for Jan¬†2017 (441.42) is appx 30% lower¬†than Jan 2016¬†($592.90).¬†This is a big decrease¬†but an¬†expected one ūüôā
      • I sold all my ESPP shares from a previous employer and moved them into a couple different mutual funds. Basically cashed out for better risk diversification….shares in only one dividend company vs shares in many¬†dividend paying companies.
      • The¬†ESPP shares had an odd dividend payout frequency: Jan, April,¬†July and October. Post the sale, dividends for these months will take a hit this year, but they will be more than compensated by investments with normal¬†cycle of dividends in Mar, June, Sept and December.
  • Additional Investments
    • International exposure
      • Just like prior¬†months, I continued to increase my exposure outside the US. Stocks in United States are way to overvalued and frothy in my opinion. I want my passive income stream to come from many countries all over the world as a good means of diversification.
      • So, I added to¬†my existing investments in an¬†Emerging markets fund (VEIEX) and Developed Markets International fund (VTMGX).
    • Build a tiny cash fund again
      • Since I have stopped investing in US stocks, I am accumulating that money in a money market fund. When the market tanks later this year, I want to have a small cash fund accumulated to take advantage of the dip.
  • Medical Fund
    • I¬†signed up the family for a High Deductible Health Insurance Plan and got access to a Health Savings Account (HSA). $6750 of pre-tax money can be saved in it. HSA money is¬†eligible for all valid medical expenses…free of federal and state taxes.
    • This will begin the accumulation of the Medical Fund. I have accumulated a couple of nasty health issues through all the ups and downs in life…this makes a medical fund an absolute necessity for my later years.
    • My hope is that the family medical expenses are small enough to be able to pay out of pocket now and let the HSA funds compound over the years. Lets see how it goes.

Financial Independence Progress Report for December 2016

Hope everyone had a wonderful holiday season! Here is wishing you a happy and prosperous 2017. May all your dreams and aspirations come true!!

December is a happy month for all dividend investors and so it was for me too! Passive income coming into my account is validation for the FI path and also motivation to continue the FI journey with even more vigor! Lets look at the numbers for Dec 2016.

12/30/2016
Emergency Fund $60K 100.0%
College Fund (80K) 47.95% 47.95%
Passive Income (2015 vs 2016) $1281.58 (12/2015) $1983.06 (12/2016)
Retirement Fund ($900K) 63.44% 64.27%
Roof for our Family($750K) 00.00%
Medical Fund 00.00%
Life Insurance Done (term life insurance policy)

Main Takeaways this month

  • Passive Income Stream
    • Passive Income for December¬†2016 ($1983) is appx 54% higher¬†than December¬†2015¬†($1281.58).¬†This is a big increase and a totally unexpected one.
    • The positive surprise was due to more than expected capital gains distribution from VDIGX and VWELX. I will take it…however they come ūüôā
  • Additional Investments
    • VEIEX(Vanguard Emerging Markets Stock Index Fund))
      • Just like prior¬†months, I continued to increase my exposure outside the US. Stocks in United States are way to overvalued and frothy in my opinion. So, I have continued to increase my exposure to countries outside the US. I want my passive income stream to come from many countries all over the world as a good means of diversification.
      • ¬†This time, I invested in a new fund:¬†an Emerging markets fund called VEIEX. This fund invests in many emerging market countries like¬†Brazil, India, Russia, China, Taiwan and 20 more countries around the world.
      • If you want more details on VEIEX, please get it directly from the horse’s mouth: VEIEX.
  • Passive Income Goal
    • My 2016 goal was¬†to reach $750 pm in passive income by year end.¬†December¬†is done…and my per-month dividend stands at $801.99. Hurrah!
    • 2016¬†had lots of ups and downs…including a phase of unemployment¬†and no salary for a month at least, a¬†nasty health issue and what not. So, achieving this goal and exceeding it by a small amount of $50 makes me very¬†happy.
    • Sometime back, I wrote an article called How much freedom did I buy today?¬†I read that article again today and decided to compute the number of hours of freedom I have bought with $801 of passive income per month.
      • My Passive Income goal is
        • $4000 per month (Why $4000 pm?)
        • $48000 per year
        • $131.5 per day ($48K/365)
      • It is the end of 2016 and my passive income is $801 per month.
        • How much freedom will $801 pm buy me?
          • $801/$131.5 ¬†=> ¬†6.09 days per month => 146 hours per month => 4.7 hrs a day (31 day month)
        • To put this in perspective, here is the amount of freedom¬†$801 of passive income will buy me:
          • 4.7 hours ¬† ¬† ¬†of absolute freedom every day!
          • 6.09 days ¬† ¬† of absolute freedom every month!
          • 73.08 days ¬† ¬†of absolute freedom every year!
          • 2.35 months of absolute freedom every year!
    • For 2017, I will aim for a challenging¬†monthly¬†passive income target of $850 pm. Wish me luck!

Financial Independence Progress Report for October 2016

October was a big down month! There was enough volatility in the month to show some RED in the nos. There were deals to be had in the early part of the month and I thought I made out good….until the later part of the month wiped out the gains ūüôā¬†Let us see what the numbers say for October.

09/03/2016
Emergency Fund $60K 100.0%
College Fund (80K) 45.65% 47.95%
Passive Income (2015 vs 2016) $628.60 (10/2015) $551.80 (10/2016)
Retirement Fund ($900K) 66.36% 63.44%
Roof for our Family($750K) 00.00%
Medical Fund 00.00%
Life Insurance Done (term life insurance payments initiated)

Main Takeaways this month

  • College Fund Portfolio Increase (in green above)
    • I got some extra money left over after September and pushed that money ¬†into the college fund. Even though October was a down month, the additional cash offset it.
  • Retirement Fund
    • This portion of my portfolio took a good solid hit in October. I lost almost 3% and the way early November is looking, it is not done going down.
    • Major reason is the increased uncertainty from US elections and the interest rate increase/decrease uncertainty from the FED.
    • I am definitely continuing to invest and am picking up stocks at lower cost i.e. Dollar Cost Averaging full speed ahead! So, all good for now.
  • Passive Income Stream
    • Passive Income for October¬†2016 ($551.80) is appx 14% lower¬†than October¬†2015¬†($628.60).¬†This is a big reduction but an expected one.
      • I sold some stocks from a previous company’s ESPP and spread the money into different funds. These funds do not distribute dividends like my ESPP stocks in Jan, April, July and October. So, all these months will show a reduction in 2016. But, the overall dividends for 2016 will increase and will show up in December of 2016 when all the other funds declare their dividends.
    • Additional Investments
      • VTMGX (Developed markets across Europe, Canada and Australasia)
        • Just like last month, I continued to increase my exposure outside the US using VTMGX.¬†Definitely lowered my cost per share via Dollar Cost Averaging this October.
        • If you want more details on VTMGX, please get it directly from the horse’s mouth: VTMGX.
      • VWELX (Vanguard Wellington Fund)
        • Bought into this fund also quite a bit this month.
        • I already have another balanced fund in my portfolio: VTMFX: 50% stocks and 50% tax-efficient bonds.¬†VWELX is another competitor for my balanced fund dollars…I always have atleast two funds competing in the category…manager diversification and hence risk diversification as well.¬†
        • VWELX is not as tax efficient as VTMFX since the bond portion is not tax-efficient. But I want risk diversification more….
    • My 2016 goal is to reach $750 pm in passive income by end of 2016…October¬†is done…and my per-month dividend¬†is¬†at $603.04 pm.
      • Target Dividend:¬†$9000 pa
      • Current Dividend (year to date):¬†$7321
      • Balance to make up in the next 3 months
        • $9000 – $7321 ¬†=> $1679 over the next 2 months
      • Unless¬†a black-swan event happens in the next two months, it looks like I will make it…hurrah!!
    • I had kept some cash aside to invest in a dip….the temptation to get to $750 in passive income per month was very high in September and I could could not resist and burnt some of it. In October, I used up the rest of the money to buy the dip. October is historically volatile…and it did not disappoint this time…so, the purchases this month will help in the coming year!
    • I anticipate another volatile month in December 2016…post the FED’s decision on interest rates….scrambling to accumulate some cash for that. Lets see…

Financial Independence Progress Report for September 2016

September was another slow month. History says that September is more often than not a volatile month. But, I did not see enough volatility and hence no deals to take advantage of. Let us see what the numbers say for September.

09/03/2016
Emergency Fund $60K 100.0%
College Fund (80K) 44.92% 45.65%
Passive Income (2015 vs 2016) $1036.87 (09/2015) $1176.74  (09/2016)
Retirement Fund ($900K) 65.01% 66.36%
Roof for our Family($750K) 00.00%
Medical Fund 00.00%
Life Insurance Done (term life insurance payments initiated)

Main Takeaways this month

  • Portfolio Increases (in green above)
    • As blog readers last month pointed out, many numbers are green this month also! I am thankful for that.
  • Portfolio changes
    • No portfolio changes this month….still adding to¬†the cash fund I set up¬†July. I did spend some of this money on VTMGX and VWELX (Vanguard Wellington) on a small dip in Financials but no major buy as the markets were more or less flat.
  • Passive Income Stream
    • Passive Income for September¬†2016 ($1176.74) is appx 10% higher that September 2015¬†($1036.87). Where is the additional money coming from?
      • A decent portion of the increase¬†is from VTMGX (Vanguard Developed Markets Index Fund) dividend payout.
    • Why VTMGX?
      • I started diversifying my passive income streams across geographies last year and boosted it a lot more this year. The world is much more volatile nowadays and it is hard to predict where the next problem will come from.
      • So, I wanted to spread my portfolio’s¬†risk across many countries of the world. 15% of my passive income investments is outside the US….when I see some good deals, I will increase my exposure outside the US but I will choose a different fund…I want another¬†fund diversify fund risk and fund manager risk as well.
      • But, this will come later. If you want more details on VTMGX, please get it directly from the horse’s mouth: VTMGX.
    • My goal is to reach $750 pm by end of this year…September is done…and my monthly dividends are still at $557 pm.
      • Target Dividend:¬†$9000 pa
      • Current Dividend (year to date):¬†$6770
      • Balance to make up in the next 3 months
        • $9000 – $6770 ¬†=> $2230 over the next 3 months
      • It all depends ¬†on December being a good month….crossing my fingers!
      • I have kept some cash aside to invest in a dip….the temptation to get to $750 in passive income per month was very high in September and I could could not resist and burnt some of it…..But, I will¬†wait this month¬†for a market dip. October is historically volatile…so, maybe there will be an opportunity.

Financial Independence Progress Report for August 2016

August also¬†has come and gone without much fanfare. Another very slow month…so slow that I felt like doing something just to make it less boring. But, I reminded myself that it is the lull before the storm that I anticipate may start¬†in September (historically a rough month). But, lets look at numbers for August.

09/03/2016
Emergency Fund $60K 100.0%
College Fund (80K) 44.30% 44.92%
Passive Income (2015 vs 2016) $297.54 (08/2015) $391.93  (08/2016)
Retirement Fund ($900K) 64.66% 65.01%
Roof for our Family($750K) 00.00%
Medical Fund 00.00%
Life Insurance Done (term life insurance payments initiated)

Main Takeaways this month

  • Portfolio Increases (in green above)
    • Nothing great to talk about…I still think that¬†the positive gains of this year will not¬†stand the test of time…..insane valuations will always come crashing down.
  • Portfolio changes
    • No portfolio changes this month….still adding to¬†the cash fund I set up¬†last month. If there is a good market dip (saw DOW drops 200-300 pts), I will use the cash to buy the dip.
  • Passive Income Stream
    • Passive Income for August¬†2016 ($391.93) is¬†higher that August 2015 (297.54). This restarts the streak of 2016 dividends being more than 2015 dividends for the corresponding months. The streak got broken last month because I was in the middle of some portfolio changes….happy to get it back this month ūüôā
    • My goal is to reach $750 pm by end of this year…it is already August…and my monthly dividends are appx $433 pm.
      • Target Dividend
        • $9000 pa => $750 pm
      • Current Dividend
        • $5593 pa => $466 pm
      • Balance to make up in the next 5 months
        • $9000 – $5593 ¬†=> $3407 over the next 4 months
        • I have kept some cash aside to invest in a dip….I could invest it right now and increase my chances of making my target of $750 pm dividend income. But, I have chosen to wait a bit for value by waiting for a market dip and then using the cash. September is another big month for dividends. Based on how September does, I will decide.
        • I think I might¬†squeeze through….keeping fingers crossed.