Year By Year Portfolio Stats

First, let me tell you why I am posting this.  When I am reading other sites, it helps me see how they did it with real numbers.  It triggers something inside me and it just makes it more real or doable.  I wanted to add to that community.  I hope this helps you see that it can be done and triggers action for you like it did for me when reading the other sites.  In other posts, I will detail some instructions on how to do it.  I have some dividends rolling in later this week so I can show you the what that looks like.

Summary Since Inception – 4/26/2012

Savings$363,229.35
Change in Value$404,870.27
Value$768,099.62
Total Dividends$81,531.46
Rate of Return Since Inception18.36%

As you read below, I really want you to pay attention to the dividends each year.  Dividend growth is really what we are after.  I’d honestly prefer the stocks I hold  to have gone down so I could buy more shares to throw off more dividends.

Keep an eye on the “Since Inception” column each year.  The chart (with yellow and black lines) at the bottom of year shows savings (black) charted with portfolio value (yellow).  Portfolio value = stock price X number of shares.

Click on each picture to see larger one.

Terms

Dividends Not Reinvested – Dividends I received, but did not reinvest.  Probably because I forgot to check the “reinvest dividends” when I bought the stock.  I was still learning the mechanics.
Net Cash In/Out – Money transferred in or out from another brokerage account.
Net Transfers In/Out – Savings or withdrawals of money.  I’ve done both over the last 5 years.
Account Value Appreciation/Depreciation – Amount the stock in the accounts have gone up or down based on stock market returns.  Does not include dividends.
Dividends Reinvested – Dividends we received and reinvested.
Interest Reinvested – Gains from cash sitting in account.  Pays like .01% money market rate.  Terrible.

2012

A couple people at work told me about an option we had to self direct our 401k.  Basically, we can buy mutual funds and individual stocks.  Individual stocks pay dividends.  I start moving money in.   Dividends recieved: $928.58.  Exactly $77.38 a month.

2013

A really good year for the market.  I lost to the S&P 500 this year 28.45% to 32.39%.  I’ll still take 28.45% for any year.  Dividends recieved: $11,507.28.  Almost $1,000 a month.

2014

I flat out whipped the S&P 500 this year, 26.80% to 13.69%.  The portfolio is really starting to take off now, yellow line separating from black line.  I really like the brokerage firm I’m using so I consolidate all other accounts shown on the Net Transfers In/Out line, transferred  $108,354.17.  Mentally, I also really like being able to see the entire stash all in one place.  Dividends recieved: $18,416.53.  Over $1,500 a month.

2015

I don’t know what to even call what I did to the S&P 500, 21.32% to 1.38%.  Killed it! Notice the drop on the black line below.  We had to pull out $43,328 for a relocation that did not work out.  I’m pointing out that life happens.  I also realize that we could pay for something like college from here and still see an increase in the stash.  Dividends recieved: $23,660.12.  Almost $2,000 a month.

2016

Beat the S&P 500 a little bit, 14.56% to 11.93%.  I strayed away from my fundamental investing approach and got killed.  I won’t do that again.  We also pulled out $33,000 to pay off 2 cars.  I thought I hated letting go of part of the stash more than debt.  I was wrong.  We hate debt more than pulling money from the stash. Especially, after writing the checks each month for about 18 months.  The dip in the 3rd quarter was due to one of my holdings getting clobbered.  I did not sell it and you can see that same holding finished off the end of the year strong.  Reinforces the “think long term” philosophy. Dividends recieved: $27,018.95.  Exactly $2,251.57 a month.   Dividend growth is slower due to my straying from core investing philosophy and one of my holdings is going up, so it’s costing me more to buy more shares.

Thanks for stopping by and I hope you found the post helpful.

Posted in Financial Independence, Net Worth, Our Story | 3 Comments

Taxes, Avoid Them If You Can

Old joke:  Two tax advisers meet for drinks after work. The first one says, “What’s the difference between tax avoidance and tax evasion?” The second one answers, “Ten years in jail.”

But seriously, you work very hard for your money and should do anything legally you can to avoid paying taxes that you don’t have to.

I first started to look into a way to limit my family’s tax exposure in 2012 when I heard Mitt Romney made like $20 million and hardly paid anything in taxes.  Now at that level of income/wealth, I’m sure he is doing all kinds of tax avoidance based on recommendations from his tax team of advisors.  First thing I did was pull out the tax tables and look at them.  At the highest rate, investment income is taxed at about half of what regular income is (20% vs. 39.6%).  I don’t know about you, but I certainly do not like the idea of making more from my salary only to have the government take a higher percentage.

The left side is the income tax you pay on income you earn.  This is the income you work hard for.  You are trading your time for money.

The right side is the income tax rate you pay on long term investments and qualified dividends.  This is the income you have planned and saved for.  Once built up, it does not require you to trade your time for money.  This income is generated whether you are working or not.  You want this type of income to be Financially Independent.

For simplicity sake, assume the $75,299 is after any deductions and/or tax credits.  That means you can actually make more than $75,299 since you will either get your standard deductions or itemized deductions and/or tax credits.

Left side, If a married couple was working hard and trading time for income and made $75,299, they would pay $10,364 in income taxes.

Right side, If a married couple was not working and had money in a normal, after-tax brokerage account, they could make $75,299 and pay $0 in taxes.

When I really understood the chart above, it was a real eye opener.  I simply don’t understand why this kind of information is not taught to everyone and in a simple manner, in high school.

If you would like to see someone who has been doing this for a few years, check out, Never Pay Taxes Again.   He puts his family’s tax returns online each year.  This site taught me a few things.

Thanks for stopping by and hope the post has been helpful.

 

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401k vs. Roth 401k

One of the most important decisions you need to make is whether to put your retirement money into a Roth or a Traditional 401k.  The decision is a personal one depending on your view on taxes.  On the traditional 401k, you get a tax break now, but pay regular in tax rates when you withdrawal.   On the Roth 401k, you don’t get a tax break now, but pay no tax when you withdrawal.   Take a look at the comparison table below.

I’d personally rather pay the $25 now per $100 invested (Roth) than pay $400 later per $100 invested (Traditional).

The Roth has another advantage, no Required Minimum Distributions (RMD) in your lifetime.  On the traditional 401k, you have to start taking RMD’s at 70 1/2.  The government wants that tax revenue.  In english, this means under the Roth, I never have to take any distributions in my lifetime.  I can pass all of the money in the Roth to my kids tax free to them and they don’t pay taxes when they pull from my Roth.  It is a huge consideration if you want to keep wealth in your family and not give it to the government.  I know I do.

I have been putting money into the Roth since my company starting matching on the Roth in 2016 and will continue to do so.  I stopped putting money into the traditional 401k altogether.

What is the ‘Rule Of 72’
The rule of 72 is a shortcut to estimate the number of years required to double your money at a given annual rate of return. The rule states that you divide the rate, expressed as a percentage, into 72:

Formula:  Years required to double investment = 72 ÷ compound annual interest rate

http://www.investopedia.com/terms/r/ruleof72.asp

Thanks for stopping by and hope the post has been helpful.

Posted in Investing | 4 Comments

Hope, Freedom, and Dreams

I hope everyone learns how to get better with managing their finances.
I hope everyone achieves Financial Independence as early as possible.

I hope everyone gets wealthy.

I hope everyone’s fears begin to diminish.  Fear of losing a job, fear of not having enough for their families.  These need to go away.

I hope everyone has enough wealth to do the work they love and pursue their passions.

I hope everyone has more freedom and time for their families.

Think about what you love to do. What you would do if money was not a concern. You know what I’m talking about, where you lose track of time, stay up later than you should, and have more energy after working on it.  You’d even do it for free.

That’s what you should be doing.

That’s the what the world needs you to do.

That’s when the world starts to become a better place.

I will show you exactly how my family is getting to Financial Independence and how you can do it.  It is not complicated, but it is not easy.

Let’s get you in a place of Financial Independence. A place full of hope, freedom, dreams, and completely free from fear.

I want you to find your hope, freedom, and pursue your dreams for you and your family.

Thanks for stopping by and hope the post has been helpful.

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The Importance Of Rate Return

Rate of return is the most important item to get really wealthy.  There is so much focus on budgeting and spending less than you make in the personal finance industry.  You do have to live on less than you make so you have something to save, but you don’t have to make yourself miserable.  I firmly believe that the journey is very important.  My wife and I don’t want to save everything to be rich later and not enjoy our lives now.

To illustrate the importance of rate of return, I built a spreadsheet that compares the growth of savings using 3 different rates of return, a Target Date Fund, the S&P 500, and my (FI Warrior’s) rate of return.  I used the most recent 5 year for all three.  I only have 5 years of data on myself and I wanted to be fair.  I chose a Target Date Fund since most people have those in their 401k’s and they suck.  Target Date funds routinely perform worse the the stock market average.  The S&P 500 is the benchmark everyone gets measure against.  A lot of people of those in their 401k’s too.  An S&P 500 index is a decent option.  I have the ability to do a “self directed” 401k.   This means I can buy individual stocks or any mutual funds that Charles Schwab offers.  Not many people have this option in their 401k, but if you do have it, get into it.  Today.  I was not able to get into it until early 2012 and you can see my portfolio take off in the graph at the top of the page.

For savings amount, I chose $1,200 per year.  That is only $100 per month.  You can change this yourself if you download a copy of the spreadsheet.  I put in $18,000 a year since that is the IRS maximum for 401k’s in 2017.

I also run the numbers out 100 years because it is important for us to build and leave a legacy for our grandkids.  The link to download your own copy of the spreadsheet is at the bottom of the table.  You can tweak the gray cells with your own numbers if you don’t like the assumptions I use in this post.

Let’s highlight a couple points in time from the spreadsheet so you can really see the importance of the rate of return using a couple key points in time.

Save $1,200 a year from Age 25 to 65.  For year 82, I used, grandkids are born at my age 60 and amount it is worth when the grandkids are 46 years old, my current age.  A fun little what if scenario for me.

Save $18,000 a year from Age 25 to 65. For year 82, I used, grandkids are born at my age 60 and amount it is worth when the grandkids are 46 years old, my current age.  A fun little what if scenario for me.

Rate of return on investments is extremely important, but does not get as much attention as it should.  Most of the focus is around budgeting and deprivation to become wealthy.  Spend a little time getting educated on investing to increase rate of return and enjoy the journey of life.

Thanks for stopping by and hope the post has been helpful.

Posted in Dividends, Investing, Stocks | 2 Comments

Don’t kill the hen that lays the golden eggs

A lot of us have heard this story since we were kids and here is a refresher.

A man had a hen that laid a golden egg for him each and every day. The man was not satisfied with this daily profit, and instead he foolishly grasped for more. Expecting to find a treasure inside, the man slaughtered the hen. When he found that the hen did not have a treasure inside her after all, he remarked to himself, ‘While chasing after hopes of a treasure, I lost the profit I held in my hands!’

How does this relate to Financial Independence?
Dividend stock = Hen
Dividend Payments = golden eggs

When you own good quality dividend stocks, they pay out a portion of their profits in the form of dividends. Most companies pay them out every three months or quarterly. Great companies have a long track record of paying and increasing their dividends annually. These companies are known as the Dividend Aristocrats.

Main purpose is for your money to earn more money forever. If you sell your stock for capital gains (kill the hen), then you loose the ability for the stock to pay you ever increasing dividends (golden eggs). Once you sell the stock, it’s gone and no longer produces income.

Would you rather have capital gains to buy something like a house or car or would you rather have increasing income coming in to your bills forever?

My goal is to figure out how to get more hens laying more and more golden eggs.

Thanks for stopping by and hope the post has been helpful.

Posted in Dividends, Financial Independence | 2 Comments

Any Monkey Can Beat The Market

I am linking to a couple articles for you to read.  The articles will show you how poorly the financial industry/experts are at beating the market.  I wish these types of article/stories made the major news cycle every year.  With a little bit of knowledge, you will easily be able to beat the market, earn great returns, and not pay fees to the financial industry for their sub par performance.

Monkeys Beat the Market

Excerpt – “Give a monkey enough darts and they’ll beat the market. So says a draft article by Research Affiliateshighlighting the simulated results of 100 monkeys throwing darts at the stock pages in a newspaper. The average monkey outperformed the index by an average of 1.7 percent per year since 1964. That’s a lot of bananas!”

 

84% of large-cap funds generating lower returns than the S&P 500 in the latest five-year period

Excerpt – “That hot-shot mutual fund manager you’re betting on to make you rich might be generating returns that fall far short of the benchmark
stock index the fund tracks.  The longer-term outlook is just as gloomy, with 84% of large-cap funds generating lower returns than the S&P 500 in the latest five-year period and 82% falling shy in the past 10 years, the study found.”

Wait, a monkey throwing darts to pick stocks  outperformed the S&P 500 by 1.7% and beat 84% of the “experts” since 1964?  Yep.  Just buy an S&P 500 index fund and you’ll beat 84% of the “experts”.  There is no way I’m paying the experts 1% of my portfolio to not beat a monkey.  I’m also not going to listen to any of their picks either.

If anyone tells you they can predict how the stock market is going to do in the future, run away, go buy a monkey, darts, and the stock pages for the monkey to throw darts at.  You will pay way less in fees and beat 84% of all the experts charging you to earn you less money.

Thanks for stopping by and hope the post has been helpful.

 

Posted in Investing, Stocks | Leave a comment

Protect Yourself

Today I am going to talk about the tool I mentioned last week in my January Portfolio update.  I use it so I don’t lose too much money.  The tool is the “Trailing Stop Sell” order.  I have Trailing stop sell orders on all my stocks in all my accounts.

Protecting losses:
I put Trailing Stop Sell orders in place immediately after I buy a stock.  So if a stock goes down immediately after I buy it, I will only lose the amount I chose to.  I usually set mine between 5-10%.

Protecting Gains:
The nice thing about the Trailing Stop Sell orders is that it also protects gains as well.  The same order I put in right after buying will still be in effect if a stock goes up past where I bought it.  When the price of the stock moves up, the sell price moves up too.  It adjusts automatically and by the minute when the stock market is open.   Once the stock hits a new high, a new sell price gets set.  The sell price will be based on that new high even it takes several days, weeks, months to go low enough to hit my 5% trailing stop sell order price.

There is a lot on the screen above.  Let’s look at the important part for setting up the order on the screenshot below.

Action: Sell.  I set it to sell all the shares of ABBV in the account
Quantity: Number of shares you want to sell.  You don’t have to sell all shares.
Venue: Smart.  Unique name to Schwab.
Order Type: Trailing Stop
Trailing amount:  This is the amount you are willing to let the stock pull back from its high.  I chose 5%.  % is in the next choice box.  I could have also selected a $ amount.
Timing: GTC which means “Good Til Cancelled”.  My trailing stop limit will stay in effect until I cancel it.
Click Review button to review the order.  And OK on the next screen.

That’s it.  I now have a Trailing Stop Sell in place in this account for 26 shares of ABBV.

Here is what the screen looks like now.

Here is the I mportant part of the screen.

The first order in the list is the Trailing Stop Sell I just created for ABBV. The Trigger Value column shows the price when I placed the order minus my 5% trailing stop or $57.74.  ABBV was trading at $60.78 when I placed the order.

Here is what the same order looks like about a week later.
ABBV must have gone up a little since my Trigger Value moved up a little to $57.96. I did not have to do anything else, the Trigger Value just moved up since the stock moved up at some point.

Once in place, these orders are automatic and take the emotion out of the stock market.  Like I mentioned in my other post, you can even be out of the country and completely disconnected and the order will execute.


I was here when one of my sell orders automatically executed. I did not know everything sold off until I got back in the US and had cellular coverage. Pretty awesome.

 

 

Thanks for stopping by and hope the post has been helpful.

Posted in Investing | 2 Comments

StockWatch

It’s another fun tool that visualizes what happens to a $1,000 if invested over the 10 year time frame. StockWatch was created by the same guy who created StockChocker.  As time and the animation progresses, fun facts are added underneath.  Sometimes during the course of a day or week, I still get caught up on what is happening to a stock now.  Watching these play out makes me to remember to think long term.

This particular StockWatch reaffirms my Dividend Aristocrat investing approach. Microsoft had an early lead but was over taken over due to a shift in technology and the iPod/iPhone.  In The Future for Investors by Jeremy Siegel, he warns us to stay away from these shiny tech stocks.  The main reason to stay away from the shiny, tech stocks is the fact that they can be replaced fairly quickly by shifts in technology.   It’s much harder for a consumer staple company with a strong brand like Coca-Cola or Marlboro to be replaced quickly.  Also, in sub par or flat rate or return years, at least you are getting dividend income.  And if you are reinvesting that dividend income when a stock is not returning well, you are buying more of the stock with dividend reinvestment since it is cheaper.

Be sure to check out some of the other StockWatches.  They are fun too.

Have a great weekend!

Thanks for stopping by and hope the post has been helpful.

Posted in Investing, Stocks | 2 Comments

Crush The Market Tool

My core investing approach is to only buy stocks that are on the Dividends Aristocrats list. I learned this approach in 2005 when I read the Future For Investors by Jeremy Siegel.

I have not been able to find a stock screening tool that focuses solely on the Dividend Aristocrats, so I built my own and it is below.

Since I will be updating the tool whenever I am doing my own stock analysis, I also placed it in the Tools section of the website.

The table does not display fully in today’s post due to the sidebar.  The horizontal scroll bar is at the bottom.  I made the Crush The Market Tool a single page in the Tools section.  You can see the fill-width table here.

Buy these stocks and you will crush the market.

What the tool does:
– Data goes back to 1/2/1970 if stock was trading
– Data goes back to the first date available if not 1/2/1970
– Accounts for splits and dividends
– Displays the CAGR (Cumulative Annual Growth Rate) for each stock
– Displays the current Dividend Yield %
– Displays the current Annual Dividend in $’s
– Displays the Ex-Dividend Date
– Displays Number of years of stock history
– Can search the entire table
– Can sort any of the columns (Ascending & Descending)
– S&P 500 CAGR is listed at the bottom of the table. I listed the S&P 500 at the bottom of the table since it performs worse than the majority of the Dividend Aristocrats.

How to Use:
– Find the best performing stock? Sort Descending by “CAGR” column.
– Find the highest dividend yield? Sort Descending by “Dividend Yield %” column.
– Find the highest dividend amount ($)? Sort Descending by “Annual Dividend $” column.
– Find when a you need to buy a stock to get the next quarterly dividend payment? Sort Ascending by “Ex-Date” column and add 3 months. Look the stock up on your favorite stock website to find the exact Ex-Dividend Date.
– Find out if you just missed buying a stock to get the next quarterly dividend payment? Sort Descending by “Ex-Date” column and add 3 months. Look the stock up on your favorite stock website to find the exact Ex-Dividend Date.

Company NameTickerNumber of YearsCAGRDividend Yield %Annual Dividend $Ex-Date
AbbVieABBV4.0019.004.192.562017-01-11
Abbott LaboratoriesABT34.0213.202.621.062017-01-11
Archer-Daniels-Midland CoADM34.029.902.681.202016-11-14
Air Products & Chemicals Inc.APD34.0213.102.212.282016-12-07
AFLAC Inc.AFL33.0217.002.451.722016-11-14
Automatic Data ProcessingADP34.0212.302.353.442016-12-29
C. R. BardBCR34.0212.600.4491.042017-01-19
Becton DickinsonBDX34.0213.801.692.922016-12-07
Franklin ResourcesBEN35.0223.102.00.802016-12-28
Bemis CompanyBMS33.0212.602.331.162016-11-14
Cardinal Health Inc.CAH30.0217.002.401.802016-12-29
Cincinnati Financial CorpCINF29.0210.905.463.842016-12-19
Colgate-PalmoliveCL40.0311.402.301.562017-01-19
The Clorox CompanyCLX34.0214.102.643.202016-10-24
Cintas CorpCTAS28.0212.804.675.322016-11-02
Chevron Corp.CVX46.037.303.744.322016-11-16
Dover CorpDOV32.0210.402.231.762016-11-28
Ecolab IncECL29.0214.201.251.482016-12-16
Consolidated Edison IncED46.0310.103.672.682016-11-14
Emerson ElectricEMR45.039.603.261.922016-11-08
Genuine Parts CompanyGPC34.0210.802.642.632016-12-07
W. W. GraingerGWW33.0213.201.984.882016-11-09
HCPHCP33.0211.604.921.482016-11-08
Hormel Foods CorpHRL27.0213.201.90.682017-01-12
Illinois Tool WorksITW33.0212.702.102.602016-12-28
Johnson & JohnsonJNJ46.0312.802.803.202016-11-18
Kimberly-ClarkKMB33.0212.903.173.682016-12-07
Coca-Cola CoKO46.0311.903.391.402016-11-29
Leggett & PlattLEG30.0212.702.851.362016-12-13
Lowe's Companies, Inc.LOW32.0216.301.951.402016-10-17
McDonald'sMCD46.0314.803.083.762016-11-29
MedtronicMDT36.0215.402.291.722016-12-21
McCormick & CompanyMKC40.038.702.011.882016-12-28
3M CompanyMMM46.0310.702.494.442016-11-16
Altria GroupMO46.0320.603.492.442016-12-20
NucorNUE34.0213.602.481.512016-12-28
PepsiCoPEP45.0311.302.923.012016-11-30
Procter & GamblePG46.039.003.062.682017-01-18
Phillip MorrisPM9.0112.004.404.162016-12-20
PentairPNR44.0310.002.311.362016-10-19
PPG IndustriesPPG34.0210.001.621.602016-11-08
Sherwin-WilliamsSHW32.0214.801.183.362016-11-16
Stanley Black & Decker Inc.SWK32.029.601.932.322016-11-30
SyscoSYY44.0315.302.451.322017-01-04
AT&TT33.0210.004.731.962017-01-06
Target CorporationTGT34.0211.003.742.402016-11-14
T. Rowe PriceTROW29.0215.002.932.162016-12-13
VF CorporationVFC32.0210.303.241.682016-12-07
WalgreensWBA2.006.001.841.502016-11-15
WalmartWMT45.0317.502.982.002016-12-07
Exxon Mobil CorpXOM46.0310.003.493.002016-11-08

Benchmark: S&P 500 CAGR since 1/3/1970 is 7.02%. All but one stock in the above list have beaten the S&P 500 since 1970.

Thanks for stopping by and hope the post has been helpful.

Posted in Dividends, Investing, Stocks | Leave a comment

Look At Your Portfolio Every Day

Yes, I am serious. Actually, look at it multiple times a day. As a dividend growth investor, you will need to get used to your capital moving a lot. It can move both up and down quite a bit over the course of even a day. When your portfolio gets larger, you will want to be mentally prepared see big swings in capital. And here’s the kicker, you should be happier when it goes down. What? Yes, when it goes down you will be able to buy more shares which results in more dividend income. Again, the goal is to live off of the dividends and never touch the capital itself. Even if you are not actively investing more of your own capital, you will likely still be buying more shares with dividend reinvestment.  You want to reinvest dividends cheap too.

Here’s a couple analogies:
If you were buying steak at the grocery store, would you be happier when the price increased $2 per pound or would happier when the price went down and is on sale by $2 per pound? Remember, you are buying steak, not selling.

If you owned a house, it was rented, and generating a steady income stream, would you sell the house if it increased 10%? Would you sell the house if went down 10%. Since you originally got into real estate for income generation, you would likely just keep the house and the income stream.

To this day, I still can’t help but get a little happy when I see the green on an up day and a little upset when I see red on a down day. Just look at your portfolio, think about how you feel, but don’t touch. It’s a behavior I am still trying to master and definitely requires a lot of practice. It’s fun to watch when it goes up, but I get more excited when it goes down and I have capital waiting to buy more shares and get more dividends and more income.

Thanks for stopping by and I hope the post helps.

Posted in Dividends, Stocks | 5 Comments

Our $1,182,742.41 Mistake

Yep, that’s not a typo or misplaced comma. That is how much we would have as of 1/1/2017 if we would have invested the $200,000 gain from the sale of our house when we sold in December 2005. I definitely did not know what I know now about investing and you can’t change the past. The purpose of looking back and documenting our mistake is to help my kids and others think differently on homeownership. I was reading a couple posts over at Millenial Revolution and it really got me thinking. So I decided to run our scenario.

Invest in Stock Market 
Proceeds from house sale$200,000
Time10 Years
Rate of Return19.21%
Value after 10 years$1,382,742.41
Dividend Yield3.6%
Cash from Dividends (Yield x Value after 10 years)$49,758.20
Monthly income from Dividends$4,146.51

Are you kidding me? We would have $1,382,742.41 in capital generating $49,758.20 annually or $4,146.51 monthly. We could buy 3 of our houses outright according to the latest $404,000 estimate from Zillow. Or that $4,146.51 every month could easily pay our $1,478 mortgage payment and all our utilities….. including a fat cable and internet package.

Hold the phone. I see a problem with your math. You have 19.21% as your Rate of Return. You can’t 19.21% for 10 years, that’s impossible! Oh, you went back and did a search for the best stock return over that time period and used to stack the deck for stocks vs. real estate.

Nope.

We sure did get 19.21% for that 10 year period, just not with that $200,000. We have been buying MO (Altria) since 2005 when I read The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New by Jeremy Siegel. It was actually trading as PM (Phillip Morris) back then. Mr. Siegel use MO for several of his examples in the book and it was the number 1 stock by far since the 1950’s. I figured, what the heck and bought a little MO to get in on the action. MO continues to be the top performer in our portfolio every single year. See the rate of return for yourself on Stock Choker.

We still have the $200,000, it’s just locked up in the house. We can’t get to it until we sell the house. We can’t use it to pay bills. To sell the house we would have to pay roughly $24,000 (6%) in real estate commissions. It also takes a long time to sell a house. We could sell the $1,382,742.41 of MO instantly for $8.95 at Schwab.

Why are you telling me this? Well, I’ve got kids and I don’t want them to make the same mistake we did. There’s got to be a better way. After looking at the math, it may be better to rent to until you have built up the from investments to pay cash.

Posted in Our Story, Real Estate, Stocks | 3 Comments