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. 

Sunday, April 2, 2017

March dividend update

Spring is finally here and although the weather isn't quite beautiful yet, I'm glad to have those freezing cold days out of the way.

March is always an exciting month for me as it's the first big dividend payment month of the year and I'm eager to see how it compares to last year.

My portfolio has grown quite a bit since the March update last year so I'm expecting to see some significant growth in dividend payments as well.

My dividend employee Steve has taken it easy the first two months but there's often a lot of work right before spring begins so let's take a look at how he did in March.

Sunday, March 26, 2017

The Side Hustle Report #3

Welcome back to the side hustle report! I'm looking at February data here and it's crazy to think that March is almost over and spring weather will be upon us soon.

As a recap, January was a $11.34 gain after expenses on $29.34 in earnings.

If you haven't read this before, the side hustle I'm trying this year is writing/self-publishing short stories. It's something I did back in 2013 and am trying it again in 2017.

There isn't a huge market for short stories so I'm not expecting this to be a huge earner but there's no harm in earning a little bit of extra cash while practicing my writing.

You can read the first two reports for my strategy and discussions around expenses so I won't repeat myself here but I do I notice that my writing is improving as I go through this process. I have written almost every day with the exception of a few days early in March due to illness.

I published a ton of stuff in January due to all the writing I did in December but that has slowed in February and March as I don't have that extra lean-in anymore like I did from December and have to spend more time writing and editing.

I will say that 50 minutes per day writing is not a lot of time to get stuff done as editing takes a huge chunk out of that.

I will also say that finding 50 minutes per day to write every single day is a struggle sometimes as I'm already tired after I get home from work. I only really have about three to four hours of free time during a weekday to walk and play with the dog, cook, spend time with my girlfriend, watch TV, play video games, read or take a walk so taking an hour out of that is certainly a challenge. It does help that I enjoy writing although some days I'd rather be doing anything else which is why it's key to do it every single day or I'll fall out of it like I did in 2013.

My TV watching has suffered the most as the result of this revival of my hobby/side-hustle and I really only watch TV on the weekends now because I don't have time for it on weekdays.

It's an interesting change in my life but I think it's a good one since I'm now spending that time on something productive that will help me grow instead of just vegging out on the couch.

I do sometimes think about bringing a personal laptop to work and just writing a bit in a conference room during downtime(of which there is a lot) or during lunch and that's something I might consider from time to time during slow season.

I'm glad I'm still sticking with this and while the numbers right now aren't all that impressive, I'm excited to see what happens to the royalties and net income from self-publishing as I stick with it for the full year.

Let's take a look at the February Data.

Sunday, March 19, 2017

My savings rate and expenses - February update

February is generally a pretty good month for my savings rate and this year is no different.

The annual bonus at my company is paid out this year and that generally means that my monthly pay for the month is double what it normally is and most of that money goes into savings.

I bumped up my 401k contributions this month to nearly the max allowed by my company to get an early start on maxing out the 401k and to avoid the high tax load that comes with bonus payments.

That means that February is one of the highest savings rates I'll see for quite a bit and possibly the entire year.

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

Sunday, March 12, 2017

My portfolio - March update

Q4 2016 earnings season is pretty much done.

According to factset, 99% of companies have reported and we're seeing a 4.9% earnings growth rate in Q42016 which is nice and it's the first time we've seen two consecutive quarters of earnings growth since Q42014 and Q12015.

The stock market has seen market large price inflation despite not seeing any substantial earnings growth since 2014.  CY2014 S&P 500 EPS was $118.96 and CY2016 will end up near $119.14.

That means that pretty much all of the price appreciation since 2014 has been driven by P/E expansion. That's not great to see from a long term investing standpoint as P/E expansion can only go so far and needs to be backed up by E expansion in order to sustain long term results.

I think the 2 months of growth is an excellent start but 2017 really needs to show some growth if investors are to get more comfortable around where the stock market is pricing securities right now. There are certainly some proposed changes from the new administration that might spur earnings but those are still out in the future and it's unclear how much of that will actually come to fruition.

The truth is that EPS estimates for CY2017 have continued to shrink down from $134.50 in September of last year to $131.28 right now which shows that some of those growth assumptions might be getting pushed off into 2018.

Still, 2017 estimates show 10% growth and would be awesome to see but keep in mind that 2016 projections also called for sizable growth that never actually materialized.

There's been a lot of comfort around mediocrity in the market the past few years due to low interest rates driving money out of suddenly low yielding alternative investments and into rapidly growing stocks.

It seems like that might change soon due to solid economic headwinds and likely continued interest rate bumps that might make other investments a bit more attractive. It's hard to say how that will impact the market in the long term but high yielding securities like REITs will likely take a hit in the short term.

I think rising interest rates are a good thing in the long run and there's also a lot of hope that things on the earnings side will change soon and that the future stock price growth will be driven by earnings growth. That optimism is driving the continued rally in the past few months that has been great for my portfolio. I'm happy to see and I'm hopeful that it will continue and yet I can't help but shake the feeling that we're getting too optimistic about something(tax/infrastructure plans) that might have less of an impact than we hope.

I'm a long term investor and short term price appreciation isn't ideal for me as P/E expansion simply means things are getting more expensive so any additional purchases I make and will continue to make are bought at a premium. If earnings don't catch up with prices then there's the real possibility of mediocre long term returns as prices eventually revert to the mean.

I'm not a market timer so I'm staying in the market no matter what and I enjoy seeing my portfolio grow every month but I'm also realistic about what price appreciation without growth means for long term returns.

We'll start getting Q1 results sometime in April and we'll see if that 10% growth rate is realistic or if the market is being a bit too optimistic. I think Q1 is too early to make a certain judgement but it'll be a time where we get more clarity around this administrations healthcare and tax plans as well which should give a clearer view to where this market is heading.

With all that said, it's portfolio time. I was on my way to 400k last month and the market has continued to grow so let's see if I'm there this month or if it'll take another solid month to put me over that milestone.

Sunday, March 5, 2017

February dividend update

Spring is almost here and the stock market keeps going up much like the temperatures.

The last few weeks of winter(besides this weekend) have been rather temperate and I'm looking forward to a quick switch over to one of my favorite seasons.

This has been another good month for stock market returns and likely a good month for most portfolios as pretty much everything has continued to trend up. The likelihood of a rate hike soon is pretty high which might cause some income payers to take a brief pause and perhaps present some opportunities.

February isn't a huge dividend month for me but I'm already looking forward into March which is the first big payment I'll get in 2017. I'm hoping that the first quarter of 2017(Q1 2017) can beat Q3 2016 which would be great to see and would mean huge growth over Q1 2016 in terms of dividend payments.

I'm eager to start seeing those payments toward the end of this month but for now I'll have to settle at looking at February.

Let's take a look at how Steve did in February 2017.