I’m behind on posting updates on my Income Fund, so here’s a look back to last year’s November 2017 Income Fund update, following on from my October update.
The following chart shows the cumulative dividend income this year compared to previous years.
With cumulative income of $9,461 I’m still far ahead of 2016’s yearly total, but there’s still a little way to go to my 2017 target of $9,925.
The year-on-year decrease for this month is again because of my changed asset allocation – most of my holdings now only pay out in the third month of each quarter.
The chart below shows a breakdown of my income this month.
Individual stocks contributed $98 or 99% since some of my stocks paid dividends this month.
Finally, interest from the Income Fund cash reserves made up the remaining $1; I keep a little cash aside to smooth out ‘withdrawals’.
Dividend income from stocks
Seven stocks paid dividends this month as detailed below for a total of $98.60.
Last November my individual stocks paid $95.89 from nine stocks. Since then, I’ve sold out of CLX and VZ and put the proceeds into VHDYX instead. I’ve also bought additional shares in T ($700) plus a small ($100) addition in GIS when moving the shares to Vanguard over the last year. On the plus side, I still earned more dividend income from stocks than the same month in 2016.
Income from funds
I didn’t receive any income from Vanguard funds in my portfolio this month.
VHDYX, VTSAX and VIHAX pay out on a quarterly schedule (March, June, September and December). VIHAX being an international fund has a tendency to pay higher dividends in June and December as some international companies pay on an annual or bi-annual basis. Distributions from both funds are usually qualified which means they are taxed at the lower 15% dividend rate.
My Income Fund asset allocation is shown below.
I’m now holding 100% stocks in my Income Fund which is held entirely in Taxable accounts. This is a much more tax efficient than before when I was holding bonds.
Cash is virtually zero as I just have a small amount left to manage cash-flow.
The following table shows the details plus the new asset allocation for my Income Fund.
Individual and International stocks (VIHAX) are a little over my target and US Total Stock is a little under. I’m not that worried about getting them exactly in line; I’m just putting a bit more money to the under-target assets each month.
Changing allocation ratio via new capital takes a lot of time because of the size of my contributions vs the total value, so I’m not in a particular hurry to meet these targets. I won’t be selling any assets to re-balance faster unless there’s really a big opportunity for tax-loss harvesting.
Fund Purchases & Sales
I added $2,900 of new money to my Income Fund in November. $2,300 of this was the standard contribution I make from my salary. I’m confident this amount is at least always left over after paying for Savings and Living Expenses. I also added a further $600 which was left over from my salary after paying living expenses and savings.
I transferred $825 from Fund Cash into my Living Expense account. This is an automatic payment and represents about 20% of my Living Expenses that my Fund pays every month.
Money is fungible, so a dollar in one account is no different than a dollar in another account. The distribution from the income fund allows me to invest $825 more of my salary than I otherwise would be able to. Withdrawing money gives me experience in managing cash-flow from the Income Fund. One day I won’t have a salary after all.
Fund Cash is now at $1,162 and held in the VMFXX money market account which is where all dividend distributions are paid into. $1,015 of this is reserved for future distributions of $825 a month.
Cash has decreased by $575 since last month due to the $825 withdrawal above less dividend income. $95 remained uninvested.
My Income Fund increased in value from $399,501 to $412,246 this month, a new record high. This increase includes $2,900 of new capital.
I’m keeping monthly ‘withdrawals’ at $825 a month through December. These withdrawals pay some of my monthly bills allowing more of paycheck to be invested.
Beating my 2017 goal of $9,925 income this year is guaranteed since I’m so close, and income in December will be significantly higher because most holdings will be paying dividends.
November was another good but uneventful month. Which, when investing, is a really good thing.
How was your latest month? Are you one step closer to Financial Independence?
Quote of the Day
What I am looking for is not out there, it is in me.