Current Investments

I wanted to go through my current investments and really what I will be sharing about and what I won’t be sharing about so if you’re reading, you know that I won’t add that stuff into my posts or if I do, it will be brief and won’t be the main subject of my posts.

First the ones I am not sharing about.

Not Sharing About!

So I have two items I won’t be sharing about: My 401K and my Stash Account.

401K

  1. So the main reason I won’t be sharing about this account is because it does not have any dividend stocks and I don’t gain any passive income through it and will ,therefore, not be able to add it to my passive monthly income number that accumulates.
  2. Reason number two is that it only has a handful of mutual funds/index funds available for us to invest in through our company companion portal. Therefore, research into specific companies is short and won’t be of much value to you guys or to myself in sharing.

However, I will say that I currently have been working for almost two years at my company and they contribute 3% if you contribute 6% which is pretty typical. I put in at least 6% because them putting in 3% is free money for me. If you have an employer that does a 401K and matches your contributions, yes, do it and hit the max amount you need to get all of their contributions. Sometimes that is $50 a paycheck and you get $25 from the employer. It is worth the sacrifice for this and because mine comes out before my paycheck hits my accounts, I don’t even see it or treat it like my own money in a sense. And I won’t be able to take it out for another 35-40 years, so I can’t really count it as a retirement idea until that age. I believe it will help once I get there, but it doesn’t pay my out or put money in my pocket now or consistently.

Stash Account

Now this one seems silly to exclude because I definitely can own dividend stocks and bonds or funds that pay my each month or quarter.

  1. The only reason I am not including it currently is because they don’t sum up your monthly dividends or payouts so I have to go in, calculate out all my pay outs for October, then November, then December. It is very possible that I will just decide to add this in and add the numbers I tally here with the numbers I add up from my main investing account, but right now, it is just a lot easier to focus on the second.
  2. I guess if there was another reason, it would be that my Stash account is a taxable account and currently I am focusing on my main account which is a Roth IRA. Every time I get a dividend from my Roth IRA, I get 0 tax on that payment and I can put it back in. In a taxable brokerage account like my Stash account, I will have to add up any dividends I receive and if I sell any stocks, I will have to add any gains to my taxes. Once I get to the point where I am maxing my Roth IRA, I may consider adding to this account. But, I would maybe just add any extra amounts to my rental property savings account.

My Stash account has under $1,000 in it which is mostly contributions and then about 9% of growth. Not much but not bad. And I will say, I do get a few dividends from my stash portfolio each month. It isn’t a bounteous amount, but it is okay. What is probably a good plan in this situation is to get my portfolio to the point that it is gaining dividends enough to pay for the $1 a month subscription. So far, I am probably close to that, but I haven’t done the numbers out yet. That might be a fun side project. Mainly that is because dividend companies pay out either monthly or most of the time they pay out quarterly. Quarterly doesn’t give me a monthly average but I will have to add things up and see where I am at.

Last year, earlier in the year, I was using Robinhood with a few stocks, Ford being one of them, Macy’s, AT&T, etc (all good dividend companies). I was in the app about 3 months, put in about $200 and made about $27 when I sold them. I was taxed on the $27 dollars and then I moved that money into my Stash account.

Sharing About!

I have two items here as well as I mentioned in my last post where I stated my goals.

Roth IRA

I started my Roth earlier this year with Fidelity. The platform is really good on the computer and it is decent as an app experience. I think it would be nicer if it move int he direction that M1 Finance is going with it’s multitude of charts, filing your stock/ETFs into sector or “pies” and their ability to trade with fractional shares. Recently, they just dropped off all trading commissions which is great! As a new investor, I was worried about making trades even up to $200 because I was like.. Well, I just paid 2.5% of my trade for a stock that i hope gets 2.5% of growth just to make up. Not anymore. Thank you Fidelity! and have yet to start making bigger contributions as I am putting a bigger sum of my paycheck to help my wife finish off paying off her student loans. Once I finish that here by the end of the year, I will be able to up my amount I do here and max out this bad boy Roth IRA. I hope. For now, I put in about $50 per paycheck. Not a great amount but it’s good that I’m starting out small while I get rid of my other expenses in my budget.

Side Note: I definitely understand the idea that investing while I pay them off could give me a better return. I definitely do. I am all about the numbers. The purpose of doing this now is that both my wife and I are working currently. If I can use this time of dual-income to get rid of a monthly expense, (even though we’ve paid it down so much that our next payment is scheduled for 5/24/2024) then when my wife gets to the point of raising our kids as her main priority, we will have less to cover each month and I will feel better about myself throwing more money into my investments. Some times you have to prioritize peace of mind which is the ultimate goal of all of this, right?

I currently hold a few stocks/ETFs right now as the start of my portfolio. My current portfolio is at about $550 with about… yep, $550 in contributions. I’ve only been at it a few months and I have a few stocks that are down a few dollars while my others are up a few dollars. Oh, well. I’m not concerned currently. In fact, the one that went down is the one that paid me a $3.10 dividend this last month. Not too bad for a few months in! That is worth a few pieces of fruit, right? or a hot cocoa at Starbucks? In any case, I want to state this as it will come up a lot as you research into investing: I haven’t lost any money yet. I would only lose money if the stock went down and I sold it lower than I bought it. It’s called “unrealized.” As long as I hold it, it doesn’t matter what the price of the stock is. Most of these companies I will buy into, I plan to hold onto forever. If I think a company is doing great and they are going to be around and pay my to hold their stocks, then if the price falls for a bit, that’s okay. In fact, if it falls, I can just buy more and it lowers how much I paid per share. So then, when it goes up, I now have more shares for a cheaper average cost than my original purchases and they all pay me the same dividends.

My Current Holdings:

Here are my current holdings listed out as well as some items about them. I’ll make it fancier as things go on. For now as I only have a couple shares of each (about $550 worth), I will just share the ticker symbol and the company/ETF that I have to give you an idea of the starting of stocks I have.

F: Ford Motor Company
I bought Ford mainly because when I first owned them, the stock price started at $10 and went up to $13 per share and right now, the share is somewhere between $7-$10 per share. Now, yes, that can mean that they had a bad year, they made some bad decisions. My experience with Ford cars has been really positive. We have had 3 so far and each of them have been very reliable. My wife just traded her 2005 Focus with 243,000 miles on it for a Ford Escape and we gave the Focus to my brother for college. Good luck, dude. Ford has a really high payout ratio right now. Something between 110% and 150% I think. So they will probably cut their dividends soon. They recently stopped production on smaller cars to focus on EV cars and bigger cars as most of their sales were from their bigger lines like trucks and SUVs.

We will see how this goes but in any case, I bought them again because they were a good stock before and they are very cheap as far as stocks go right now so I can at least get started. If they do end up slashing their dividends, then I can sell out of them without being taxes and put that money elsewhere.

JNJ: Johnson and Johnson
There has been some news recently that talks about lawsuits that JNJ is going through regarding their baby talcum powder. The company knew about it for a bit and decided to reach out first before they were on the receiving end of issues. As one of my favorite YouTubers right now, Joseph Carlson on Joseph Carlson Show, states (paraphrased): “This may look bad, but you have to look at the whole picture for JNJ. Even if they stop running the entire line of baby talcum powder, that would only be a percent or so of their entire production. They are so well diversified that they will be okay and will continue paying dividends.” He adds up their lawsuits and showed that even if they settled all of them, it wouldn’t hit their dividend payout for investors and after 56 years of continually growing their dividends, they are going to keep doing that for investors.

This is very interesting to hear, especially since my wife has a lot of JNJ products. I think they are a pretty good buy right now and I will probably buy some more here in the next week if things stay as they are. They pay out quarterly around the end of each calendar quarter so that adds to my portfolio!

VYM: Vanguard High Yield ETF
This is one I bought even though it is a little bit high. I wanted to start off buying ETF/stocks that had good dividends and I thought that Vanguard’s high dividend yield ETF would be a good place to start. They distribute a 3.16% dividend yield which is pretty good and holds companies like JP Morgan Chase, JNJ, Procter & Gamble Co, Intel, AT&T, Exxon Mobil, Coca-Cola Co to name a few. All good dividend companies from different sectors and ones that I will probably invest in at some point. This ETF is really just to get exposure to the dividend companies. I think they paid me $3.10 in the last dividend distribution for my 1 share! So that’s pretty cool.

VNQ: Vanguard Real Estate ETF
This ETF is similar to the High Dividend Yield ETF in that I am looking to get some exposure into these areas and get a feel for how they pay, how they perform, etc. Real estate is a good holding because of the growth and performance of the sector as well as the payouts being good as well. The groups of companies that are in this group range from Healthcare real estate companies to Public Storage, commercial property owners and residential real estate. This gives for a good variety and they pay out a 3.12% dividend distribution.

For those of you who aren’t really sure about specific companies, I am the same way right now. I don’t know what I should put tons of money into. What if Chase blows up again. What if I invest in CenturyLink and then their coverage goes out for 3/4 of the U.S. Will that affect how much I’m getting paid? These are all concerns I have as I am starting in as well and I think taking a little time to know about your companies will help you feel safer about putting money there. ETF will help you spread your risk in a sector that you like but you question who actually performs well, keeps their balance sheets in check and continues to pay their shareholders and grow their dividends.

Dividends So Far:

In August, I made my first dividend from my portfolio on Fidelity.

August: $0.04 cents. Oh joy.
September: $3.10 Not bad!

I will have more updates as October comes to a close!

Rental Property/Rental Savings

This is my savings account that I am using to store the money I will use as a down payment and other costs when purchasing a home or duplex as a rental property. Right now, I keep it in a high yield savings account that makes about 2% interest and has a $1,000 minimum balance. I have about 25% of what I am hoping to have saved for a down payment right now with the price of properties in my area for renting ranging anywhere from $100,000 to about $150,000.

Once I hit the numbers I want saved to cover the rental amount and the costs and a few months of rent, I will move on from there. For now, I add a few hundred dollars into it every month and I am waiting.

Mortgage Payments

Now this doesn’t sound like an investment. It sort of isn’t but if you understand that as my mortgage goes down, I have a lot of options open up to me.

PMI:

We bought our house when we were newly married and because we are going to be living in it, we got it with a 3.5% down payment. This causes us to have to pay PMI (private mortgage insurance) til the mortgage balance is down to 80% (or 78% for some mortgages.) So putting extra towards the house will ultimately get us to that point and allow us to drop that $68-$80 extra payment off of our total monthly costs.

Equity/HELOC Opportunity:

Now, I understand that if I build up equity in my home and then I pull out a HELOC I now have two loans which equal the full value of my house and I’m back where I started. Plus HELOCs typically hold higher interest rates. However, once I have enough to pull out a HELOC, that money can be used to make purchases on a rental property which ultimate will leave me positive on my investing if I do it right. Then, the cash flow from that and other items helps pay back that HELOC and we’re back at square one except I have a second house now generating monthly rental income.

Mortgage Payoff:

Eventually I will retire. When I do, if I still have a mortgage payment, than I still have a substantial amount of month expenses along with the typical utilities, food, gas and insurances. If I am able to pay off my mortgage faster, I can cut out a good chunk of my monthly expenses. This ultimate helps my monthly cash flow that helps my investing and moves me closer to that investing to pay for my retirement.

Student Loans:

I don’t have any student loans. BUT when I got married, my wife had about $10,000 in student loans. We have since paid for her schooling out of pocket which has helped to keep that were it is. In the past year we have paid those down to about $3,500 and plan to be done with them fully before Thanksgiving!

Now it has taken a lot of sacrifice to do that. We eat out but maybe once a week, if at all, and we don’t buy much extra furniture or other fun items. We have a TV that I got my from parents that is older and starting to dim. Our table chairs are from a thrift store. There are few things that we can really say that we splurge on.

Car Loan:

Yes, my wife and I have a small car loan. We got a 6 year old car and we decided to pay 75% in cash and take a loan out for the rest. Because my company works with the seller company, doing this allowed them to drop their original price by about $4,000-$5,000. Not a bad buy now really. This equated to about a $3,500 loan and currently is around $3,300. We are making the monthly payments and as I mentioned in the Student Loan section, we are throwing everything extra into my wife’s student loans. Once those are gone, we might consider paying this off more quickly. But really, as the interest rate is really low, I’m not too worried if I am paying 3% interest on a ~$75 car payment and putting the rest into my investments where, it is not too difficult to do better than 3%. If we were to only pay the monthly payment, we’d only be out $277.60 over the life of the 4 year loan.

One these two are gone, we will only have the house to pay off! Debt-Free baby!

Conclusion:

So you now have a pretty okay picture of where we are at. We aren’t atypical and I’m not pretending to just have gobs of cash, experience, or to be better than anyone else at this. I’m simply sharing where we are at and hoping that others can align and feel that they too can start the journey of investing, paying off debt, and understanding the need to start as soon as you can so you build up more and more as time goes on.

Please feel free to reach out, comment your thoughts below, or to follow me on Twitter @youngbudgeteer. Always happy to share in the struggle and the journey!

 

 

 

Photo by Austin Distel on Unsplash