Portfolios
Previously, we had just been using the metrics inside our portfolios, but the information there can be misleading. And it will be easier for you to understand the benefits of income investing if we break things down.
We’re going to update our charts each month and lay things out so that you can see things easier and focus on what’s important.
First off, this is a chart that shows where our portfolio started and where’s it at now in comparison to the performance of the markets.
At first glance this looks pretty good, but we can’t emphasize enough how the value of your portfolio isn’t really relevant for this strategy. You’ll see this in the next chart.
Look at how our portfolio value was down -10% at the end of 2022, but our income increased over 14% for the year. Markets were down about -20% for 2022, and we were only down half of that because of dividends.
Dividends can help stabilize your portfolio value during market swings. They also provide liquid cash if you need is versus having to sell off assets to free up money for expenses.
Keys to Focus On When Looking At These Portfolio Comparisons
- Watch how the value of our account fluctuates drastically over time as the markets shift.
- Pay attention to the income metrics. Our primary goal is generating consistent cash flow.
- Observe how reinvesting and compounding increases our monthly earnings as time goes on.
Now let’s move on to what’s actually in our portfolio. Below we’ll show you our current holdings, monthly changes, and comments on why we made the changes.
If you’re on our paid subscription, you’ll be notified via email when we make changes to our portfolio so you can follow along in real time.
Charles Schwab Portfolio
This is what we are currently invested in inside of our brokerage account. The date that we are using as a start is July of 2020 because this is when Tim settled on this strategy.
The amount of money we invested into our account was $70,000. We haven’t contributed anything else into this account since that time.
Tim did a lot of rearranging recently so many of these assets are new to the portfolio. It’s really hard to calculate which of these assets were bought with dividend reinvestments versus initial starting capital.
The two tickers with asterisks JEPQ and TRIN had a portion of holdings sold before the end of July. This is not reflected in this chart because wouldn’t have allowed for accurate Percent Value Change numbers.
Tim took some profits off the table because we had a lot of value appreciation. He then re-invested that money among other lower valued assets to rebalance the portfolio.
Biggest Take-Aways
The biggest take away from this chart is in the last two columns. Check out the difference in price change versus our portfolio’s change. (Look at the ones that we’ve held longer).
Specifically, IEP had a -40.84% loss while we were only down -10.86% due to reinvesting dividends to buy more shares.
This chart shows the current dividend numbers at the time of July 2023. We can’t extrapolate the ones with variable rates out to a yearly basis with certainty, so we’ve just used July’s numbers for the monthly payout.
Our next financial goal is to hit $2,000 a month. We’re going to be selling our condo by the end of 2023 and the equity of that will get moved into our portfolio.
Also keep in mind that we have money in Worthy set aside to live for about 3 years on the road so we can let our dividends reinvest and compound.
Biggest Take-Aways
Dividend payouts are our main focus. There are several ways to grow income generated from a portfolio. The number 1 way is to reinvest your payouts to buy more shares.
Notice how most of our yields are higher than the current listed yields. They can grow exponentially over time if the companies you invest in raise their dividends over time. Yields are based on your buy-in price.
The price of the shares only comes into play with regards to how many shares you can buy with a set amount of money. And how much yield you’re getting based on your average buy-in price versus the listed yield.