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Progress Log: Investing for Passive Income

MTF

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$88k is very little money for any sensible returns from dividend stocks. Is there any way you can get better returns investing, say, $40k of it back into your business?

What if you could double, triple or quadruple that $40k this year via your e-commerce business and next year have a $200-300k portfolio? Or better yet, keep reinvesting most of your profits in your business for triple-digit or higher returns and then, having made high six figures, focus on dividend stocks?
 

Johnny boy

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Grow your business, build or purchase a SAAS business that can be managed anywhere and with little attention given to it, and make a lot more than 2500 a year lol. You won’t have to be chained to any one location, you can spend an hour or two a week on it, and then you’re in a 10x better spot.
 
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Colton

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Hi, my name is Colton and I’m a dividend growth investor.

It’s been a long time since I posted on this forum and I’m starting this thread to create an additional layer of accountability for myself.

It would also be nice to provide some value to others on the forum, as well as engage in conversation with other people who are interested in passive income. I don’t discuss my investments with friends or family, so this is my chance to share this journey and show what I’m doing.

(I don’t know if this will be interesting to anyone, but I hope that it will be.)

A little about me – I’m 25 years old and I earn the bulk of my income through an ecommerce business that I started a couple of years ago. It has been, and still is, a great opportunity for me but it has its downsides.

I am building this dividend growth portfolio to overcome the downsides of my business and job. To build a stream of income that is truly passive and will grow over the course of my lifetime and beyond.

In this thread I will be detailing my short term (monthly) financial goals as they relate to investing.
This thread may evolve over time but here’s my plan for now:

At the start of each month, I will set a goal to reach a certain average monthly income from my portfolio. Each week, I will purchase dividend growth stocks and share my purchases here. I’ll state my monthly investment income as well.

Starting Point:
Average monthly investment income: $259.98
Total Accounts Value: $88,480

Next week I will provide an update and post my goals for July here.

Until next time.
 
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Colton

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That is valuable; it's just the slowlane method and goes against everything in both books!

There are much faster ways to do what you are seeking. But, this way will work too.
Correct me if I’m wrong, but my takeaway from MJ’s books wasn’t that investing in the stock market is a bad thing, but rather that it’s not a reliable method to achieve wealth at a young age. To that point, if you check out my most recent update you’ll see that I’m still working on the entrepreneurial end of things too. So I don’t think I am going against everything in both books.

I started this thread to focus more on my investments than on business, so that might have given the impression that I think investing is more important or that I'm against being an entrepreneur.

In my view, it just makes more sense to start investing young and still be working to try and start/grow a business rather than exclusively doing one or the other, but I’ll admit I could be wrong and time will be the judge of whether this was a good call.
 

Colton

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Update – 7/3/21

On Monday, I purchased shares in the following businesses:

Kimberly Clark (Consumer packaged goods)
Verizon (Telecom)
Lockheed Martin (Defense)
Campbell Soup Company (Consumer packaged goods, food)
American Electric Power (Utilities)
Pfizer (Healthcare)
Bristol-Myers Squibb Co (Healthcare)
PepsiCo (Consumer packaged goods, food)
Pinnacle West (Utilities)
Gilead Sciences (Healthcare)

These are, for the most part, businesses that I consider to be good values in the current market. Lately I have been dividing my purchases between a larger number of businesses to add an additional layer of protection. It’s the same concept as buying into an index fund, but on a much smaller scale. The upside is that every purchase I make will have an increased element of diversification and valuations will average out. The potential downside is less efficient use of capital (Could I identify the single business that represents the best value out of all the above options?)

After these purchases, the average monthly investment income of this portfolio now sits at $263.25.

By the end of July, I will aim to reach $280 per month.

Thoughts:

The temptation to chase high yields at the expense of quality is a persistent obstacle to overcome -
especially as someone who wants to use dividends to help pay bills in the near future.

To avoid this, I must only invest in businesses that I understand. I must weigh multiple factors when choosing businesses to invest in, such as dividend payout ratio, growth streak, growth rate, and business quality.

Nothing in this thread should be taken as investment advice. I am simply sharing my own personal journey and thought process.

Until next time.

-------------------------------------------------------------------------------------------------------------

@MTF
In my case, I would not be confident that I could get better returns by investing this money back into my ecommerce business.

@Martzee
I have only briefly looked at options trading and it is something that I should probably learn more about. It would take a lot to convince me to actively trade the stock market, but I’m going to follow your thread with interest as well.

@Metz
Like you, I also get paid through my ecommerce business while I’m sleeping. However, I am in a different situation because I prepare each and every one of my orders by hand.
I’m always on the lookout for ways to improve my existing business, or “plug the holes” as you said. But I see this as something that should be done while I am investing in dividend growth stocks and not before.

@Omsubedi
Thank you. I’ll definitely do further reading on call options.

@Johnny boy
I am always looking for ways to grow my ecommerce business, as well as looking for new business opportunities, so thanks for your suggestion.

However, liquidating my investment portfolio to fund one of these business ideas would be reckless in my view. Whatever money is invested into my ecommerce business (or a new business) will not come from selling shares in my portfolio. I believe that while I am taking risks with starting new businesses, I should also be investing in a conservative manner so that my wealth will be protected and I can simultaneously build a reliable source of passive income for added financial stability.
 
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Guest-5ty5s4

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This concept seems very slowlane to me.

It’s just not a business. You’re investing your extra money into a money system, which is fine if you have no other use for it.

But like @MTF said and @MJ DeMarco says in the books, these passive investments are really better for people after they’ve made more money through active means.

Options trading can be better. It’s still not amazing with lower capital though.

Business trumps all. Forget about 30% per year - try 30% PER SALE
 

Johnny boy

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Johnny, do you know anyone who has done this? How they found the business to buy, what it cost, what kind of skills they already had or didn’t have, and how they manage it?

first place id look

Or, look within your industry to see opportunities to build a software solution to a problem, advertise it, build it, etc. And then let it run. Once it is up and running it requires only occasional updates.

If I had extra capital I didn't know where to put, before any options trading I would purchase classic cars and lease them out and expect a 15% yearly return.
 
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Guest-5ty5s4

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Hey, you might be right.
The thing that bothers me about stocks and bonds at my age (and I do own a good amount of stocks) is that it takes decades and decades for it to be worth anything.

I've really used my stock investments as a kind of secondary bank account that grows and that I can tap if I need to for better opportunities.

That being said, cash is king when it comes to doing business or seizing new opportunities, whether a new investment, a real estate deal, or a business move.
 
G

Guest-5ty5s4

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I certainly hope that it won't take decades and decades for the portfolio to be worth anything, but I guess we shall see. Personally, if I could get this thing to the point where the dividend income is covering my rent, I would consider that to be extremely valuable.
That is valuable; it's just the slowlane method and goes against everything in both books!

There are much faster ways to do what you are seeking. But, this way will work too.
 

Colton

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January 2022 Update

Alright, so we've had some turbulence in the stock market and the fund is sitting at a value of about $106k right now. (Didn't lose as much as the S&P500, which is to be expected as this is a fairly conservative portfolio) I was honestly hoping for a larger correction so I could scoop up some cheap shares, but we'll see, anything can happen.

The monthly dividend income continues it's steady upward march, and this is where we're at as of right now:

2022-01-29.png
 

Colton

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Could you start a second ecommerce business that you can invest these funds in?

I'm in a similar position to you. I'm 23, run an ecommerce business and have about $110k net worth. I've been reinvesting the profits but the business has stopped growing. Reinvesting more money doesn't increase the sales or profit anymore. I believe the business has reached it's natural size so now it is a cash cow.

It's tempting to use that money for security and comfort, to set me up for life (on the slowlane). I could put some of it as a deposit on a house mortgage, keep some in the business and put the rest in the stock market. However it is such a slow route to wealth. After inflation, index funds usually grow at about 4% per year. 4%!!! It's hard to get excited about.

So instead I am opening a second ecommerce business. You said you pack orders yourself and I do as well. Therefore I am going to run both businesses from one warehouse, saving costs. As well as the money, I can leverage the experience gained over the last 4 years. I already know what works and what doesn't. I looked for a niche where the products are small in size so they can easily be stored in my current warehouse (no increase in fixed costs). So, cash I have now and the future profits from the first business will go into the 2nd business. Eventually I want to use 3rd party fulfilment for packing orders for both businesses.

If you still want to pursue the stocks then go for it. You've got more than most 25 year olds have and it will make the rest of your life comfortable. However I think you're missing an opportunity to leverage that money using skills you've already learnt. Compounding works not just with money but with experience too! Start small and invest the money in a second business once it shows signs of success, you can calculate risk.
Yeah, that's a great way of putting it. And congrats on your success thus far!

Of course I want to get the best return + cash flow on my capital, and although dividend investing is a pretty slow process it's just the best place I've found so far to put my savings. I have not found a business idea that I'd want to invest a lot of money into, which isn't to say it can't be done but rather a reflection on my abilities and risk tolerance.

I am still trying out new ways to make money (adding a new ecommerce product this week) and I just prefer to do this without spending much money if possible. My mindset/experience is that maybe 1 out of 20 ideas will actually be profitable for me. The way I built my ecommerce business was by doing 1 thing per week that could increase my income going forward (usually by creating a new product listing) and I did this without spending any money upfront. That was kind of a turning point for me, learning to test ideas out quickly, one after another, without losing money. The only problem is that I feel I've reached the point of diminishing returns on this business, and finding it challenging to come up with new successful ideas.
 
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Martzee

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Hi, my name is Colton and I’m a dividend growth investor.

It’s been a long time since I posted on this forum and I’m starting this thread to create an additional layer of accountability for myself.

It would also be nice to provide some value to others on the forum, as well as engage in conversation with other people who are interested in passive income. I don’t discuss my investments with friends or family, so this is my chance to share this journey and show what I’m doing.

(I don’t know if this will be interesting to anyone, but I hope that it will be.)

A little about me – I’m 25 years old and I earn the bulk of my income through an ecommerce business that I started a couple of years ago. It has been, and still is, a great opportunity for me but it has its downsides.

I am building this dividend growth portfolio to overcome the downsides of my business and job. To build a stream of income that is truly passive and will grow over the course of my lifetime and beyond.

In this thread I will be detailing my short term (monthly) financial goals as they relate to investing.
This thread may evolve over time but here’s my plan for now:

At the start of each month, I will set a goal to reach a certain average monthly income from my portfolio. Each week, I will purchase dividend growth stocks and share my purchases here. I’ll state my monthly investment income as well.

Starting Point:
Average monthly investment income: $259.98
Total Accounts Value: $88,480

Next week I will provide an update and post my goals for July here.

Until next time.
I am in the same boat. A dividend growth investor and options trader. I consider my trading my business and trade it as a business. In 2014 I started an LLC and invest aggressively. But with a small account (yours at $88k, mine is currently at $72k) I also added another feature to my dividend growth investing - my stock position monetizing by trading options around those positions. My dividend income is small, currently, $400 dividend received this year, projected dividend next year $3,600, but my options income is in average at $4,500 a month. Once I reach $10k a month of combined income, I will start looking at shifting to full-time trading.

I post here in this forum too (time to time) to keep myself accountable and encourage those who think it is not possible to invest in the stock market and make money (many believe it is gambling, many believe, you can't make a decent income and money in the stock market as they look at it from the 401k perspective, that is not a way to make money for sure. You must be an active money manager like a business, not a passive buy and hold dude...

Congrats, you can make it and I wish you good luck! I will follow your thread regularly.
 

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Eventually, I'm trying to do the same as you, building a dividend-rich portfolio for passive income -- which is dope plan, by the way (though clearly I'm biased). I'm bootstrapping an e-commerce site that I launched last month (after closing down my first one because I realized the new branding and platform was much easier to work with) but one of the reasons I even started the thing was because of its potential to build passive income.

For now, I sell print-on-demand clothing and the only time spent is on coming up with new designs and then marketing strategy. Even though this current site is just starting out, I've had a handful of mornings where I woke up to sales notifications. While I don't intend on remaining solely PoD, the site is optimized where already I'm making money while sleeping which is pretty passive. I feel, especially with your current portfolio, you've probably already experienced that.

With that in mind though, does your e-commerce site require your attention all the time? If so, are there any parts of it that you can automate so that you can reinvest your time into activities that generate more money and then use that extra growth in both your portfolio and reinvesting into your site? Then again, how are you defining passive income? For me, passive income is money that I'm making where I'm not actively babysitting something; I build a system that, once set up, runs on its own and just needs adjustments like new products, a new interface, more payment options -- whatever improvements to make the system run better and to attract and retain customers -- but those improvements require a few hours here and there, not a full work week's worth.

Especially with saying how your interest in building a dividend portfolio is to help overcome your business's shortfalls, I'm a little curious about why not plug those holes first and *then* build that kind of portfolio.

No judgment or anything but like I said, would love to hear more about your process because maybe the answer to finding the goal you're looking for is a lot simpler than it might appear. If the goal is to create passive income, maybe your e-commerce site could be the engine you're looking for (and admittedly, one you have much more control over and need less money to make a larger impact, depending on your margins).
 
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Omsubedi

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Hi, my name is Colton and I’m a dividend growth investor.

It’s been a long time since I posted on this forum and I’m starting this thread to create an additional layer of accountability for myself.

It would also be nice to provide some value to others on the forum, as well as engage in conversation with other people who are interested in passive income. I don’t discuss my investments with friends or family, so this is my chance to share this journey and show what I’m doing.

(I don’t know if this will be interesting to anyone, but I hope that it will be.)

A little about me – I’m 25 years old and I earn the bulk of my income through an ecommerce business that I started a couple of years ago. It has been, and still is, a great opportunity for me but it has its downsides.

I am building this dividend growth portfolio to overcome the downsides of my business and job. To build a stream of income that is truly passive and will grow over the course of my lifetime and beyond.

In this thread I will be detailing my short term (monthly) financial goals as they relate to investing.
This thread may evolve over time but here’s my plan for now:

At the start of each month, I will set a goal to reach a certain average monthly income from my portfolio. Each week, I will purchase dividend growth stocks and share my purchases here. I’ll state my monthly investment income as well.

Starting Point:
Average monthly investment income: $259.98
Total Accounts Value: $88,480

Next week I will provide an update and post my goals for July here.

Until next time.
Hi Colton congratulations on your passive income. I believe learning on Sell to Open a call options will definitely help you increase your monthly returns without increasing/exposing you to more risk.
 

Martzee

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I have only briefly looked at options trading and it is something that I should probably learn more about. It would take a lot to convince me to actively trade the stock market
You do not have to be active with options, trade a wheel strategy - if you own 100 shares, place a covered call above your cost basis price (in case you get assigned you will be sold out for a profit) and then you can forget it. It will either expire worthless and you rinse and repeat it, or it will expire in the money and sell your 100 shares of the stock. In that case place at the money or slightly in the money put trade and again forget it - it will either expire worthless (then rinse and repeat) or you get assigned and buy back 100 shares of the stock. You will do this once a month only so it is not much active trading at all. And it significantly boosts your income (I roll calls and puts to avoid assignments so I collect dividends and premiums but if I get assigned it is not an end of the world to me - you can also use the options against a portion of your holdings).

Here is a picture of what options do to my portfolio income (on top of the dividends):
1625612030923.png
 
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Omsubedi

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You do not have to be active with options, trade a wheel strategy - if you own 100 shares, place a covered call above your cost basis price (in case you get assigned you will be sold out for a profit) and then you can forget it. It will either expire worthless and you rinse and repeat it, or it will expire in the money and sell your 100 shares of the stock. In that case place at the money or slightly in the money put trade and again forget it - it will either expire worthless (then rinse and repeat) or you get assigned and buy back 100 shares of the stock. You will do this once a month only so it is not much active trading at all. And it significantly boosts your income (I roll calls and puts to avoid assignments so I collect dividends and premiums but if I get assigned it is not an end of the world to me - you can also use the options against a portion of your holdings).

Here is a picture of what options do to my portfolio income (on top of the dividends):
View attachment 38765
Martzee, you Nailed it with the explanation.
 
G

Guest-5ty5s4

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You do not have to be active with options, trade a wheel strategy - if you own 100 shares, place a covered call above your cost basis price (in case you get assigned you will be sold out for a profit) and then you can forget it. It will either expire worthless and you rinse and repeat it, or it will expire in the money and sell your 100 shares of the stock. In that case place at the money or slightly in the money put trade and again forget it - it will either expire worthless (then rinse and repeat) or you get assigned and buy back 100 shares of the stock. You will do this once a month only so it is not much active trading at all. And it significantly boosts your income (I roll calls and puts to avoid assignments so I collect dividends and premiums but if I get assigned it is not an end of the world to me - you can also use the options against a portion of your holdings).

Here is a picture of what options do to my portfolio income (on top of the dividends):
View attachment 38765
It’s true. I do it too. I still can’t call this a business though.

Control is lacking, and scale is limited to your returns and your contributions.

My advice would be to build a fastlane business and ALSO sell options and/or invest in real estate.
 

Colton

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Update: July 10th, 2021

On Monday, I purchased shares in Clorox (CLX), Verizon (VZ), and Prudential (PRU).

I’m particularly excited that Clorox is trading at a reasonable valuation. This appears to be a rare deal on a high quality business.

Clorox has increased its dividend for 44 consecutive years, with a 5 year CAGR of 7.6%. Share price has seen a pullback recently as “cleaning habits” return to pre-pandemic levels, but the business is well diversified and continues to grow at a healthy rate. In my view it will be a great long term investment.

7257631-15644069852784834.png
Above: Clorox history of dividend increases

This week I also learned that JPMorgan Chase & Co. (JPM), another holding of mine, has just increased its dividend by 11%.

The Freedom Fund now generates $267 per month in passive income, not including capital appreciation.

Until next time.

P.S.

Nothing in this thread should be taken as investment advice. I am simply sharing my personal journey and thought process.

----------------------------------------------------------------------------------------------------------------------
@Metz
Outsourcing fulfillment may be possible for some of the items I sell, but not for the majority of them.

I have no issue keeping up with demand these days, in fact my main concern is figuring out how to make more sales.

Regarding inflation and the stock market, I don’t lose any sleep over it and I will continue investing as usual by dollar-cost-averaging into the market.

@thechosen1
This style of investing does take time to see results, so you’re not wrong.

@Martzee
That’s very interesting, thanks for the explanation. You’ve given me more to look into. Since you started your LLC back in 2014, have you looked back and figured out your average annual return?
 
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Colton

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Update – 7/31/2021

The Dividend Growth Portfolio is currently valued at $92,332
And produces just over $280 per month in passive dividend income.

2021-07-31.png

So, after doing this for a few weeks I am thinking that a posting schedule of once per month would be more appropriate.

Dividend growth investing is a slow grind, and weekly changes in the portfolio will be miniscule compared to monthly changes. It’s taken 2 years of investing to get to this point.

If I come up with an idea to make weekly posts more interesting/valuable, then I may start posting more frequently again. But I’m not sure what to talk about really… if you have any questions or comments then be sure to drop a line here in the thread and I’ll still reply to you as soon as I see the comment.

Otherwise, I’ll plan to post once monthly for accountability purposes. I may include some details about my ecommerce business and other things I am doing to try and increase my income, because that is what will allow me to invest more money and grow the portfolio at a faster rate.
 

WJK

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@WJK Thanks man, but the dividends only make up a small portion of the portfolio's total return. The portfolio has also gained about $12,000 this year due to capital appreciation alone. The reason I don't pay much attention to this number is that I don't intend to sell my shares, so the capital appreciation is kind of irrelevant to me. It's the actual dividend income that I will be using to help fund my lifestyle in the future.
The thing that scares me about stocks and bonds is my lack of control. It's too much like gambling for me.
 
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This is an interesting thread to me. I too chase passive income -- not in the stock market. I do it through buying privately owned real estate trust deeds and notes at a discounted price. I too am trying to balance my business income with passive income for the long haul. It's a lot of work to find these deals, but, it sure is fun when I do.
 

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DECEMBER/ END OF YEAR UPDATE

The dividend portfolio grew from 99k at the tail end of November to 107k as of now. That's nearly all down to capital appreciation. The dividend payout grew to just over $350 per month, as a result of shifting things around within the portfolio. I'm focusing more on etfs right now, shuffling capital over from some of my individual stocks into VOO, SCHD, and QYLD.

December was another slow month in terms of business revenue... crossing my fingers that things pick up a bit as we head closer to spring (again my business is in the gardening niche) but meanwhile I'm dedicating 4 hours per day toward new projects and trying to boost income. My preference is to focus on location-independent businesses because I've got the travel bug.

Thanks to Martzee, I'm also selling options (wheel method) in a practice portfolio through Think or Swim. Tracking everything in excel to see how things go and I'll compare it to my existing real money portfolio over time.

Happy to report that I reached my goals for 2021 that I had written down at the start of the year. I've got my goals defined for 2022 and I'm ready to go.
 
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Tony100

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Could you start a second ecommerce business that you can invest these funds in?

I'm in a similar position to you. I'm 23, run an ecommerce business and have about $110k net worth. I've been reinvesting the profits but the business has stopped growing. Reinvesting more money doesn't increase the sales or profit anymore. I believe the business has reached it's natural size so now it is a cash cow.

It's tempting to use that money for security and comfort, to set me up for life (on the slowlane). I could put some of it as a deposit on a house mortgage, keep some in the business and put the rest in the stock market. However it is such a slow route to wealth. After inflation, index funds usually grow at about 4% per year. 4%!!! It's hard to get excited about.

So instead I am opening a second ecommerce business. You said you pack orders yourself and I do as well. Therefore I am going to run both businesses from one warehouse, saving costs. As well as the money, I can leverage the experience gained over the last 4 years. I already know what works and what doesn't. I looked for a niche where the products are small in size so they can easily be stored in my current warehouse (no increase in fixed costs). So, cash I have now and the future profits from the first business will go into the 2nd business. Eventually I want to use 3rd party fulfilment for packing orders for both businesses.

If you still want to pursue the stocks then go for it. You've got more than most 25 year olds have and it will make the rest of your life comfortable. However I think you're missing an opportunity to leverage that money using skills you've already learnt. Compounding works not just with money but with experience too! Start small and invest the money in a second business once it shows signs of success, you can calculate risk.
 
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WJK

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Could you start a second ecommerce business that you can invest these funds in?

I'm in a similar position to you. I'm 23, run an ecommerce business and have about $110k net worth. I've been reinvesting the profits but the business has stopped growing. Reinvesting more money doesn't increase the sales or profit anymore. I believe the business has reached it's natural size so now it is a cash cow.

It's tempting to use that money for security and comfort, to set me up for life (on the slowlane). I could put some of it as a deposit on a house mortgage, keep some in the business and put the rest in the stock market. However it is such a slow route to wealth. After inflation, index funds usually grow at about 4% per year. 4%!!! It's hard to get excited about.

So instead I am opening a second ecommerce business. You said you pack orders yourself and I do as well. Therefore I am going to run both businesses from one warehouse, saving costs. As well as the money, I can leverage the experience gained over the last 4 years. I already know what works and what doesn't. I looked for a niche where the products are small in size so they can easily be stored in my current warehouse (no increase in fixed costs). So, cash I have now and the future profits from the first business will go into the 2nd business. Eventually I want to use 3rd party fulfilment for packing orders for both businesses.

If you still want to pursue the stocks then go for it. You've got more than most 25 year olds have and it will make the rest of your life comfortable. However I think you're missing an opportunity to leverage that money using skills you've already learnt. Compounding works not just with money but with experience too! Start small and invest the money in a second business once it shows signs of success, you can calculate risk.
Good for you. Max out your assets!
 

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Hi, my name is Colton and I’m a dividend growth investor.

It’s been a long time since I posted on this forum and I’m starting this thread to create an additional layer of accountability for myself.

It would also be nice to provide some value to others on the forum, as well as engage in conversation with other people who are interested in passive income. I don’t discuss my investments with friends or family, so this is my chance to share this journey and show what I’m doing.

(I don’t know if this will be interesting to anyone, but I hope that it will be.)

A little about me – I’m 25 years old and I earn the bulk of my income through an ecommerce business that I started a couple of years ago. It has been, and still is, a great opportunity for me but it has its downsides.

I am building this dividend growth portfolio to overcome the downsides of my business and job. To build a stream of income that is truly passive and will grow over the course of my lifetime and beyond.

In this thread I will be detailing my short term (monthly) financial goals as they relate to investing.
This thread may evolve over time but here’s my plan for now:

At the start of each month, I will set a goal to reach a certain average monthly income from my portfolio. Each week, I will purchase dividend growth stocks and share my purchases here. I’ll state my monthly investment income as well.

Starting Point:
Average monthly investment income: $259.98
Total Accounts Value: $88,480

Next week I will provide an update and post my goals for July here.

Until next time.
Hi Colton, congratulations on your passive investment income. I think learning on Sell to Open a Call Option (STO Call option or shortinga call option, in Wall st. Jargon), and assessing liquidity of options in the stocks you are holding will definitely help making your monthly income larger without increasing your risk.
 

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Metz

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@Metz
Like you, I also get paid through my ecommerce business while I’m sleeping. However, I am in a different situation because I prepare each and every one of my orders by hand.
I’m always on the lookout for ways to improve my existing business, or “plug the holes” as you said. But I see this as something that should be done while I am investing in dividend growth stocks and not before.
Ahh, that makes a lot more sense as to why the model you're working with isn't truly passive the way you want it. Would there be any way to outsource fulfillment then or is it not worth the investment or delegation at this point? I guess in my head, I'm just thinking about ways for you to free up your time so you can chase finding more sales, boost your profit, and then you have more money to invest back into your portfolio to get you to your goal faster. But I understand sometimes fulfillment ought to be done in-house, whether because of the products themselves or just the current scale of the business.

Still, good on you for grinding!

A question relating to your stocks: I've started to be a bit more conservative what with worries about inflation and how that affects commodities among a few other factors in the increasingly-post-pandemic world. What's your take on it all? Has it caused you to slow down due to the risk of a bubble.. do you dollar-cost-average to mitigate those dips and then just shares on sale when/if the bubble pops? Just curious about your take on it.
 

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Quality is the Name of the Game

(Update: July 17th, 2021)


This week, the focus was on quality.

On Monday, I purchased shares in Johnson & Johnson (JNJ), Kimberly Clark (KMB), and Clorox (CLX).

By all means, these are “boring” companies to invest in but I am excited nevertheless because they are some of the highest quality companies available on the market. And they are trading at reasonable valuations right now considering what you get as an investor.

These are the kinds of businesses that I want the Freedom Fund to be based around. Although they don’t provide the highest starting yields, they have excellent track records of paying increasing dividends year after year.

They’re the kind of businesses that allow you to never have a to lift another finger for the rest of your life and still be confident that your dividend income will continue to grow at a rate that significantly outpaces inflation.

These businesses rarely come on sale but occasionally you can grab them at-or-near fair value. Looking at JNJ specifically, they suffered some negative press this week related to their vaccine and sunscreens. These events always blow over with time but can present short term buying opportunities.

im-369895.jpg
Above: This week JNJ recalled some Neutrogena and Aveeno sunscreen sprays over benzene related concerns. Image credit: Wall Street Journal

While the core of the Freedom Fund is based around stocks like JNJ, there is also room for ancillary positions that offer higher starting yields with a bit more risk. These stocks are valuable in their own right because they provide more immediate income.

My personal rule is that each ancillary position will be limited to 1% of the total fund, while a core position such as JNJ may reach up to 8% of the fund.

Next week you can expect me to share a couple of higher yielding (ancillary) dividend growth stocks that I’ll be using to help reach my passive income goal for July.

Until next time.

P.S.

Nothing in this thread should be taken as investment advice. I am simply sharing my personal journey and thought process.

---------------------------------------------------------------------------------------

@Martzee
That’s fantastic, congratulations on your success!

I’ve been watching videos and learning about the wheel strategy. It’s a very simple concept, and the way people talk about it sounds like a free lunch with no catch.

What would you say are the major downside(s) of your strategy, compared to the standard buy-and-hold that I’m doing? I’m not seeing where the increased risk lies, but there must be a tradeoff if we’re talking about earning a 45% annual return, over 4 times that of the S&P500. If it is really that easy then I can’t imagine why every big-name investor wouldn’t take advantage.
 

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