Saturday, June 14, 2014

Freedom Fund Update – June 2014

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 a job I don’t desire to purchase goods I don’t need to impress neighbors I don’t care about. This journey is all about freedom and flexibility. One day the dividend income this portfolio generates will fully replace my day job’s income and my time will be completely my own. What could you possibly want to own more than your time?
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It’s important to keep in mind that while updating the overall value of my portfolio is important for historical reference and for purposes of keeping track of total return, my main focus is on the rising dividend income stream the Fund provides.
May was a bit of a snoozefest for my portfolio, with very little activity. Of course, I prefer it to be that way pretty much every month. This month was particularly slow for me, however, due to the changes I’ve made in my personal life. Quitting my full-time job to move to Michigan and focus on writing while spending time with family has obviously put quite a dent in my free cash flow, and as such I invested no fresh capital. However, that doesn’t mean that I did absolutely nothing during the past month.
decided to sell off half of my position with Lorillard Inc. (LO) in the middle part of the month due to what I felt was overexposure to tobacco in general, excess risk due to reliance on one product that could face unfavorable regulation in the future, and a strong run in shares. I then pretty much immediately reinvested that capital into a new position with The Clorox Co. (CLX) as I felt the household brands provided an economic moat while the valuation and yield in today’s market made sense.
The current market value of the Fund stands at $162,809.40. This is an increase of 1.35% over last month’s published value of $160,634.85. Not as impressive as I was expecting, but I also realized some weak stock performance from the likes of Target Corporation (TGT) and Aflac Incorporated (AFL) – two of my larger investments.
I’m expecting to make at least one investment with fresh capital during the month of June, which I’m particularly excited about. It’s funny to be excited about something as routine as buying stocks, but just getting back on the horse after missing the opportunity of investing fresh capital for only the second time in over four years feels great! Investing brings great joy to me, so I’m anxious to get back to it in June and see what happens. It’s very likely that one of my purchases will be one of the stocks I listed on my recentwatch list article, so stay tuned!
I’m currently invested in 47 companies. This is an increase since my last update due to the new position in CLX. I anticipate new positions to be limited going forward as I’m getting fairly close to my self-imposed limit of ~50 companies.
These updates are mainly designed to show the increase or decrease 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 on 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 LO, CLX, TGT, and AFL.

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