Wednesday, February 8, 2017

Annual Update – 2016 Review

Welcome to the annual 2016 update. This is part of  a series where I track our financial progress on a regular basis. I present four parts in this series: (i) Investment & Portfolio Update, (ii) Passive Income Update, (iii) Blog Update, and (iv) Goals Update.

1. Investment & Portfolio Update

2016 saw a big change in direction of my overall portfolio. I decided to cut the number of individual stocks I own as life has gotten busier both personally and professionally. In addition, the current economic environment does not give me a lot of confidence to stay fully invested and decided to move to a cash-heavy position over the summer.
 
On an ongoing basis, I continue to invest in index funds regularly, which gives me broad market exposure and is currently on “cruise-control”. I have a smaller set of companies that I focus on and make bigger bets on each instead of spreading myself too thin by investing in 40, 50, or 100 companies. Studies have shown that the Unique risks drops substantially by owning as little as 12 stocks. To be on the safer side, I want to focus on a approximately 20 companies and invest in those stocks instead. I have discussed more about this topic in the past — see this post. As a result, you will notice a lot of sales in the following image.
 
I present the following image which summarizes all the purchases (excluding the regular ETF/seg fund purchases which occur regularly on a monthly basis), all the sales, and all dividend increases in my portfolio.

Companies listed without any activity during the year mean that we did not add or remove these positions in our portfolio, nor did those companies have any change in dividend policy. These investments remain dormant in our portfolio.

2. Passive Income Update

Our total annual passive income totaled $9,099.70! Needless to say, I am extremely pleased with my progress over the years and I just managed to clear the goal of reaching $9K in annual passive income.
On a quarterly basis, our passive income saw another all-time high in Q4 2015.

Year
Q1 Q2 Q3 Q4
2013
$383.65 $516.32 $718.33 $1,063.97
2014
$1,322.47 $951.18 $1,055.79 $1,803.90
2015
$1,546.87 $1,960.10 $2,076.81 $2,256.01
2016
$2,167.95 $2,404.43 $1,965.95 $2,561.37
You can read my previous quarterly updates here.

“Other” Passive Income

Passive income that we achieve is split between investment income via dividends + options and what I call other sources of passive income, which includes cash back rewards credit card, affiliate programs, advertising revenue from this blog, interest on cash and writing premium articles for Seeking Alpha. As you can see from the chart below, our other category has performed well through 2016. This other income gets transferred into our investment accounts helping us compound our investment growth.
I realize that some of our sources of passive income are not completely passive, as it requires us to put some time and effort into it. However, I consider these sources to be semi-passive and I wrote an article to capture my thoughts on the scale of passivity of each income type. Be sure to check out Passivity of Income.

3. Blog Update

Based on the pageviews, the following were the most popular posts on Roadmap2Retire.
A wide variety of topics based on reader preferences, including a couple of guests posts. Its great to see the interest generated by these posts and gives me an idea of what the readers are more interested in.

4. Goals Update

Right. Onto the goals that I set and see how we did overall on that front.
  • Total passive income of $9,000 Achieved!
    • Our total passive income for 2016 was $9,099.70. I set a high goal at the end of 2015 and what looked like a failed goal even until a couple of days ago, it turned out that we had achieved this goal for the year. I am ecstatic with this progress and look forward to setting an even higher goal for 2017 and trying to beat it going forward.
  • Achieve better balance across asset classes and sectors Achieved!
    • For the time being, I am happy with our asset allocation…we are close to 1/3 cash, 1/3 real assets (gold/silver and real estate) and 1/3 in other DGI stocks. I have detailed the reasons for picking this in this post. This is a short term allocation, and I will be slowly adjusting our portfolio going forward to align with our long term goals.
  • Take atleast two finance related courses Failed!
    • I took only one course in 2016. The course was Financial Markets taught by none other than Robert Shiller. I was hoping to take another course in Q4 of 2016, but life got busier and I missed this goal.Take atleast two finance related courses
  • Blog Growth: Achieve 15K pageviews consistently through 2016 Failed!
    • I was not able to keep my blog traffic up and fell well below the target of 15K pageviews per month.
  • Write an e-book Failed!
    • I started writing an ebook earlier in 2016, but was not able to dedicate enough time to keep working on it. I have struggled with this goal for a few years now and hope to find enough time and motivation to work on this in the coming years.
All in all, not bad as far as all the goals go. Here’s to hoping that 2017 will be better…I will be sharing the 2017 goals in the coming days.

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