Archive for the ‘Passive Income Project’ Category

Ultimate Sustainable Dividend Portfolio – September 2014 Update – Moving Ahead

By: ispeculatornew | Date posted: 09.18.2014 (4:20 am)

 

Dollar treeAs many of you know the Ultimate Sustainable dividend portfolio was built over a year ago as an attempt to slowly become financially free. By that I mean having enough passive income to not “need” to work any longer. I track my progress every month and I’m looking at many different ways to get that done which include real estate, my own business, etc. That being said, the core of my strategy relies on income generated from my portfolios.

The USDP, along with my ETF portfolio generate the bulk of my passive income and I decided to track this with a monthly post in order to keep myself accountable and also because I’ve heard from many of you that this would be helpful.

As is always the case, you can get extra information in my newsletter, it’s free to sign up for here:

Without further wait, let’s get started. Here are the portfolio holdings as of last night:

TickerNameSharesSept 17 2014 PricesSept 17 2014 Values
OMCOmnicom Group Inc32$70.33$2,250.56
MSFTMicrosoft Corp74$46.52$3,489
JCIJohnson Controls Inc42$46.37$1,993.91
PEPPepsiCo Inc/NC30$92.85$2,878.35
ETNEaton Corp33$66.36$2,256.24
DOVDover Corp26$84.72$2,287.44
ITWIllinois Tool Works Inc30$88.63$2,658.90
XLNXXilinx Inc39$43.92$1,756.80
SJMJM Smucker Co/The21$99.71$2,193.62
BLKBlackRock Inc13$329.74$4,616.36
TROWT Rowe Price Group Inc31$79.30$2,537.60
OXYOccidental Petroleum Corp24$98.17$2,454.25
XOMExxon Mobil Corp21$97.08$2,135.76
ADIAnalog Devices Inc46$49.63$2,332.61
HASHasbro Inc31$53.77$1,720.64
MATMattel Inc45$34.16$1,571.36
AFLAflac31$58.33$1,866.56
BAXBaxter International26$72.65$1,961.55
IVZInvesco Ltd69$40.85$2,859.50
CVXChevron20$124.72$2,619.12
TXNTexas Instruments Inc32$48.37$1,596.21
VWOVanguard FTSE Emerging Markets81$44.20$2,696.20
BNDVanguard Total Bond Market46$81.46$2,932.56
Cash$2,550.94
USDP$58,216.04
SPX16.17845817$3,643.33$60,943.46

Dividends Received

Things are going absolutely great from this perspective. You will see in the below chart a clear trend in monthly income when you compare to the same period the previous year.

usdp2

 

Ultimate Sustainable Dividend Portfolio News

Not much to report here. I can’t say I’d blame these companies for not announcing dividend increases in the middle of the summer!

Returns

Overall returns continue to be decent but I did not yet catch up on that S&P500 uptick. The main stocks that have let me down from that perspective so far this year are:
Mattell (MAT): -26% so far this year (total return)
ETN Corp (ETN): -10,55%
Of course, it’s one more example of the importance of diversification in a portfolio like this one.

usdp1

 

Trades

Not much going on from that perspective but you can expect a change or two before year-end.

Ultimate Sustainable Dividend Portfolio – July 2014 Update – Tougher Month

By: ispeculatornew | Date posted: 07.29.2014 (3:00 am)

financialfreedom

As many of you know the Ultimate Sustainable dividend portfolio was built over a year ago as an attempt to slowly become financially free. By that I mean having enough passive income to not “need” to work any longer. I track my progress every month and I’m looking at many different wyas to get that done which include real estate, my own business, etc. That being said, the core of my strategy relies on income generated from my portfolios.

The USDP, along with my ETF portfolio generate the bulk of my passive income and I decided to track this with a monthly post in order to keep myself accountable and also because I’ve heard from many of you that this would be helpful.

As is always the case, you can get extra information in my newsletter, it’s free to sign up for here:

Without further wait, let’s get started. Here are the portfolio holdings as of last night:

TickerNameSharesJuly 28 2014 PriceJuly 28 2014 Values
OMCOmnicom Group Inc32$72.96$2,334.72
MSFTMicrosoft Corp74$43.97$3,253.78
JCIJohnson Controls Inc42$48.65$2,043.30
PEPPepsiCo Inc/NC30$90.97$2,729.10
ETNEaton Corp33$76.75$2,532.75
DOVDover Corp26$88.11$2,290.86
ITWIllinois Tool Works Inc30$84.75$2,542.50
XLNXXilinx Inc39$41.33$1,611.87
SJMJM Smucker Co/The21$104.08$2,185.68
BLKBlackRock Inc13$316.43$4,113.59
TROWT Rowe Price Group Inc31$80.25$2,487.75
OXYOccidental Petroleum Corp24$99.82$2,395.68
XOMExxon Mobil Corp21$104.37$2,191.77
ADIAnalog Devices Inc46$50.55$2,325.30
HASHasbro Inc31$51.14$1,585.34
MATMattel Inc45$35.42$1,593.90
AFLAflac31$63.65$1,973.15
BAXBaxter International26$76.47$1,988.22
IVZInvesco Ltd69$38.43$2,651.67
CVXChevron20$133.24$2,664.80
TXNTexas Instruments Inc32$47.35$1,515.20
VWOVanguard FTSE Emerging Markets81$45.14$3,656.34
BNDVanguard Total Bond Market46$82.15$3,778.90
Cash$93.30
USDP$56,539.47
SPX16.17845817$3,588.68$58,059.31

Dividends Received

The month of July is one of the slower months in the year in terms of dividends but the $35 generated this month are still 27% more than July 2013 so we are making progress!

 

july2

Ultimate Sustainable Dividend Portfolio News

Not much to report here. I can’t say I’d blame these companies for not announcing dividend increases in the middle of the summer!

Returns

Unfortunately, the news isn’t as good here. Yes, part of it is the type of portfolio that I run. Having a dividend portfolio usually means having a low beta portfolio. So you’d expect it to underperform in fast rising markets but to do much better in market declines. Since the last update, the overall market is up 2% (including dividends). The USDP is only up about 1.3%. Why? Just look at these 2 stocks compared to the overall market:

MAT Chart

MAT data by YCharts

XLNX Chart

XLNX data by YCharts

So the USDP now trails the S&P500 total return and will hopefully make up for it!

 

july1

Trades

A very slow month this time around, I did add to both of my ETF positions however.

Passive Income Update – June 2014

By: ispeculatornew | Date posted: 06.26.2014 (3:00 am)
incomeIt’s clear that money isn’t everything but it is important for me to have enough to travel and be financially independent as early as possible:)

Why Do I Post This?

The main reasons why I post this monthly account of my passive income are to keep myself accountable and also establish a clear process where I can build and track my journey. I’ve been fortunate so far in doing very well with my USDP portfolio as the income being generated has continued to increase at a very rapid pace. That and my side business are the core of my early retirement plan.

For example, if my base salary is currently 100K, my objective is to make 100K of passive income on an annual basis. This could be done through a variety of methods which I will be exploring of course. A few people tried to figure out how much capital I have by looking at the USDP size. The main issue is that the USDP is only part of my dividend income. I also get income from my ETF holdings, etc.

My primary objective remains to generate 100K in passive income on an annual basis as soon as possible, ideally from a few different sources.

June Updates

One more reason to focus on passive income
-I did publish the June update of the USDP

How Much Do I Really Need?

I am aiming for an income of 100K or so, before taxes as a first goal. To be clear, I feel like I need significantly less than that. Why? I’ve described how I am living off of significantly less right now (I’m paying taxes, paying my house, saving, etc). I also have the option, as discussed of retiring in a foreign location. I discussed the idea of needing 100K in yearly income here.

Overall, I feel like aiming for the same level of income as I am currently making is very very reasonable and I could easily live with less but why aim lower if I’m confident I can reach that 100K?:)

Why Am I Doing This?

I’m a strong believer in working with clear objectives but also holding myself accountable so writing about these objectives will without any doubt help me reach financial independence more quickly.

3

 

Current Passive Income Flows:

7.83% – Dividend/Investing Portfolio: To this day, there have been no dividend declines in the USDP which is a big part of why the income continues to increase steadily.

8.08% – Private Investment In My Online Company: No changes here although I did meet my biz partner and we do expect to raise our kickbacks later this year which will hopefully make a decent difference.

Total: 15.91%

It’s not spectacular by any means yet. That being said, I am 32 years old and do have a decent base (I could live with less easily).. I will continue to work on getting that total as close as I can do 100%:)

2

 

Passive Income Ideas

0% – Real Estate: I have started writing about adding real estate to my income flows. One aspect that I love about Real Estate Investing is how much of an inflation hedge it will represent for my portfolio. So I started looking into some aspects such as investing into residential or commercial real estate as well as the question of becoming (or not) a landlord. I’ve also looked into the possibility of renting property that I’d own though AirBnB (and an updated post here) and a few other questions I had been wondering about.

0% – P2P Lending – I started exploring the idea and wrote my first post about it here🙂

0% – Annuity – No intention of buying an annuity for the time being

0% – Farming – I know it sounds crazy but I’ve started looking into it as you can see from my post a couple of weeks ago

0% – Other ideas – I could end up starting other businesses or projects will I’ll certainly keep you posted about.

What I Am Not/Will Not Include

Pensions: I do know that the government will be paying me a sum of money once I retire. However, given how poor government finances look like these days, I personally think it’s crazy to count on the government actually fulfilling its promises. It won’t happen. Yes, there will be money, but not anywhere what is currently being promised. Whatever I do end up getting will be a nice surprise.

I feel like I am being extremely conservative here. By not including my government pension and also not including the fact that lower revenues will mean less taxes to be paid, I’m overestimating the amount of passive income that is truly needed. That is more than fine by me. I’d also like to think that my house will be paid by then making my level of spending lower all things being equal.

My Long Term Passive Income Objectives

January 2014: $12,000/year
January 2018: $25,000/year
January 2023: $50,000/year
January 2030: $100,000/year

1

 

I continue to see that little blue line slightly above of the red line so everything is looking very good:)

Do you have any questions or comments? I’d love to hear any ideas or how you’ve been managing on your end as well!

 

One More Reason To Focus On Passive Income

By: ispeculatornew | Date posted: 05.28.2014 (3:00 am)

MoneyThis blog is about investing and money management so it’s no surprise that I focus most of my blogging to money-related questions. My quest to build a solid and diversified passive income cash flow. Of course, life is about much more than money. You’ll find a bunch of theories about the importance of money:

-Money does not buy happiness
-Any income over $X does not contribute to more happiness (number I had heard was 70K)
-etc

I agree 100% that there is no perfect direct relationship between the two. However, there is clearly some kind of relationship. Having money helps to:

-travel
-take time off
-live unique experiences
-etc

Of course, it’s easy to think of people that have tons of money but don’t do any of that stuff but I certainly do my best to have those flows help my family and loved ones, that’s the plan anyway:)

Last week, I also saw one more compelling reason to strive for a decent level of passive income:

Living Longer

Just look at this chart from the Wall Street Journal and you’ll see exactly what I mean:

rich

Any thoughts?

chart credit: WSJ

 

Ultimate Sustainable Dividend Portfolio – May 2014 Update – New Record!!

By: ispeculatornew | Date posted: 05.14.2014 (3:00 am)

moneytreeIn September 2011, I did some in-depth research to find long term sustainable dividend stocks and have been doing updates on this Ultimate Sustainable dividend portfolio since then in the attempt to show how well such a portfolio can perform over the long term. I would personally say that things have been going very well and will certainly continue to evolve. I do have a few more things planned which I will discuss in the near future.

The USDP is obviously a critical part of my now very public quest to replace my job income with passive income. you can see my most recent update here.

The past month has been a great one with the overall markets doing very well. I’ll also be trading for the USDP in the coming days and have more about that later in this post. I’ll be looking for 1-2 new stocks and will be going through the process in the newsletter in the next few days.

If ever you would like to receive those types of updates, please join, it’s free:

 

Keep in mind that this portfolio was built by selecting 20 stocks out of thousands. The goal is not to pick the best dividend stocks but rather to pick a diversified, high quality portfolio that will keep dividends increasing over time.

Here are the holdings as of last night to start off:

TickerNameSharesMay 13 2014 PriceMay 13 2014 Values
OMCOmnicom Group Inc31$68.77$2,131.87
MSFTMicrosoft Corp74$40.42$2,991.08
JCIJohnson Controls Inc41$45.08$1,848.28
PEPPepsiCo Inc/NC29$87.23$2,529.67
ETNEaton Corp33$73.20$2,415.60
DOVDover Corp25$86.58$2,164.50
KNKnowles Corp12.5$30.02$375.25
ITWIllinois Tool Works Inc29$86.90$2,520.10
XLNXXilinx Inc39$46.18$1,801.02
SJMJM Smucker Co/The20$100.40$2,008
BLKBlackRock Inc12$302.96$3,635.52
TROWT Rowe Price Group Inc30$81.32$2,439.60
OXYOccidental Petroleum Corp23$97.52$2,242.96
COPConocoPhillips26$78.64$2,044.64
XOMExxon Mobil Corp21$102.36$2,149.56
ADIAnalog Devices Inc45$51.47$2,316.15
HASHasbro Inc31$55.50$1,720.50
MATMattel Inc44$39.74$1,748.56
INTCIntel Corp55$26.45$1,454.75
AFLAflac30$63.73$1,911.90
BAXBaxter International25$75.41$1,885.25
IVZInvesco Ltd68$36.04$2,450.72
VWOVanguard FTSE Emerging Markets61$42.19$2,573.59
BNDVanguard Total Bond Market34$81.80$2,781.20
Cash$1,050.81
USDP$53,191.08
SPX15.32335164$3,427.01$53,513.28

Dividends Received

Wow.. the below chart looks AMAZING:) I’m very excited to say that the USDP will end up generating $179 this month, setting a new record. It’s not enough to live by but we’re clearly making progress here. Part of the reason is the $1000 that I’m investing every month but the portfolio has also performed extremely well.

usdp2

Ultimate Sustainable Dividend Portfolio News

Some positive news as 3 stocks will be paying a bit more:

XOMExxon Mobil CorpDividend increase from $0.63 to $0.69, a 9.5% increase
BAXBaxter InternationalDividend increase from $0.49 to $0.52, a 6.1% increase
IVZInvesco LtdDividend increase from $0.225 to $0.25, a 11.1% increase

Returns

As has been fairly typical, in a month where the market performed extremely well, the USDP underperformed slightly which is what you’d generally expect from an income focused portfolio.

usdp1

Trades

Last month, I mentioned that I had received Knowles Corp (KN) as a spin-off. It does not have a dividend history and frankly, I’d rather not own the stock at this point. I decided to take a look at the key metrics for the stocks of the portfolio looking for anything else that looks very off.
TickerNameDVD 1Y GrowthDVD 5Y Gr.Sales 5Y GrEPS 5Y Gr.Payout RatioP/E
OMCOmnicom Group Inc23.0821.6758.442.8817.73
MSFTMicrosoft Corp24.4217.398.5616.9435.1914.26
JCIJohnson Controls Inc10.819.5411.37N/A41.7714.68
PEPPepsiCo Inc5.585.959.293.0151.219.7
ETNEaton Corp PLC13.7512.7214.9N/A42.7417
DOVDover Corp8.069.26.8434.2625.7116.45
KNKnowles CorpN/AN/AN/AN/A0N/A
ITWIllinois Tool Works Inc9.336.273.59N/A43.821.84
XLNXXilinx Inc14.2913.1810.2918.7742.2620.73
SJMJM Smucker Co/The10.78-17.714.5721.5341.5917.66
BLKBlackRock Inc12.7817.4426.665.7339.0117.6
TROWT Rowe Price Group Inc-34.1710.2520.5454.9838.1920.89
OXYOccidental Petroleum Corp16.8115.5816.2245.7734.913.91
COPConocoPhillips3.417.752.2838.4441.6614.38
XOMExxon Mobil Corp10.269.7512.6420.834.3113.93
ADIAnalog Devices Inc12.111.686.6678.7860.3223.49
HASHasbro Inc10.1415.31.88N/A72.8823.4
MATMattel Inc13.1814.254N/A55.216.27
INTCIntel Corp09.9513.6657.2546.5614.32
AFLAflac Inc5.887.573.6914.3720.910.32
BAXBaxter International Inc16.3215.477.07N/A49.715.67
The stocks I’ll be looking to replace at this point are:
Certainly – KN
Possible – ITW, HAS, COP
I’ll likely end up getting rid of 2 names and replacing it with a new name. Stay tuned, the trade will likely happen soon:)

Passive Income Update – April 2014

By: ispeculatornew | Date posted: 04.23.2014 (3:00 am)
PIN_1-million_dollar_circle_caren kate cuWhen we hear about being a millionaire, it’s generally meant in terms of net worth but that certainly brings a new dynamic to those of us that have a significant part of their net worth in their house. It’s something I can worry about at some point down the road but it’s safe to say that I’ll reach the $1M in net worth a few years before getting $1M in investable assets.

Why Do I Post This?

The main reasons why I post this monthly account of my passive income are to keep myself accountable and also establish a clear process where I can build and track my journey. I’ve been fortunate so far in doing very well with my USDP portfolio as the income being generated has continued to increase at a very rapid pace. That and my side business are the core of my early retirement plan.

For example, if my base salary is currently 100K, my objective is to make 100K of passive income on an annual basis. This could be done through a variety of methods which I will be exploring of course. A few people tried to figure out how much capital I have by looking at the USDP size. The main issue is that the USDP is only part of my dividend income. I also get income from my ETF holdings, etc.

My primary objective remains to generate 100K in passive income on an annual basis as soon as possible, ideally from a few different sources.

April Updates

-I did publish the April update of the USDP

How Much Do I Really Need?

I am aiming for an income of 100K or so, before taxes as a first goal. To be clear, I feel like I need significantly less than that. Why? I’ve described how I am living off of significantly less right now (I’m paying taxes, paying my house, saving, etc). I also have the option, as discussed of retiring in a foreign location. I discussed the idea of needing 100K in yearly income here.

Overall, I feel like aiming for the same level of income as I am currently making is very very reasonable and I could easily live with less but why aim lower if I’m confident I can reach that 100K?:)

Why Am I Doing This?

I’m a strong believer in working with clear objectives but also holding myself accountable so writing about these objectives will without any doubt help me reach financial independence more quickly.

pi3

Current Passive Income Flows:

7.77% – Dividend/Investing Portfolio: Not much to report here but the expected dividend income did increase slightly in a very slow month of dividend news.

8.08% – Private Investment In My Online Company: No changes here although I did meet my biz partner and we do expect to raise our kickbacks later this year which will hopefully make a decent difference.

Total: 15.84%

It’s not spectacular by any means yet. That being said, I am 32 years old and do have a decent base (I could live with less easily).. I will continue to work on getting that total as close as I can do 100%:)

pi2

Passive Income Ideas

0% – Real Estate: I have started writing about adding real estate to my income flows. One aspect that I love about Real Estate Investing is how much of an inflation hedge it will represent for my portfolio. So I started looking into some aspects such as investing into residential or commercial real estate as well as the question of becoming (or not) a landlord. I’ve also looked into the possibility of renting property that I’d own though AirBnB (and an updated post here) and a few other questions I had been wondering about.

0% – P2P Lending – I started exploring the idea and wrote my first post about it here🙂

0% – Annuity – No intention of buying an annuity for the time being

0% – Farming – I know it sounds crazy but I’ve started looking into it as you can see from my post a couple of weeks ago

0% – Other ideas – I could end up starting other businesses or projects will I’ll certainly keep you posted about.

What I Am Not/Will Not Include

Pensions: I do know that the government will be paying me a sum of money once I retire. However, given how poor government finances look like these days, I personally think it’s crazy to count on the government actually fulfilling its promises. It won’t happen. Yes, there will be money, but not anywhere what is currently being promised. Whatever I do end up getting will be a nice surprise.

I feel like I am being extremely conservative here. By not including my government pension and also not including the fact that lower revenues will mean less taxes to be paid, I’m overestimating the amount of passive income that is truly needed. That is more than fine by me. I’d also like to think that my house will be paid by then making my level of spending lower all things being equal.

My Long Term Passive Income Objectives

January 2014: $12,000/year
January 2018: $25,000/year
January 2023: $50,000/year
January 2030: $100,000/year

pi1

I continue to see that little blue line slightly above of the red line so everything is looking very good:)

Do you have any questions or comments? I’d love to hear any ideas or how you’ve been managing on your end as well!

 

Ultimate Sustainable Dividend Portfolio – April 2014 Update

By: ispeculatornew | Date posted: 04.15.2014 (3:00 am)

moneytreeIn September 2011, I did some in-depth research to find long term sustainable dividend stocks and have been doing updates on this Ultimate Sustainable dividend portfolio since then in the attempt to show how well such a portfolio can perform over the long term. I would personally say that things have been going very well and will certainly continue to evolve. I do have a few more things planned which I will discuss in the near future.

The USDP is obviously a critical part of my now very public quest to replace my job income with passive income. you can see my most recent update here.

The last month was a difficult one for the overall markets but the USDP continued to generate steady returns. I will be publishing more analysis of the stocks from the portfolio in the free newsletter. If ever you would like to receive those types of updates, please join, it’s free:

Keep in mind that this portfolio was built by selecting 20 stocks out of thousands. The goal is not to pick the best dividend stocks but rather to pick a diversified, high quality portfolio that will keep dividends increasing over time.

Here are the holdings as of last night to start off:

P.S: Small note. In early March, one of my holdings, DOV, spun off part of its business, KN which I should have included last month, I did this time.

TickerNameSharesApr 14 2014 PriceApr 14 2014 Values
OMCOmnicom Group Inc31$68.87$2,134.97
MSFTMicrosoft Corp73$39.18$2,860.14
JCIJohnson Controls Inc41$46.11$1,890.51
PEPPepsiCo Inc/NC29$83.55$2,422.95
ETNEaton Corp32$71.03$2,272.96
DOVDover Corp25$81.56$2,039
KNKnowles Corp12.5$30.02$375.25
ITWIllinois Tool Works Inc29$81.64$2,367.56
XLNXXilinx Inc38$51.69$1,964.22
SJMJM Smucker Co/The20$95.39$1,907.80
BLKBlackRock Inc12$298.47$3,581.64
TROWT Rowe Price Group Inc30$77.99$2,339.70
OXYOccidental Petroleum Corp23$94.32$2,169.36
COPConocoPhillips26$71.51$1,859.26
XOMExxon Mobil Corp20$97.86$1,957.20
ADIAnalog Devices Inc45$52.46$2,360.70
HASHasbro Inc31$53.65$1,663.15
MATMattel Inc44$38.14$1,678.16
INTCIntel Corp54$26.56$1,434.24
AFLAflac30$61.19$1,835.70
BAXBaxter International25$72.76$1,819
IVZInvesco Ltd68$34.41$2,339.88
VWOVanguard FTSE Emerging Markets61$41.26$2,516.86
BNDVanguard Total Bond Market33$81.54$2,690.82
Cash$337.42
USDP$50,818.45
SPX15.32335164$3,302.90$50,611.55

Dividends Received

Ahhh.. as great as March is in terms of dividends, April is usually much slower and while I will be earnings over 50% more than the same period last year, it still amounts to only about $18. Ah well…As long as the numbers continue to increase, I certainly can’t complain.

usdp2

Ultimate Sustainable Dividend Portfolio News

Not much to report here as no dividend increases were signalled.

Returns

As would expect, the decline in the overall market in the past month ended up helping my returns when compared with the overall market. I am now slightly above of the S&P500 total return index (assuming the same investments).

usdp1

Trades

One thing that I will be doing shortly is probably getting rid of the new Knowles Corp (KN) position which I got through a corporate action. Otherwise, I did end up buying about $1400 worth of my 2 ETF positions, VWO and BND, which now represent about 10% of my portfolio.

Passive Income Update – March 2014

By: ispeculatornew | Date posted: 03.26.2014 (3:00 am)
millionThey say earning the first million dollars is by far the most difficult. That doesn’t seem very difficult to believe does it? When you’re starting out, most of your assets are held in real estate which isn’t very liquid and doesn’t work as well in terms of generating compound interests:) However, it does look like it’s easier than ever to make that first million, just take a look at this chart:
That being said, being a millionaire clearly does not mean what it used to, especially in this era of ultra-low interest rates. Someone earning 4% on $1,000,000 (which would be fairly good) would only generate $40,000 before taxes. And that is for a portfolio of 100K. It’s unlikely that someone with a net worth of $1M would have all of his money in the market. 

Will $1M Be Enough?

Clearly not for me. It’s a good starting point though so if I can reach that point in the next few years, I’ll be able to start working on #2!:

Why Do I Post This?

The reason I post this monthly update is both to keep myself accountable but also have a more public discussion about my plans and how I can become financially independent as quickly as possible.

With both sides of the US government acting like complete fools these days, more than ever I feel like being financially independent is critical, don’t you? So here is how I went about this whole process:

For example, if my base salary is currently 100K, my objective is to make 100K of passive income on an annual basis. This could be done through a variety of methods which I will be exploring of course. A few people tried to figure out how much capital I have by looking at the USDP size. The main issue is that the USDP is only part of my dividend income. I also get income from my ETF holdings, etc.

My primary objective remains to generate 100K in passive income on an annual basis as soon as possible, ideally from a few different sources.

March Updates

-Following the reading of Berkshire’s annual letter, I did get inspired and wrote about building my own little Berkshire
-I did publish the March update of the USDP

How Much Do I Really Need?

I am aiming for an income of 100K or so, before taxes as a first goal. To be clear, I feel like I need significantly less than that. Why? I’ve described how I am living off of significantly less right now (I’m paying taxes, paying my house, saving, etc). I also have the option, as discussed of retiring in a foreign location. I discussed the idea of needing 100K in yearly income here.

Overall, I feel like aiming for the same level of income as I am currently making is very very reasonable and I could easily live with less but why aim lower if I’m confident I can reach that 100K?:)

Why Am I Doing This?

I’m a strong believer in working with clear objectives but also holding myself accountable so writing about these objectives will without any doubt help me reach financial independence more quickly.

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Current Passive Income Flows:

7.70% – Dividend/Investing Portfolio: Not much to report here but the expected dividend income did increase slightly, always a good sign.

8.08% – Private Investment In My Online Company: No changes here although I did meet my biz partner and we do expect to raise our kickbacks later this year which will hopefully make a decent difference.

Total: 15.75%

It’s not spectacular by any means yet. That being said, I am 32 years old and do have a decent base (I could live with less easily).. I will continue to work on getting that total as close as I can do 100%:)

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Passive Income Ideas

0% – Real Estate: I have started writing about adding real estate to my income flows. One aspect that I love about Real Estate Investing is how much of an inflation hedge it will represent for my portfolio. So I started looking into some aspects such as investing into residential or commercial real estate as well as the question of becoming (or not) a landlord. I’ve also looked into the possibility of renting property that I’d own though AirBnB (and an updated post here) and a few other questions I had been wondering about.

0% – P2P Lending – I started exploring the idea and wrote my first post about it here🙂

0% – Annuity – No intention of buying an annuity for the time being

0% – Farming – I know it sounds crazy but I’ve started looking into it as you can see from my post a couple of weeks ago

0% – Other ideas – I could end up starting other businesses or projects will I’ll certainly keep you posted about.

What I Am Not/Will Not Include

Pensions: I do know that the government will be paying me a sum of money once I retire. However, given how poor government finances look like these days, I personally think it’s crazy to count on the government actually fulfilling its promises. It won’t happen. Yes, there will be money, but not anywhere what is currently being promised. Whatever I do end up getting will be a nice surprise.

I feel like I am being extremely conservative here. By not including my government pension and also not including the fact that lower revenues will mean less taxes to be paid, I’m overestimating the amount of passive income that is truly needed. That is more than fine by me. I’d also like to think that my house will be paid by then making my level of spending lower all things being equal.

My Long Term Passive Income Objectives

January 2014: $12,000/year
January 2018: $25,000/year
January 2023: $50,000/year
January 2030: $100,000/year

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It’s easy to look at a chart like this and think that I’m still so far away from my goal but I’m getting there, step by step.

Do you have any questions or comments? I’d love to hear any ideas or how you’ve been managing on your end as well!

 

Ultimate Sustainable Dividend Portfolio – March 2014 Update

By: ispeculatornew | Date posted: 03.19.2014 (3:00 am)

Protecting a good investment and making money conceptIn September 2011, I did some in-depth research to find long term sustainable dividend stocks and have been doing updates on this Ultimate Sustainable dividend portfolio since then in the attempt to show how well such a portfolio can perform over the long term. I would personally say that things have been going very well and will certainly continue to evolve. I do have a few more things planned which I will discuss in the near future.

The USDP is obviously a critical part of my now very public quest to replace my job income with passive income. you can see my most recent update here.

Things continue to go very well for the USDP which I’m thrilled to see. The past few weeks were not the most successful but overall the performance remains very solid. I will be publishing more analysis of the stocks from the portfolio in the free newsletter. If ever you would like to receive those types of updates, please join, it’s free:

Keep in mind that this portfolio was built by selecting 20 stocks out of thousands. The goal is not to pick the best dividend stocks but rather to pick a diversified, high quality portfolio that will keep dividends increasing over time.

Here are the holdings as of last night to start off:

TickerNameSharesMar 17 2014 PriceMar 17 2014 Values
OMCOmnicom Group Inc31$72.80$2,256.80
MSFTMicrosoft Corp73$38.05$2,777.65
JCIJohnson Controls Inc41$46.58$1,909.78
PEPPepsiCo Inc/NC29$82.05$2,379.45
ETNEaton Corp32$72.40$2,316.80
DOVDover Corp25$81.43$2,035.75
ITWIllinois Tool Works Inc28$81.78$2,289.84
XLNXXilinx Inc38$52.91$2,010.58
SJMJM Smucker Co/The20$96.12$1,922.40
BLKBlackRock Inc12$298.71$3,584.52
TROWT Rowe Price Group Inc30$81.58$2,447.40
OXYOccidental Petroleum Corp23$96.85$2,227.55
COPConocoPhillips26$67.29$1,749.54
XOMExxon Mobil Corp20$94.32$1,886.40
ADIAnalog Devices Inc45$50.68$2,280.60
HASHasbro Inc31$54.96$1,703.76
MATMattel Inc44$37.66$1,657.04
INTCIntel Corp54$24.70$1,333.80
AFLAflac30$63.82$1,914.60
BAXBaxter International25$66.50$1,662.50
IVZInvesco Ltd68$34.90$2,373.20
VWOVanguard FTSE Emerging Markets43$38.42$1,652.06
BNDVanguard Total Bond Market25$81.18$2,029.50
Cash$790.67
USDP$49,192.19
SPX15.02058773$3,349.66$50,313.88

Dividends Received

Great month of income as the portfolio will end up generating $138 of dividends, a 75% increase over the same period last year! I LOVE seeing such progress!!

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Ultimate Sustainable Dividend Portfolio News

A great month in terms of news as you can see:

PepsiCo Inc (PEP) Dividend increase from $0.655 to $0.5675, a 15.4% increase
Eaton Corp (ETN) Dividend increase from $0.42 to $0.49, a 16.7% increase
T Rowe Price Group Inc (TROW) Dividend increase from $0.38 to $0.44, a 15.8% increase
Analog Devices Inc (ADI) Dividend increase from $0.34 to $0.37, a 8.8% increase

Returns

There isn’t that much to report this time around. Although you always hope for this portfolio to outperform, the reality is also that I’d expect it to slightly underperform in rising markets and outperform in more difficult environments. Markets continue to cruise so I did lose a bit more ground compared to the S&P500. You can now see a small difference in the chart below, if you look close enough:)

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Trades

This time around, I am not entering any new trades apart from re-investing the dividends that were received. I will be doing an in-depth review of the stocks within the next week which will surely lead to 1-2 trades at a minimum.

Building My Own Little Berkshire

By: ispeculatornew | Date posted: 03.12.2014 (3:00 am)
warren_buffett.laLast weekend, I did what I always do at this time of the year. No, not starting to work on my taxes (that is something I will postpone a bit longer). I took the time to go through Warren Buffett’s annual letter. Every year, I always learn a lot going through it and while there is some self-promotion, it’s also filled with good stories about what has worked, what hasn’t, why he bought certain stocks/businesses as well as a unique perspective.

Creating Cash Flows

Berkshire is in many ways a conglomerate that owns dozens of different types of businesses but at its core, it was built around insurance businesses. Those tend to generate cash flow year after year both through annual profits but also through the float (he explains what float is very well in every letter).

Using the cash flow to build an empire.

With the money from his insurance businesses, Berkshire ended up buying great quality businesses that would be able to grow over time. One unique thing (especially in this era of investing) is how much of a long term view Buffett takes. He’ll always look at the price of an asset but the most important thing is not how cheap it is but rather how great of a business it is (and how easy it is to understand, etc)

Being Ready For Opportunities

Buffett is incredibly disciplined and has always been very good at keeping his money ready to jump on opportunities that would present themselves. Yes, that means holding cash which puts a drag on performances but it has paid off time after time after time. Remember how he “saved” Goldman Sachs during the crisis? That came with a very nice profit. He makes sure to always be in a position to jump on undervalued assets.

Idol?

It’s hard not to be impressed with what Buffet has built over the years. He did come short in terms of performance last year but it’s important to note that with a fund the size of Berkshire, it’s much more difficult to find opportunities that will have any kind of impact on the overall performance.

How I Can Build My Own Berkshire

I’d love to be able to look back and say that I also was able to build my own little empire. It will be much smaller in size but over time could still become significant. How will I do it?
No, I don’t plan on buying an insurance company obviously:)
Creating Cash Flows: So far, I’ve been able to build flows from my job, my online company and my stock & ETF’s. I’m also looking at buying some real estate to help increase that monthly cash flow. I do publish a monthly report about my process here.
-Using The Cash To Build An Empire: I’m fortunate enough for now to not need any of the income that’s being generated so I’m reinvesting all of it (and more) and buying more assets
Being Ready For Opportunities: I generally try to avoid timing the market but I do always keep some money ready for any opportunities. I’m certainly thinking about buying Russia right now for example. It’s never about timing the bottom but rather about buying undervalued but quality assets.

My Objective? It’s mostly to build an empire that will outlive me and that will generate enough cash flow for me to never need to sell off shares