December is always an exciting month for those of us that have a lot of their dollars tied up in either ETFs or mutual funds because most of those financial instruments either pay out quarterly or a bit more rarely annually so that means for most of us December is the biggest income month of them all!
I’m not a dividend investor but I do like to see what kind of investment income my securities are generating because that’s one of the great things around stocks versus other investments. They not only generate capital returns but also generate income that can either be used for spending or be reinvested into more securities. I’m also not living off my income so the fact that the income is concentrated so heavily into quarters and more so in December doesn’t bother me either although it would be nice for graphing purposes for the income to be more evenly split. I figure that when I retire my monthly income for non mutual fund/ETF quarters will be higher but still relatively low in relation to the quarterly payouts but that’s what budgeting will be for. The payout in December will likely be a lot more than I can spend in December so I can leave the rest for January, February and March spending until the next quarterly payment in March comes around.
The only changes I made last month was redirecting my new contributions to heavily hit the small-cap funds which were far below my asset allocation. I looked into potentially moving my dividends into new funds but some of my tax-advantaged accounts did not have an easy way to do this so for the most part the dividends there were re-invested in the fund that paid them out. For my taxable accounts, they went into cash that will be used for future purchases.
We see a pretty heavy tax-advantaged lean in my dividends this month which is good since it means less paid taxes for me. That’s understandable since at my income level, I’ll only push money into taxable accounts after maxing my 401k and my ROTH which means the tax-advantaged accounts will get a bigger contribution every year than my taxable accounts. As my income grows, this might change but the tax-advantaged accounts will likely always retain a big lead over my taxable accounts partly due to contributions but also because of tax-free growth.
The best part about dividends is that they get re-invested right back into the “business” allowing me to grow my imaginary employees’ potential hourly wage each month. The $3175.58 earned this month will be re-invested back into my portfolio. I calculate my annual yield based on my current holdings at about 2.5% which means that the new dividend income generated this month will increase my annual income by 79.38 and my average monthly income by $6.61! That might not seem like a lot but it’s an annual increase that’s bigger than my monthly income last month with no new contributions from me. This type of stuff adds up guys and this December is a good sign of things to come. We’re due for some much smaller months in the near future but I’m excited to see what next December brings and what kind of increase we can see y/y in our monthly incomes.
This wraps up 2015 for me and I’ll start tracking 2016 next. Unfortunately I don’t have the full 2015 picture but at least I caught December – the biggest month of them all in this comparison. Seeing such big income months certainly helps motivate me in my quest for independence because 3.1k in income generated in one month is nothing to sneeze at guys!
December Total : 3175.58
2015 Total* : 3254.95
Portfolio hourly monthly wage : $19.05/hr
Portfolio hourly yearly wage* : $1.62/hr
*Data from November and onward. Hourly wage calculated based on 12 month total which means $0 earned assumed for first 10 months.