October was a simple month as far as dividends but I was also able to add a few stocks to my portfolio.
P.S. The picture is just a fun 3D Print that I played around with a bit and I think it turned out pretty well. What do you think?
I got paid dividends on my Stash account. 4 funds paid me out for a total of $1.30.
These are all index funds through the stash app.
Blue Chip Companies
Match the Market
Slow and Steady
I didn’t receive any dividends on my Fidelity account this month due to only having a few stocks right now (F, JNJ, VYM, VNQ.) My cash storage account paid me $0.04 but that really isn’t anything to talk about. As the months go on and I add companies to my portfolio, I will have a more steady level of dividends coming in each month.
Stocks I added
There were two stocks that I bought into this month. Those are SPHD and I bought a few more share of Ford (F).
F: Ford: I’ve had some good experiences with Ford and the cars that I’ve had have been fantastic. I know that they are doing some restructuring as well as paying for some union issues, but I think with the changes, people will be very happy. The most sold vehicle in the U.S. is the Ford F-150 and as cars are getting bigger here in the U.S., just like the people, I think they will fare just fine. They also have a high Dividend Yield up around 6%.
SPHD: Invesco High Dividend Low Volatility ETF
This is probably one of the best ETF funds to buy if you just want to put money away and not worry about researching the market. This fund will analyze companies in the Fortune 500 and select 75 companies with the highest dividend yields and then they will cut out the 25 businesses that have the highest volatility. It is pretty much just a recipe for good growth. They pay a 4.11% dividend yield right now and they pay their dividends monthly. This allows me to now start having a monthly dividend from my portfolio! I am grateful for simplicity.
High-Yield Savings Account
My high yield savings account, which is where I put my money that is not being invested in, paid me $10.54 for the month of October. This is the account that I store my emergency fund as well as my savings for a rental property. I used to have my emergency fund in my regular “Share” savings account but if it’s going to sit there for a while as an emergency or for savings, there is no point in having it not pay me. Regular savings account: 0.01% return, High-Yield: ~2%.
So technically this seems to be my highest yielding vehicle for passive income right now. It is only ~2% but as my other items start to pay more regularly, I expect it to grow a lot from the other items as well.
Change in Investing Platform
So, I’ve had Fidelity for my Roth IRA and it has been an okay experience. Fidelity touts $0 fees for everything. That is great. But the site kind of lack luster. It shows my securities all together in like… a table on the app. I could do this in excel. The website is not too much better. It shows charts but they are all very jumbled and I don’t feel like I can understand them very well. Where are the tabs, Fidelity? How come I have to scroll to look for dividends? Why can’t a group stocks into a sector or area to try to control my volatility?
I’ve been watching a lot of youTubers like “Joseph Carlson” on the Joseph Carlson Show that talk about their different platforms they are using, especially with these new changes happening between brokers vying for your investments, and I am having a hard time using Fidelity and feeling like I am just “going for it on my own”. I could go with some more broad securities, but I want to feel like I am not just shooting in the dark. Yes, I get that the point of trading in the stock market is about risk and being educated. Yes, I get that there is a learning curve. I just don’t feel like Fidelity has upped their game on putting the technology to use and putting the control of my items at the tips of my finger tips.
With all of this, I am making a movement to M1 Finance. They are a newer company in the investment environment and they haven’t done a ton of marketing. Most of their money has been spent on developing their software and developing the ability to do mostly everything that the different brokerages have collectively done but never on one platform. As someone who for work, delves analytics and reporting through visuals, M1 Finance has done something that I think the other companies don’t do. It simplifies the information but provides it all, and it helps you to visualize what you are participating in.
Top 3 Reasons about M1 Finance
One of the pieces that I like the most about it is that you can group up your securities into different sectors. You simply create a “pie” that includes the stocks and whatnot of the group you want to have and then you add that to other groups you have created to complete a full portfolio. That way, you can say, I want to have 20% of my portfolio to be Bonds, and then you have it. 20% allocation. And inside that group you can say, “of Bonds, I want 50% of those bonds to be the Blah Blah Blah bond.” And there you have it. Yes I can do 10% of a certain bond in a 401K or other managed account and then re-balance it, but I don’t pay anything for this. Not to mention possible taxable events if it were in a non-Roth account or if it were in a taxable account. I don’t see this anywhere else.
The percentages work to allow you a big picture view of what types of things you are trading in. It allows you to say, “wow, because Ford is so cheap, I just ended up buying 100 shares over a year, but I really want a stock of Amazon.” What happens is that, although you bought 100 shares of Ford which is about $880 right now, that one share of Amazon at around $1,700 now contains 65.9% of your portfolio. If Amazon drops, and it does frequently, then your portfolio will significantly drop as well.
Conversely, if you always make sure that Amazon is at 50% of your portfolio, then once Amazon is at 50%, it will buy other shares to make up for that. You won’t see as much of an off balance when you initially buy into Amazon though because of Fractional Shares, which I will talk about later.
And you get full control over your portfolio percentages. If my portfolio were to look like this:
COST: Costco: 50%
HD: Home Depot: 20%
APPL: Apple: 20%
O: Realty Income Corporation: 10%
And then I was to change these percentages to:
COST: Costco: 15% (less exposure of my portfolio)
HD: Home Depot: 30% (more exposure of my portfolio)
APPL: Apple: 15% (less exposure of my portfolio)
O: Realty Income Corporation: 40% (more exposure of my portfolio)
Now, when I put money in or when my dividends start to reinvest, they will pour large amounts into O: Realty Income Corporation and HD: Home Depot and not put as big amounts into APPL: Apple or COST: Costco until my portfolio was readjusted to the correct percentages. If you are only adjusting a few percentages at a time, it could definitely put some into the ones that you lowered the percentages of if they were to drop in value and drop below the percentages that you allocated. That is definitely possible.
DRIP (Dividend Re-Investing Plan)
Going along with the allocation setting, there is the issue of re-balancing and how to keep your portfolio from only being.. Apple or whatever. Yes, I understand that other places will invest your dividends for you in a mutual fund. (Fidelity only DRIPs for mutual funds, I checked. And I was upset.) I’m sure Charles Schwab or someone else invests this as well, but the DRIP on M1 Finance will collect dividends and then once you have reached over $10, or your set amount, it will invest into parts of your portfolio that have dropped from their target allocation. This means that if you have 50% in Energy companies, 50% in Tech companies and Tech companies start to drop to 40% because of the terrible stuff that is happening to FaceBook, (I will never own FaceBook stock, different story) that would mean that when you receive dividends from either of those companies, it will put that into FaceBook because you will be buying it cheaper than you had it before which lowers your Dollar Cost Average, or DCA, how much you are paying per share of a company.
It will also do it’s best to gives you a little bit of each company that is lower than your allocated percentage. For example, if you allocate for a large portion of your portfolio to be Real Estate, say 33%, then when money hits your cash balance, you will see that money work to even out your percentages so Real Estate is at 33%. Most of the time, this is through buying other items that are lower, or buying RE when it is lower than that amount. It can do this at increasingly focused amounts because it is not buying full shares.
If you got some dividends from Amazon or Google where the stock price is over $1,000, you would be able to put that dividend back into that company as opposed to just putting it in your cash balance and not being able to reinvest it into Amazon until it hit $1,700 or so. This is all all done through buying portions of those shares. I am allowed to have 1.05 shares of Amazon. And when they pay out a dividend, I will get x1.05 the dividend payout amounts. This works really well when trying to balance your portfolio to have some defense in certain sectors.
Again, I can’t get into the tech industry if every share is $1,000 when I only deposit $500 a month. I’d have to wait two months to invest. But again to the negative, when I put that into my portfolio, I will now see that I went from 100% Ford to 65.9% of Amazon and Ford is 34.1%. Obviously that is a basic portfolio, it just doesn’t sit right with me not knowing that a certain percentage of my portfolio could drop without me knowing that I am trying to protect myself against that risk. The pie percentages help protect you from going over too much in any one sector as well as going over in any one security in a sector.
It will be interesting to make the change and see what difference I saw before I changed versus what it actually is like. I am really thinking it will be closer to my ideal way to research and analyze companies as well as track their performance and reinvest for the best future.
Hopefully that gives you a good overview of what is going on in the YoungBudgeteer portfolio. As you are going through the journey of learning about investing and getting better, so am I. I think that diligent work and the willingness to change course if needed will help you have a well diversified portfolio, eventual retirement and life in general.
Do you like this style of reading? I plan on charting out everything that I do and create some data analytics on all of this. Would that be exciting? If you have any questions or you think this article was great, please feel free to reach out on Twitter, Instagram, or on the blog. I appreciate all that you do and hope my content is helpful. Have a great week!