Friday, December 30, 2016

Passive Income Report: December 2016 ($2,658!)

It is time again for my Monthly Progress Review, the last of the year, and a PERSONAL RECORD!

In each progress review I will list a summary of all dividends I received, the rental income I received, and any purchases I made from that particular month.

This monthly report covers December 2016.  

I hope you enjoy these posts and that we can learn how to grow our passive income streams and build real long-term wealth together! 

I am happy to report that December saw the highest Passive Income amount I've ever achieved in a single month, which I'll analyze in depth in this report.


Read More to see how I earned $2,658 this month in passive income,

Dividends Received
In total, I received dividends from five companies and five funds and two special dividends this month:

Pfizer, Spectra Energy, Wells Fargo, Duke Energy, Prospect Capital, Vanguard 500 Index, Vanguard Wellington, Vanguard Star, Vanguard Target Retirement, and Vanguard Emerging Markets Index.   

I also received a dividend from USAA as they do each year for all of their members, and finally, every year my annual Costco Rebate check comes in December as well. I include this 'special dividend from Costco' in this report for two reasons: It really is 100% passive, as I do not have to do anything at all to earn it except get my groceries like I normally would anyway, and two, it is in fact substantial enough (always in the hundreds of dollars) to include in my roll-up of passive income investments for the month.  Though it isn't from a fund or stock per se, it still is a dividend.

Anyway, listed below are the details for each:



Rental Income Received
I currently have two rental properties, my Missouri Rental and my Colorado Rental.  Listed below is the cash flow they provided this month:


Therefore, with dividends and rental income, Total Passive Income Received: $2,658

Purchases

No new purchases. Agh!  Next month.  It has been four months since my last purchase (Wells Fargo).

Thoughts on This Month
This was an incredible month for passive income, a personal record for me, which is always very exciting to achieve.  And as you can see above, this record still occurred with about $120 less from my rental properties (thanks to another repair at my Missouri Property, which made my cash flow for that investment negative $61 for the month), which lowered what I was expecting to receive.  

As awesome as it is to receive over two thousand six hundred dollars in one month while not doing anything for it, I'd encourage those reading this post to realize the following:

1) My portfolio definitely was not built over night - I've been diligently saving and working very hard since I was 18 years old.

2) Despite this large amount, I've still got a long way to go to truly achieve FI.

But, I hope this is encouraging to you.  I hope you read this post and follow my journey and clearly see that YOU CAN DO THIS TOO. Simply working hard, and saving, and being very disciplined, and sticking to a plan over many years (as other bloggers demonstrate as well) really can produce sizable wealth.  That's awesome news and encourages me to keep going.

Finally, I almost did not post this comment, but there is a part of me that is slightly disappointed with this number, believe it or not, and I think I have a good reason why, so please let me briefly explain.  For the past four Decembers, I'd been averaging passive income growth of around 30%.  I know that 30% isn't sustainable for a long period of time, but 30% has been my actual average for the last four years. So, in making my $10,000 passive income goal for this year, I thought I could at least get around a 20% growth rate from last December's total. Since I'd reinvested all dividends and had also added new capital throughout the year as well, getting 20% growth seemed manageable.  

Unfortunately, despite it's size ($2,658), this number actually came in at growth rate of only around 4%.  Significantly less than my projection, and very significantly less than my previous four-year-average.

So what happened? Well, I honestly don't know, but what I think happened was that many of my funds which contain bonds, that have been paying out awesome amounts of income in December for the last four years, finally got really hurt this year and therefore did not pay out nearly as much. This is my theory at least, and with mutual funds I don't think it is possible to forecast exactly what their yield (or income) will be.  So, I do my best to guess based on last year's numbers, but unfortunately this year was a very bad year for bonds (which as you know pay out a large amount of return in income).  Does this seem right, or does anyone else have a theory?

All of that said, I think I'll need to readjust my income growth rate going forward, as bonds I think will continue to have a hard road ahead, especially compared to the last several years. Be on the lookout because in several days I will post my 2017 goals.

Well, here is how the year turned out, month by month:



With the addition of this month's income to my Progress Tab I now have earned $8,841 this year in passive income.

Thanks for reading, and I always appreciate any comments,

Passive Income Dude 

16 comments:

  1. Congrats on hitting a new record, the month of December definitely adds a nice boost to your yearly total!

    ReplyDelete
    Replies
    1. Thanks Dividendsarecoming. December is always my best month. I'm a believer in mutual funds and so that skews my monthly average every year with December as a high month. There's value it it I think though. Take care!

      Delete
  2. Awesome month. Anytime it is a positive number you are moving in the right direction keep it up and next year will be better

    ReplyDelete
    Replies
    1. Thanks Dividendsandhobbies! I hope so. Onwards, onwards! Loving what you're doing at your site, thanks for stopping by,

      Delete
  3. Wow congrats on the awesome month keep up the great work.

    ReplyDelete
    Replies
    1. Hey thanks Matthew. It is always nice to make a new milestone, though I fell short of my goal for the year. It's been a long journey to get here and so I am thankful and excited to see the progress! 2017 should be big hopefully!

      Delete
  4. Hi, congrats on the aweseome results this month!

    You have three funds which contain bonds: VTIVX (10%), VGSTX (40%) and VWELX (33%). I imagine there's quite a bit of overlap between them too - is there any reason that you don't just buy a total bond fund and add more into your VFIAX fund to get the mix of stocks to bonds that you want? It'd likely be cheaper / simpler too.

    Also if you're earning nearly $500 from VWELX, I'm thinking you'll be eligible for the admiral class of shares (VWENX) which are cheaper but require $50,000 minimum. Maybe those are in a 401k or other brokerage though, but if possible I'd suggest looking into the cheaper Admiral classes.

    Anyway, it's all looking great - congrats and wishing you all the best for 2017.

    -DL

    ReplyDelete
    Replies
    1. Hey DivLife, thanks for the comment! Looks like you know your Vanguard funds!

      A few thoughts to answer your question and offer a reply: You're right on the bond percentages, but there seems to be a good amount of diversification benefit when you get into the details of each fund and look at the specific holdings. I share a little bit of this information on my Portfolio tab. Though there may be some overlap, holding each fund offers a lot of global and asset diversification (domestic/international, corporate bonds, and stocks, etc).

      It also has to do with my particular investing timeline with buying the funds (VGSTX only had a $1000 minimum that I borrowed from my dad when I started ivesting at 18 and paid him back working summer jobs, VTIVX wasn't even around when I was able to make new purchases initially, VWELX is an amazing fund that I wanted to get into, etc).

      For your other question, I wish I had enough for VWENX and I intend to make the switch when I do, but trust me I am not there yet! $50K is a lot. I love the analytical thought to your comment and greatly appreciate your support! Take care,

      Delete
  5. That is an awesome month! I love December cause all the income trickles in for those of us with a lot of ETFs and mutual funds. I'm a big fan of vanguard funds myself and most of my money is in those as well.

    ReplyDelete
    Replies
    1. That's awesome Timeinthemarket! Yea mutual funds and ETFs offer much better diversification and most likely a much higher risk-adjusted return over the long run. Waiting until December develops patience, but it is an awesome month to end the year. I just wish I knew how to forecast their income better (though I don't think it is possible). Take care,

      Delete
  6. Holy shitballs Batman! Nice job setting a new record. Your post is very inspiring and proves that it's possible to retire wealthy.

    ReplyDelete
    Replies
    1. lol, thanks. It's been a long road but I think the best is still ahead! It really isn't 'easy' to retire wealthy, but it definitely is possible for almost anyone with enough time, discipline, and patience. I've enjoyed following your journey at IH. Take care,

      Delete
  7. Great job for the month with a very respectable average of passive income rolling in. Nice to see your rentals are still in the green on the whole. Sometimes one property has the carry the other. I think the key words from this post are, "You can do this too." We aren't dealing in rocket science. Just good old fashioned discipline, common sense and patience. Thanks for sharing.

    ReplyDelete
    Replies
    1. Thanks Keith! I only hope to increase it in 2017, since our debt load should be lower. As for the rentals, Missouri continues to not be that great of an investment, but once North Carolina is added I should see my average go decently higher.

      And yes, I believe everyone really can achieve FI and have a giant snowball of passive income. You are COMPLETELY right about "good old fashioned discipline, common sense and patience" being some of the key steps. That pumps me up!! Take care,

      Delete
  8. Congrats on a great month and although its only 4% - growth is still growth. Looking forward to your updates in '17. I still plan on including your monthly updates in my dividend income tracker. Best of luck in 2017.

    ReplyDelete
  9. Man your December rocked!

    I can't wait to see what 2017 brings your way.

    ReplyDelete