Wednesday, March 13, 2013

Freedom Fund Update - March 2013

Well, the time has come to update the Freedom Fund once again as we start another month. The Freedom Fund is my portfolio, and I think it's aptly named. My portfolio is my way to freedom; freedom from working at a job I don't enjoy to purchase goods I don't need to impress neighbors I don't care about.

I feel extremely fortunate and thankful that I'm able to post these updates every single month which shows the power of monthly contributions to investments because of the high savings rate I maintain. It shows how a relatively large sum of money can be built through the power of time, patience and perseverance.

It's important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.

The market has not been cooperative with me. I would have genuinely jumped for joy had we seen a 1,000 point drop in the Dow Jones Industrial Average over the last 30 days. Such an event would have provided much more attractive prices on some of my favorite dividend growth stocks. Unfortunately, as a long-term investor and net buyer of stocks on a monthly basis, I had to make due with a DJIA that instead found itself up just over .5% for the month.

I actually had a fairly active month as far as investing fresh capital goes. I didn't actually plan on this, but rather planned on sprinkling a purchase in here and there while simultaneously holding a tight fist on the majority of my available capital in case a market correction came my way. But I tend to always come full circle to what I'm doing. I'm trying to build a portfolio of high quality businesses that are paying me dividends that rise annually over the rate of inflation. Value is paramount to my strategy. Overpay for even the highest quality stock, and your returns will suffer. However, I'm willing to pay fair price for a great company. I know 30 years from now I'll be very happy I did so. It's important to note I'm a very long-term buy and hold (monitor) investor. 

Over the past month I added to my position in Aflac Incorporated (AFL) and alsoadded to my burgeoning position with The Coca-Cola Company (KO). Later in February I decided to initiate a position with Wells Fargo & Company (WFC). Just before February came to a close I initiated twin positions in The Bank of Nova Scotia (BNS) and Toronto-Dominion Bank (TD) after doing some lengthy research on Canadian banks and other dividend paying stocks. Big month! I've had some people in the past come to my blog and state how I'm a market timer. If I were a market timer I wouldn't be unloading such a large amount of capital when the market is near an all-time high. I'm instead an opportunity taker and a capital allocator. I think those titles suit me infinitely better.

The current market value of the Freedom Fund stands at $98,166.64.  This is an increase of 8.66% over my last published value of $90,345.18. This was mostly due to new capital and reinvested dividends as the market was mostly flat over the last month. 

I'm fast approaching the 6-figure mark for my Freedom Fund, which is quite dramatic for me. I don't make a lot of money. As noted on my About Me page, the first year I was ever able to gross more than $40,000 in one year was in 2010. I am a man of relatively modest means. I've done better than average over the last two years, but for most of my 20's I was making $30k or less per year, sometimes significantly less. This just goes to show you what setting a goal and giving it all you've got can accomplish. I plan on writing a special article for the $100k mark. As you can see here, my first Freedom Fund update showed a value of $28,845.28. This was just under two years ago. I just want to say THANK YOU to all you readers that continue to support my journey and stop by and comment and give me the inspiration I need to keep going. Thank you!

I'm currently invested in 31 companies. This is an increase since my last update, as I initiated positions in three banks as outlined above. 

These updates are mainly designed to show the increase in the value of the underlying equities I'm invested in, but the main purpose of investing in dividend growth stocks is for the rising stream of dividends over time. So, with that said I don't put too much emphasis in these monthly updates on the value of my portfolio. I think it is a good idea, however, to keep track of the rising (or falling) value of one's securities and be aware of where they are in terms of the marketplace and whether or not certain stocks are attractively priced. It proves to be a useful exercise, for me at least, to update the values monthly. It gives me fresh perspective on which equities are performing well and which aren't, and from there I can make educated decisions (based on further due diligence) on which stocks I'd like to add fresh capital to (while considering portfolio weight as well).

Full Disclosure: Long AFL, KO, WFC, TD, BNS

This article was written by Dividend Mantra. If you enjoyed this article, please subscribe to my feed [RSS]

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