Sunday, May 21, 2017

My savings rate and expenses - April update

April was a fun month and included my trip to Nashville which ended up being an absolute blast even if the weather didn't cooperate every day. There's a lot of cool stuff to see there and a lot of good food to eat and I highly recommend a visit for a few days.

The March expense update had the first part of the costs for that trip and included the tickets, lodging and car rental but April has the second part which includes some of the entertainment costs, additional travel expenses and the food. I'm a guy that likes some fine dining so whenever I get out to someplace that has some of that, I make sure to visit all the great restaurants in that area which can be costly.

It certainly hit my savings rate this month but the memories I made during the trip were totally worth it and I'll remember the experiences and meals for a long time to come. I haven't done a lot of traveling in the past few years one of my goals this year was to change that. I've also got another trip to Denver planned towards the end of the year that includes a little day trip north to see the total solar eclipse!

I'm super excited about that trip and am glad I took the trip to Nashville even if it hits my savings rate for these last two months.

Let's take a look at the gross income breakdown for April.

savings rate

I saved 21.6% of my gross income this month which is the lowest month of the year so far and far below my bronze goal of 30% for the year. This isn't unexpected as vacation costs ballooned my expenses for the month plus I had some health related expenses that I've mentioned before that finally got billed.

Adding my employer contributions bumps this number to 26.6%.

It's below my target but the fact that I can still save money during a month where I take a vacation is pretty great to see and I'm definitely grateful for that. I may have spent more than I generally spend due to the vacation and healthcare expenses but being able to save money despite that is something I don't take for granted. I know many people who go into debt to take vacations and the fact that I can do so without really being overly frugal and still save money is awesome.

Let's take a look at my savings rate.

savings rate %

It's a similar story here with the savings rate being the lowest it's been this year and far below my bronze goal of 40%.

The savings rate for April clocks in at 29.6% and jumps to 36.4% when I add in employer contributions.

I know that my savings rate will fluctuate depending on months where expenses jump up and that was definitely the case here. The overall goal is to hit a savings rate for the year so these low months should be offset by other months as long as I'm not taking vacations every month!

Let's take a look at where my money went.

tracking expenses

I spent a lot on food! Restaurants make up the 2nd largest portion of my expenses after rent and that's due to all the hip, fancy joints I went to in Nasvhille. I do indulge in that area when I vacation but it's something I enjoy greatly and find a lot of value in and even now, almost a month after the trip, I still remember a lot of those meals vividly. Food isn't a big deal for everyone but I happen to find a lot of joy in it so I won't begrudge myself those expenses when they come around.

I did however find that there is a limit to how much I can enjoy food because after five straight nights of high end lunches and dinners, I was a bit tired of all the eating and yearned for a simple home cooked meal again.

I do like the fact that while my tastes trend towards the higher end, I have a limit of how much I can take. I like my meals out to be special and generally only go out at most once a week so five straight days of something I normally get less often was a bit much. In fact, I've noticed being less enthused about going out to eat to anything super high-end for the next couple of weeks after our return.

I don't see that lasting forever though as I'm starting to get a craving for some of my favorite local restaurants that I haven't been to in a while but it'll still be a once a week treat at most. It's still nice to now that restaurants are likely to be a treat for me instead of something I want to indulge in every single day.

Car expenses are next followed by some medical bills for tests I had done a few months ago that have started flowing in and will likely continue for the next few weeks.

The rest of the stuff is rather normal. Groceries were lower this month as I had a full week where groceries weren't needed due to my vacation. Entertainment was a bit higher due to some expenses in Nashville. One of my favorite stops in Nashville were two escape rooms my girlfriend and I did that were two of the best of the rooms we've done.

That's it for the month. It's not a great one on the savings rate side but was a great one in my personal life. If anyone out there needs any recommendations on Nashville, let me know.

How was your month? Anyone have any fun trips or was it a good savings rate month instead?

Sunday, May 14, 2017

George Risk Industries Inc.(RSKIA) Stock Analysis

I'm always on the lookout for solid values but it takes a really solid value for me to pull the trigger and actually buy something.

I'm also a firm believer that research is the keystone of a good investment and I simply haven't had time lately to get the research I want done on stocks that look interesting.

That's one of the reasons why I only own three individual securities and keep most of my money in index funds and ETFs. It's simply easier to buy ETFs when you have no time to research individual stocks.

Thankfully, I have gotten to a point where my work allows me ample time to do research on individual stocks and plan to start investing more in individual securities. This is the first of what I hope will be many articles that will discuss my analysis of a stock and my decision regarding a potential purchase.

If you've read my blog before, you know that my asset allocation plan has a 10% allocation to small-cap stocks so I'm willing to take additional risk in search for long-term results. All of my small-cap holdings are in mutual funds that spread the risk across a massive group of securities but that recenlty changed as I initiated a position in George Risk Industries Inc.

Let's talk about George Risk.

If you've ever read anything by Peter Lynch or Benjamin Graham then you've read about boring stocks in boring industries that no one seems to follow or care about. You've also read about how those boring stocks can often be some of the best investments you can make. 

Most companies you hear about every day get a lot of coverage and can move up and down quite a bit based on market opinion. Stocks can fall in and out of favor rather quickly and prices can shift dramatically based on market opinion and coverage.

George Risk isn't one of those companies. This is a company that nobody follows, one that does business in a low growth boring industry and seems to continue chugging along without much interest from anyone.

When I first ran into this company and looked into it after hearing about it on some old podcasts, I saw that George Risk Industries Inc.(GRI going forward) is a company that the market seems to have no opinion on and sometimes those can be quite interesting.

GRI is a tiny American company located in Nebraska that employees around 145 people. They design, manufacture, and sell computer keyboards, push-button switches, burglar alarm components and systems, pool alarms, and water sensors. 

The company is majority owned by the Risk family and insider ownership makes up nearly 60% of the outstanding stock. Stephanie Risk is the current CEO after taking over after the death of her father Ken Risk in 2013. 

The majority of their business is in the security burglar alarm sector and security switch sales made up 80% of their net revenues for the last fiscal year(ending April 2016). They have ~1000 customers and receive about 50% of their revenue in that sector from two key ones, ADI, a division of Honeywell, and Tri-Ed Distribution. 

Their keyboard business has around 800 customers and they mainly work on small custom orders there as they can't compete with the larger more automated companies that work in that area. 

GRI also has a substantial amount of cash and marketable securities which contribute substantially to the bottom line via investment income and made up 22% of income in fiscal year 2016 and 24% of income in fiscal year 2015.  

Are you excited yet? Let's take a look at how the market is valuing this company right now. 

GRI is a small company with a market cap of $42.5M and just under 5M shares outstanding. 

The stock price as of 5/14/2017 is $8.44 which represents an increase of 12.53% in the last 52 weeks, a return that lags the S&P 500. The stock has actually lagged the S&P 500 for the last five years even when including dividends which shows how little value the market has been assigning the stock. That's not a good thing when you consider the additional risk you take with a small-cap company. It has lagged any comparative small-cap index as well. 

The poor performance interesting me when I started looking at the financials. If you're read anything by Benjamin Graham or delved deep into the field of value investing, you're familiar with a concept of a net-net which is basically a company that's valued solely on the basis of its net current assets. 

When I speak about current assets, I mean cash, cash equivalents(investments) and the liquidation values of inventories minus any liabilities. 

The idea is that the business has an intrinsic value based on those assets and anything selling close to, at or below that value makes it an interesting prospect especially if we're talking about a company that produces cash flow and earnings. 

I became interested in the concept of net-nets after reading Benjamin Graham's The Intelligent Investor but found that most of the ones I could find in the small-cap space were not consistently profitable and there was a reason they were valued below current assets as those current assets were likely to be a lot lower in the near term as negative profits ate away at them. 

That's where GRI is different in that it's a profitable company that fits some of the criteria of a net-net although at current valuations, it's not a net-net by definition. 

Let's take a look at the financials. 

RSKIA financials

GRI is profitable and has been profitable since 2012. It is a company that generates FCF every single year, issues dividends at an increasing pace and has slowly reduced the # of shares outstanding. These are all good things and become better when you consider how much you would actually pay for the FCF producing company when you account for other assets.

One thing that immediately stands out to me is the $31.4M in cash and marketable securities which is one of the main reasons I was initially drawn to this company.

We're talking about a $42M market cap company that has $31.4M in cash and marketable securities. The company also has 2.5M in inventories and 2M in receivables as well, all of which would have liquidation value in a net-net analysis but due to the difficulty of valuing those, I ignored them for the purposes of my analysis. 

As of 5/14/2017, GRI's stock price is $8.44. When you consider the $31.4M in cash and marketable securities which can fairly be valued at 100% of their balance sheet total, I'm essentially paying $2.08 for the rest of the business because the cash + investments per share on the balance sheet amount to $6.36 per share(see below).

RSKIA stock analysis

Is this a business that's fairly valued at $8.44 or $2.08 when you remove the cash + marketable securities from the price?

On an EPS basis, I'm paying 13.84 or a forward 13.61 based on conservative assumptions for fiscal year 2017 earnings. Do note that the estimates for 2017 are my own since there are no analysts that follow this stock.

That seems rather high when you consider this is a stock with an increased risk that comes with small-cap stocks. You also have the consider the lack of growth in EPS since 2014.

However, am I really paying a 13.6 P/E here if I purchase this stock at today's prices? I don't think I am because the true net cost of the business excluding balance sheet value is $2.08. That means that I'm really paying a 3.35 P/E against 2017 estimates. 

The beauty of this business is that it's a company that generates consistent and predictable cash flow and has a solid balance sheet with 0 long term debt.

Based on a starting point of 2.61M FCF and a growth of 0% for the next five years, I believe the FV of the company outside of cash is about $7.20 which isn't too far from the current stock price but that doesn't account for the balance sheet. That means when I add the value of the company to the cash and investments on the balance sheet, I get a fair value of $13.56. 

That represents an upside of 88% from the $8.44 closing price and is a pretty damn great valuation when you consider the valuation on the rest of the market right now. 

That seems pretty great right? Why the hell isn't everybody buying this stock then?

Bull Case
The bull case here is simple. The valuation is solid on a business that seems to continue to chug along and generate FCF on a pretty predictable basis. 

The business is somewhat cyclical and will be tied to the housing market since that's what drives security system sales but the company continued to earn money during the 2008 crisis and didn't stop the dividend during those years. 

The 13.56 valuation prices this to a 21.8 P/E which is expensive for a low growth business like this one but when accounting for the balance sheet value, you're down to a 11.6 P/E at that price level which is reasonable especially in these low interest rate market conditions. 

I'm not opposed to buying a heavily insider owned business that has shown such consistent results for 3-4x earnings after adjusting for cash. 

If I were to take a leap and make a safe estimate for inventories and accounts receivables, I'd get a balance sheet value closer to $7 so I'm basically paying just north of $1 for a business that earns money. That's not bad at all. 

There company also pays a dividend which has been consistent and grown for the past few years and includes a special dividend in 2013. There have also been stock buybacks that have reduced the # of shares outstanding. 

I also think I was rather conservative on my 2017 earnings estimates and we could see a number that's slightly higher there which means some of these values may be understated.

If I just look at these numbers then it seems like a great value at current prices. It's a boring low growth business but it makes money, pays a dividend, has a great balance sheet and continues to be fairly valued. 

Bear Case
There is absolutely no catalyst for growth here. The company has and will probably continue to grow at a 0-2% rate if the investor is lucky and the stock market simply doesn't care about companies like this. 

George Risk's price has been in the $6-$9 range since 2012 and while the valuation looks good on paper, it's looked about the same for a number of years and there have been better entry points in the past few years than there are today, some as early as last year when the stock traded back into the $6 range. 

That means the market hasn't wised up to the value of RSKIA in all those years so why should it now? The stock has lagged the S&P 500 and any comparable small-cap index by a decent margin due to the fact that the market values growth more than anything these days and an S&P 500 index fund is much less risk than a 42M small-cap company.

The revenue they generate is highly concentrated with most of the money coming from the security switch division and half of that money coming from two key customers. Losing either of the two key clients but especially ADI(40%+ of security switch revenue) would mean the business value would decline rapidly. 

RSKIA's keyboard division is a small portion of their business and their keyboards look like they would feel old in the 90s as far as design goes( so there's likely a limited marketplace for that kind of design aesthetic.

The company does mention new products and technology during most of its quarterly or annual reports like adding wi-fi support, smart phone support and the like but it's clear that they're behind on the modernization aspect on both sides of the revenue ball. The amount spent on R&D/Engineering each year is low which doesn't bode well for improvements and I don't think that Kimball, NE is a hot spot for technology research nor does it attract the best talent in that realm. 

The stock is 60% owned by insiders which can be great but the truth is that the insider owners(risk family, trust and others) has recently used the company as a dividend payment generator and has shown little interest in reinvesting back into the business to grow earnings. That's great for income but not great for stock appreciation. 

It's a very small company so there are additional risks that come with it like late fillings, lack of data in accounting and conflicts of interest. That's to be expected in this realm but the investor does have to do additional due diligence on small stocks like this to make sure nothing looks super frightening. 

They have been late on filings a few times and have some odd practices like renting one facility from a director of a company and keeping a lot of their cash at a bank where one of the directors is a principal shareholder. They also keep their marketable securities with an unnamed third party broker which is another question mark. 

Speaking of those investments, the company has 30M+ in cash and investments which could be used to purchase something, expand or research in a way that would generate more value than just paying out a dividend.

Perhaps the company is too small to look for such a venture and feels that the cash is best used to buy back stock and pay dividends. There is an active stock purchase program that started in 2008 that calls for a buyback of 500k shares and the company has utilized that along with the dividend payments to return money to shareholders in lieu of growing the bottom line but that hasn't generated shareholder returns in excess of the market the past few years so it'd be nice to see some changes. 

Equities make up nearly 50% of their cash and investments which is relatively high and while that does help prop up the EPS, it does add additional risk to the portfolio in a downturn especially if management and/or the third party broker sells at an inopportune time. 

The other issue is that the stock is very thinly traded and trades on the OTC markets. There are often days where the stock doesn't trade at all since there no sellers and no buyers and the average volume is less than 1000 shares changing hands any given day. Most of that average is driven by spikes where tens of thousands of shares change hands on certain days(like after earnings) as most days see little trading volume. 

That means a higher bid/ask spread than a large company and a potential to have to sell at a lower than market price if money is needed quickly. 

Despite the negatives, George Risk is an interesting company when looked at through the lens of a value investor. 

On paper, this company looks like a solid value despite the shortfalls. The shortfalls aren't small and included revenue concentration and a stale product line combined with management's seeming lack of interest in growing earnings. That lack of growth is one of the reasons the market has discounted this stock for so long but I wonder if that will continue forever or if the valuation will eventually catch up if the company keeps chugging along and earning money even if the growth isn't there. 

The company made it through 2008 relatively unharmed and continued to pay out the dividend while earning money. They didn't panic and sell equities in 2008 when stock market values dropped so that was also good to see when you look at the fact that 50% of their cash and investments are in equities. 

The benefit of buying a stock like this is downside protection. If I think that the stock has $7 in current assets less liabilities on it's balance sheet and can buy it for $8 then theoretically my downside is pretty limited unless those current assets begin declining for some reason. That $7 in current assets doesn't even account for the long-term assets the company has although I find it hard to value commercial real estate in Kimball, NE but I would think it has a non-zero value. 

That thesis didn't really hold true in 2009 where the stock dropped as low as $3 despite nearly $4 in cash and marketable securities valuing the business at -1$ but that was a housing downturn. That was a crisis that directly correlated to their business and the stock market didn't act that rationally during that time with a lot of companies, some much larger than this dropping to near liquidation values. 

There was a real fear that the company and other companies would fold due to the mortgage crisis and the market valued things as such back then. The fact that the company didn't take on debt, continued to pay out the dividend and made money during the time speaks highly of the business. 

There have been points during the past few years where the company has been priced more attractively than today. In February 2016, you could have had this stock for around $6.50 which was less than a dollar above cash and investments but that was during a wide ranging stock market dive that didn't last very long and showed values in much larger and profitable companies. 

The main concern on my mind is that they fall behind technologically and can't catch up. Losing ADI as a customer would be a disaster but they've had a long relationship with them which gives some credence to the idea that it might continue for the foreseeable future. 

I do wish that they spent more money on R&D and expanding their business in some way and it's likely that the stock value will continue to be undervalued until management does something to change that. I'd prefer more investments in the business to guarantee more long term viability even if it comes at the expense of raising the dividend or issuing a special dividend. 

The dividend is nice and has grown since 2010 and the company still maintains a healthy payout ratio of 56% but I can see the dividend growth slowing to a crawl or stopping if earnings don't increase in the next few years. Last year's bump was 3% and I can see similar growth this year. At current levels the yield is 4.1% and is easily supported by the cash balance and earnings. 

It's true that there have been times where this stock was a true net-net and traded at or below their net current assets and it's possible that it will trade at that level again. That would mean a price point in the $7 dollar range if you consider inventories and receivables. 

I do believe that the strong balance sheet sets a floor for the stock that's not too far below the current price level unless the business flops and they start bleeding cash but I don't see that happening any time soon. It's an obvious risk with how concentrated their revenue is so it's not a company I would bet a huge % of my portfolio on unless I was feeling particularly risky. 

At the current price point, an investor is paying $2 for the business portion of RSKIA which is just north of 3x earnings and that's not bad at all. 

I generally aim for 30% below FV so would consider any price below $9.49 an attractive entry point based on my free cash flow valuation. 

I found myself a bit behind on my small-cap allocation with last month's update so I recently initiated a small position of 200 shares at $8.10 to cover that gap. That's a very small portfolio of my overall portion and will add $70 in forward dividend income to my portfolio to be paid out in September. 

I will potentially purchase more if the price drops closer to the $7 range I mentioned above if I have space in my portfolio for a small-cap company.

I would strongly suggest using a limit order as the bid/ask spread can be wide and you can potentially buy at a better than market price if there's a seller out there willing to fill your order. 

This isn't a stock that I will be putting a put a huge percentage of my portfolio in due to the illiquid nature of it meaning it may take a few days to buy or sell at the price you want if there are no traders on the other side willing to take that price. 

I didn't buy this expecting amazing short term results but feel like the stock can eventually produce solid returns based on the metrics I saw. It's possible that the stock market will keep ignoring it for quite some time which means lackluster returns that will likely continue to lag the market. This is more of a trial of the Benjamin Graham school of investing for me than something I expect to pay off immediately. The plan is to hold this for a couple of years and revisit again to see if anything has changed in my thesis. If the price drops to $7 or below, I might revisit this again and add more shares if the valuation hasn't changed and my asset allocation has space for a small-cap stock. 

I believe it's certainly a worthwhile company to look at if you are looking for a value stock in the small-cap space and have some room for a riskier bet in your portfolio. I do think the risk here is much less than other companies in this market cap range but it's still there. 

Let me know your thoughts on RSKIA. Have I missed anything in my analysis that you feel should be discussed?

I plan to do more of these analytical posts so let me know what you thought about it and where you'd like to see more detail(or less) or if you have any suggestions for companies to analyze. I generally don't spend a ton of time on the small-cap space and most of my future posts will likely be much larger companies. 

Disclosure : I am long RSKIA. I have no business relationship with the company discussed above and am not a licensed investment professional. You should not buy or sell any of the companies discussed in this article without your own analysis and diligence and/or consultation with your investment or tax professional as investments may decline in value. 

Sources : Fidelity(, George Risk(, SEC(

Sunday, May 7, 2017

My portfolio - May update

It's exciting to see how fast a portfolio can grow once you hit a certain dollar amount.

The market still grew this month with the S&P 500 trending up 1.77% which doesn't sound like a ton but even 1.77% is quite a bit of money when your portfolio reaches 400k like it did for me with the last update

That sort of movement yields almost $7000 in growth at my level and that dollar total is pretty damn exciting. That means that now these types of months and even smaller ones can yield portfolio growth that's much larger than my monthly contributions.

It's interesting that now organic portfolio growth through security appreciation is now the biggest driver of portfolio increases rather than additional contributions I can make any given month. I'm not quite sure when that shift happened but I've started to notice large jumps in my portfolio size in these monthly updates(I'm talking 10K+) when I don't contribute anywhere close to even half that amount.

That's great to see but also makes you think about the other end of the coin flip. We've been lucky enough to have a bull market that has continued to run and that looks great on the page when it comes to portfolio size but one always has to be ready for the reverse as well if we see a large drop.

It's great to see 10k+ monthly growth but the reverse won't feel so great when it happens. I've had 8 straight months of portfolio growth and 14 positive months out of the last 15 which is pretty amazing but as a more realistic investor, that sort of consistent growth makes me a bit nervous that one of those negative periods is coming.

I'm not even talking valuations here, I'm just talking about expectations. The stock market does trend up in the long run but it also takes pauses in the short run. Don't get me wrong, I don't mind those pauses as they're an opportunity to buy at lower prices and that ain't so bad even if it looks bad on the page.

With all that in mind, I don't have any plans to change my investments right now and have continued to purchase on the way up but I do have expectations that this sweet ride will probably take a slow pause eventually.

On the subject of valuations, the Q1 earnings that I've talked about in the past have been mostly excellent. According to fact set, with 83% of companies in the S&P 500 reporting, 75% have beat mean EPS estimates and 66% have beat sales estimates. The q/q growth rate so far is 13.5% which is the highest rate since 2011. A good deal of that is driven by energy companies which had negative earnings last year but even without them, the earnings growth is still above 9%.

I mentioned that the last estimates for Q1 growth rate were around 9% so if we end up seeing 13.5%, that'd be pretty damn fantastic. That's pretty optimistic considering there's still a good amount of companies left including a ton of retail companies which may show weakness in their earnings growth this year.

The bottom line is that it looks like we're finally back to growth again which is great for the stock market after a few years of muted earnings. Q2 guidance is largely negative with 70% of companies that issued guidance going negative versus expectations but that's the standard and actually below the 5-year average of 74% so it's not anything to worry about.

If this level of growth can continue into Q2 and for all of 2017 then this stock market may still have a ways to go before we see a pause and yet I can't help but be wary whenever we see such a long term sustained growth cycle even if it means great things for my portfolio.

Let's take a look at how my portfolio did this month.

8 straight months of growth power the portfolio to a total of $415,018.94!

That's a 3.03% increase over last month or growth over $12k! That means 4 out of the last 6 months have seen increases over $10000 in that month. That's freaking awesome and means my portfolio has grown more in those four months than I contributed in all of 2016!

Contributions help a lot with that growth but nothing beats good old fashioned market returns once you start getting to a certain dollar level.

The S&P 500 returned 1.77% this month and my portfolio was powered by that but also by great returns in the European markets which were buoyed by the French elections and good returns in two of my largest individual holdings, Apple and United HealthGroup which explains the out performance on my end although the contributions certainly don't hurt that comparison either.

My taxable accounts were up 6.2% this month and part of that is driven by a new purchase.

My tax-advantaged accounts were up 2.9% this month.

Cash was down 6.7% as I initiated a position in a small-cap company this month in my taxable account.

Cash now makes up 7.2% of my overall portfolio so a good deal below my 10% max and I'll continue deploying it as I find values and to prop up any asset classes that are below their target allocation.

Let's take a look at the asset allocation now.

I was pretty close to target across the board last month and that hasn't changed much. There have been asset classes that out performed(international developed) and classes that have lagged behind(REIT and bonds) so there's some work to do but I'm still pretty close to where I want to be right now.

Here's the breakdown of each class versus target.

  • US Large Cap at 42.52% versus target of 42.5%(+0.02%)
  • US Mid Cap at 10.02% versus target of 10%(+0.02%)
  • US Small Cap at 10.11% versus target of 10%(+0.11%)
  • US REIT at 9.73% versus target of 10%(-.27%)
  • International Developed at 15.29% versus target of 15%(+0.29%)
  • International Emerging at 4.98% versus target of 5%(-0.02%)
  • US Bonds at 7.35% versus target of 7.5%(-0.15%)
REIT performance this month was lacking when compared to the other classes which shows in it's move from being right on top of target last month to being well below this month. 

Bonds were behind last month and will always lag further back without additional contributions if stocks perform well any given month. The French elections sent Europe up quite a bit and I've shored up the small cap shortfall by taking a small stake in a little company(George Risk Industries) that seemed fairly valued to me when looked at through the Benjamin Graham value lens. I'm in the process of doing a write up/valuation of that purchase and should have that up in a few days.

The plan for next month is as follows. 
  • Buy US Bonds and US REIT in tax-advantaged accounts. 
  • Cash pile at 7.2%, look for value. 
I'm in a good spot with my asset allocation and these monthly updates are key in letting me know where to direct my money. That way I'm buying assets that hasn't performed well in the last month which means that I'm likely buying it at a better value than the other classes.  

That's it for this month. How did you portfolio do in April?

Wednesday, May 3, 2017

April dividend update

I'm back from my vacation to Nashville which was super fun and ready to take a look at the dividends I got in April. I think my dividend employee Steve is taking a little vacation as well after working hard for dividends in March.

The excitement of the large March update winds down in April as we get back to our regularly scheduled tiny payments.

My bond fund is the only thing that pays monthly and I only have one stock that pays outside the quarterly payout cycle so most of my money is in those quarter ending months.

I did recently add a bit more money into my bond funds as bonds became slightly under represented in my asset allocation which will help these tiny months be slightly less tinier.

I did get some good news today as one of my core holdings Apple raised their dividend to .63 per quarter, another ~10% raise which was nice to see. I don't own a ton of shares but most large-caps index funds do have a decent chunk of Apple as well so the quarterly payments there will get a tiny bump as well!

Let's take a look at how I did in April and where I am in 2017 YTD.

Friday, April 28, 2017

The Side Hustle Report #4

Side hustles are hard guys! One of my goals this year as outlined in my initial side hustle post was to write every day and see if I can get traction by publishing short stories online.

I was doing a great job with this through March but then warm weather arrived, I got a little bit ill and suddenly writing wasn't on the forefront of my mind.

I found myself enjoying it less and less as I moved into mid-April and the daily grind of forcing one hour of writing onto the page began to get to me. On top of that I had the additional time needed to format the stories for publishing via KDP or on Nook or wherever(I publish to five different places and each one requires a slightly different format) and suddenly I was spending an average of 1.5 hrs every single day on writing.

That's hard to maintain when one works a full time job and I found myself enjoying life a bit less because I barely had any free time for myself during the week. I recently got promoted at work to a more managerial position and that meant a bit more responsibility there(and a bit more enjoyment in my work as well which is great), but it also means less time for myself.

I'd wake up early to exercise a bit, walk the dog, shower, make breakfast then run off to work. I'd get back around 5, cook dinner, walk the dog and suddenly it's 6:30 and my girlfriend's home. Now that it's starting to get warm and sunny, we might want to take a walk but even if we don't, we have to eat dinner and it's 7 P.M. and I now have to get my hour of writing in which doesn't leave me a lot of time to do anything for myself considering I generally get in bed by 9:30 and yes I'm aware that makes me sound like an old man, I like my sleep!

It also cut into the quality time I spend with my girlfriend as I'd lock myself in my office for an hour plus writing every night instead of spending it with her. It was a big drag to be honest.

I started this process looking forward to my nightly ritual of writing but by mid April, I was dreading it because I'd much rather spend time with my girlfriend or play a game, or read a book or go for a walk and I couldn't do that due to this limit I placed on myself.

I found myself stressing about writing rather than enjoying it. Many days, I had to force an hour of crap onto the page because I had run out of ideas and writing those days just wasn't all that fun anymore. I'm an anxious person in general and my anxiety seemed to amp up during this period and I just started feeling crappy because of this internal pressure I was putting on myself. It was just no fun anymore.

I started to resent it and I didn't like how it was making me feel so I decided to make a change.

In short, I have failed my goal to write every day.

I haven't written a word since April 10th and while part of that was due to a vacation I took last week, a lot of it was due to how quickly I burned out with this.

It's interesting to see how much you don't value something as simple as an hour every day until it's taken away from you. I found that I just couldn't give up that time on a daily basis and still live my life the way I wanted to so I decided to change that.

Does that mean the side hustle experiment has failed? Yes, in a sense although I think there's still long term potential here and I certainly plan to continue even if it's in a more limited capacity.

Sunday, April 16, 2017

My savings rate and expenses - March update

March is always a weird month for me as it's the month I usually get my taxes done. The goal is to shoot for a $0 refund but that's nearly impossible and sometimes you completely miss the mark due to unknowns like stock sales and bonuses(which get taxed at a much higher rate).

This year, I missed the mark which means I got a decent sized refund this month. 

The refund essentially means that my expenses in 2016 were too high and my savings rate was higher that I had calculated it. 

Still, it'd be a huge task to go back and recalculate everything there which means I'm left with my second option; to look at it as additional income in 2017 and move on. It's not the most correct way to do it but it is the easiest and I'm always a fan of that. 

I wasn't expecting March to be the highest of months as I had some known expenses here but the refund certainly changes that expectation. 

Let's take a look at the gross income breakdown for March.

Sunday, April 9, 2017

My portfolio - April update

The markets took a brief respite from all the gains as the S&P 500 was down for the first time since October 2016.

It looks like people are still trying to digest the failed(and possibly soon resurrected) healthcare bill and what it means for potential tax reform down the line. Syria added another complication to the risk profile this month leading to a small haircut in US stock values. 

I'm actually quite surprised that the market reaction was so muted which leads me to believe that there's still momentum in the market that wants it to keep going up. The fact that the US 10yr is still only at 2.38%(that's well up from October but still lean) means that the stock market still seems like the smartest place to keep your money. 

Q1 2017 earnings calls are almost here and we'll start seeing those results within the next couple of weeks. 

The current estimated growth rate for Q1 is 8.9% and that would be great to see as it would be a return to consistent growth in a market that has been anemic for many years. That number however is down from a 12.5% growth estimate for Q1 as of December 2016 and shows that the outlook has gotten slightly less rosy in the last few months. 

I think it'll be an interesting batch of results and I'm eager to see where the companies guide for FY 2017 and going into 2018 as the growth projections are pretty optimistic right now as they usually are this time of year. If we see another flat year like we have the past few years then the market might have to take a small pause until growth returns which won't be great for short-term results. 

I do have some cash on the side so I'm always on the look out for some values and could potentially pick something up if the market over-reacts to some short term misses. 

I've always got money flowing into the market with regular monthly contributions so any short term drops for the overall market don't worry me and actually benefit those with a long time frame as I can buy in at lower prices which bodes well for long-term returns.

With all that said, let's take a look at how my portfolio did this month. As a reminder, I was just a few thousand dollars shy of 400k last month so let's see if I was able to cross that threshold this month.