Sorry I didn’t post over the weekend. Went backpacking up in New Hampshire, where it dropped down to 32 degrees with a 15 mph wind blowing. Made the hike a little more “exciting” than I wanted.
As noted back in April, I altered my Dividend/Income account to reduce the bond allocation to 0, and increased the dividend stocks and REITS to a 50/50 split. The idea was to increase my dividend yield, as bonds had been performing poorly for the 3+ years that I had been using them. With Interest rates the way they appear to be, I don’t see bonds performing that well in the near future.
The first quarter was somewhat successful (an 18.7% increase in dividend $) but a real bust as far as value (I dropped almost 30% in value) due to the market volatility. Yield was up to 6.13%, but this was primarily due to a drop in the underlying value of the investments. For the second quarter, the investments recovered somewhat, and my yield dropped won to 4.67%. The actual $ amount of dividends for 2020 vs. 2019 was just about even.
For the third quarter, the value of the underlying investments has gone up about 2% (still not where they were at the beginning of the year) and the dividend payments are only 3% higher than the same period last year. A slight improvement.
International Business Machines
Realty Income Corp (REIT)
Services PPTYS TR
Again, if I was using the account to live off the dividends, I could “let it ride” and let the investments build back up, while spending the dividends. I believe the “jury is still out” on whether the shift to stocks & REITS was a good decision or not. With the current US Fed and its interest rates, I don’t think Bonds will be a good return any time soon – unless you are willing to go into some very risky bonds. If I had additional capital, I might invest more here, as I think these dividend stocks are undervalued.
Well, it’s early October, and while I’m down for the year in my investments, I still think I’ll end the year OK, maybe a little up. I think there is a lot of uncertainty in the market right now re: the US elections, and that will all be sorted out int he next 30 days. Once that is done, hopefully we will continue moving forward.
The Chinese Corona Virus is still around, still causing issues, but I’m also hopeful that its affects on the economy will continue to recede. We will see.
My Goals for 2020 (some financial, some not):
Save $28K in tax-advantaged accounts – 401K, and Roth IRA. Grade A. Saved $3.5K in our 401Ks for the 3rd qtr, bringing my 401K total to $11.2K. Plan to put my $14K bonus into the Roth in 4th Qtr once I know my tax status.
Save $41K in regular accounts (compared to $5K in 2019). Grade A. We’ve saved $43K for the year. Remaining money goes into paying for the Roth IRA.
Increase dividend income from all accounts to $27K/year (compared to 29K in 2019). Grade C. Dividends are down for the year in the major accounts/mutual funds. Was only able to put $5.8K in for 3rd qtr, which leaves me at $17.6K for the year. Unless 4th qtr is a “gang buster” dividend time, I won’t hit it.
Passive income covers 30% of base living expenses in retirement, estimated at $78K per year (previously, I was using $72K, but after meetings with our finance guy and Mrs. 39 Months, the budget ended up being $78K). Grade A. Currently running at 30.1%. My long-term goal is to get my dividend/passive income up to where it covers over 100% of my expected retirement living expenses, so my investments can continue to grow.
Beat net worth growth rate of 6% (it was +20.1% in 2019 with the stock market run up). Grade D. Like most folks, my Net Worth hasn’t moved much. While I’m down in my investments for the year, since I continue to dollar-cost-average in, my net worth is up 2.4% – but unless the market really turns, I don’t think I’ll hit my historical 6% this year.
While not getting a membership, I wanted to attend six (6) of my local real estate investors association meetings this year. Grade A. My local real estate group has had free online meetings, at least 2X a month, and I’ve attended eight already. Going to continue to do this, and I’ll probably join permanently in2021.
Double the number of blog visitors in 2020. Last year it was a little over 6,000. I want to get at least 12,000 this year, so I need to put myself out there more (i.e. comment) and write interesting topics. My thanks to everyone who stopped by, and I try to return the favor, and comment as well. Grade F. Not seeing a real jump on this – If anything, it’s a bit of a drop. Need to get out in the community more.
Create TKD Woodworking (my side-hustle name) with an LLC, website, finance tracking, etc. Sort of a trial method for running businesses. Grade B. Incorporated it, built 5 products, established a website (basic one) and began selling on Etsy. Due to the Virus, haven’t been able to do any trade shows. Still, coming along.
Make $1,000 in sales (not necessarily profit) on items with TKD woodworking. Grade F. Haven’t sold anything yet.
Write/publish a book on finance. I wrote one for new graduates in 2017, but I have identified an area of the community which hasn’t been served as well in the past. Hopefully I can assist with something here. I’ve got the first five chapters outlined/partially done, but still have a ways to go. Grade F. With all this extra time, you’d think I could make progress on this. A little lazy I guess.
Increase weight lifted by 10% from 2019. Was able to exceed this in 2019, need to continue to push it. Grade F. Jumped up about 7% in 1st qtr, but haven’t been lifting due to the Chinese Corona Virus. In September, I went to the online training system called Gynmastic bodies. Looking to get better with that since I can’t go to the gym now.
Average 2 hours of cardio per week, which is about what I’m doing now. Grade A. Walking daily, so hitting this.
Backpack over 90 miles on AT (did around 80 miles in 2019). The trail that I haven’t hiked is getting further and further away, making it impossible to do weekend trips. Going to get harder. Did 40 miles in August, have 18 miles this month and another 30 scheduled for November. Grade B.
Continue volunteering at Pennsbury Manor at their joiner’s shop (woodworking). Really enjoyed this. Incomplete. Site is closed down
Reduce weight by 20 lbs. from Jan 2019 (lost 2 lbs. in 2019). Again, I want to get in better shape as I get closer to financial independence. Grade C. I’m down 8 lbs in first 3 quarters, but still have a long way to go, and the virus is keeping me from eating as healthy as I’d like.
Read at least one book a month. I surpassed this goal in 2018, and re-learned the joy of reading. Grade A. Seventeen (17) books so far and I really enjoy it.
Visit three national parks (that is the plan, right now). Grade F. No vacations this year.
Visit family in Tennessee, Vermont and New York. Family is very important to me. One of the things I am looking forward to with financial independence is the opportunity to visit family more often. Need to get up to see my brother in Vermont. Grade B. Visited Vermont and Tennessee. Just need to see family in New York now.
Take a week at the shore and just relax with family. Currently planned for July, but we’ll see how many family members can come. Grade F. Cancelled.
Visit Ellis Island. Still want to do this – its so close. As 50% Czech from immigrant great grandparents from the turn of the century, I believe they went through there, and I want to see it. Grade F. Cancelled.
What a year it’s been! Like everyone else, it’s been a crazy year. Markets up/Markets way down/Markets way up/Markets down. It’s enough to drive someone to drink – or to drink more!
I was reading an article which was showing the various stock indices for each country, and apparently just about every other countries stock market (Britain, Germany, China, etc.) haven’t gotten back to their pre-2008 numbers, and most haven’t gotten back to their pre-dot.com (1999) numbers. Heck, Japan hasn’t even gotten back to their 1989 numbers!
So the US stock market is a bit of an anomaly here. The fed has pumped a lot of money into the system, and this has resulted in the market staying up. By keeping interest rates low, folks have nowhere else to put their money but the market (bonds, CDs, etc. – who are you kidding). At some point in time, it’s going to drop worse than in March 2020.
What to do? Get ready for it, both physically and physiologically. Pay off debt, so that isn’t hanging around. Get your spending within reasonable levels, so if you have to cut back, you can. If you have short-term needs (within the next 5 years) get that money out of the market and into bonds/treasuries/CDs. Be ready to suddenly lose 20%+ of your stock money – and don’t immediately go out and sell everything. What you leave in the market should be money you won’t need for the next 5+ years.
For September, we ended up losing about -2.52%, and it was broadly “across the board.”
So our allocation is as follows, as of July 2020:
Retirement Accounts: Remember, my allocation for these is:
20% Bond Index Fund
20% S&P500 Index Fund
20% International Index Fund
20% Small Cap Index Fund
20% REIT Index Fund
My 401K doesn’t have REIT option, so it’s just 25% for each.
S&P was down -4%, International -2.4%, Small Cap down -3.2% and REITS down -3.6%. Bonds were up +0.4% (one of the reasons to have them).
My dividend account new allocation (as of Jan 2020) was:
50% Dividend Stocks
The dividend paying stocks varied, but most were down. Overall, the account was down -3.0%. My value account with Vanguard was down -3.0%, so it was in line with most of the stock losses.
So September pushed us back into negative numbers for the year (-1.82%). I’m assuming we’ll gain some/all of that back for the year, and end 2020 about where we started.
Hope everyone is healthy and your Sept turns our well!
Well, part of a company’s marketing and sales effort is the development of new products to sell. I’ve got five products selling on Etsy at this point, and wanted to expand this by offering a nice hinged wood box, perfect for keeping items in. Its called “Tery’s Tea Box” because it was made for my wife, and used to store her various tea samples in. Its made with Cherry and Mahogany, with a Poplar tray.
Like I discussed before, in preparation for this, I had to determine bill-of-materials, assembly process, and Economic Order Quantity. I then had to time myself during the construction to determine labor hours. With all this information, I price my labor ($20/hr) and then I am able to determine a price per unit. Throwing in overhead costs, I can arrive at a final price per piece.
This particular item needed $44.40 in materials (the high-quality Brusso hinges are $28.80 for each box), and took 2.6 hours @$20/hr. With a 40% overhead, this works out to:
Again, one of the primary purposes of TKD Woodworking is for me to do the paperwork and calculations, so I can better understand how to run the business. I just had to do my taxes for September, which luckily were $0, because I haven’t sold anything yet. I can see that being difficult in the future.
So far, its been an eye opening experience, and I have enjoyed (somewhat) the process.
Should I increase my credit limit? (Half banked); Everyone will typically say “no” to start, but he lays out the benefits and problems with increasing your debt limit. Good read.
There’s still no such thing as a free lunch (financial bodyguard); One of the biggest “pet peeves” I have is when someone talks about getting or giving away something for free (especially the government!). Someone is paying for it, no matter what – and its probably you!
As some of you know, we take a portion of our money each month and put it into a “charity fund” that we use to make charitable contributions every year. We use to track this when we itemized deductions on our taxes, but with the tax act of 2017, itemizing didn’t work anymore for us (we had paid off our mortgage, so we reached the point where itemization didn’t reach our base deduction in the tax code).
Still, like a lot of folks who give to charity, we continued, even though we don’t get a tax deduction for it. Right now we are only at about 5% of our after-tax for charity (vs. the biblical 1/10th) but we increase it every year.
I got in the mail an offer from Mariott for a rewards card with no annual fee, with 50,000 points if you get the card and charge $1,000 in the first 3 months. This isn’t hard for a lot of folks (groceries, etc.) so I chose to sign up, with the intention, like most travel hackers, of getting the points, paying off the card immediately, and then not using it again.
With the Covid, we’ve been extending our charity to various groups early, rather than waiting till the holidays (like we have in the past). We’ve given several times to our local food bank and the Salvation Army. In this circumstance, we chose to send $1,000 to various charities in September, rather than wait. By doing it by credit card (and eating any fees that were charged for doing so) we were able to get the charity money to folks that needed it, and get our 50,000 points for Mariott (several nights stay). Win/Win all the way around.
Now if only they would lift these travel restrictions so we could use them…..