Lending Club Update 4/4/19

I know this is long over due and I normally like to get these done every 3 months however March was a busy month and I finally carved out some time for this, so let’s get started.

To refresh everyone on the update from December found here, I had 274 active notes after investing another $1500 into the platform. I had a rather even split of notes with an average weighted rate of 15.88% and had collected $717.29 as of then.

LC notes snip 12.13.18note details 12.13.18

I began pulling money out of the platform about November or late October and have been pulling money out ever since. I plan to keep pulling money out until I begin work full time in June and shortly after that I will begin reinvesting back into the platform as well as putting new money into assuming I have extra money left over after the 40% rule. For those of you that are joining for the first time or forgot the backstory, I am a college student with no income for 9 months of the year, I invested in Lending Club to receive a great yield (6-9% generally) and keeping my money liquid with monthly payments to pay for my expenses during school. In early April my portfolio looks like this.

lc 4.4.19lc pie chart

Had some defaults and some fully paid notes along the way but not looking bad, we earned another ~$260 in interest in the last 4 months so far although it is slowing down.

Below we will compare the non-adjusted and adjusted account values with December data first followed by April data.

LC interest non adjust

lc adj 4.4.19

The account value has decreased dramatically due to pulling out hundreds of dollars every month to live off of.

LC interest 12.13.18lc non adj 4.4.19

The April adjusted value has taken a big hit due to the numerous late notes I am currently holding. Even if they default I still should be in good shape overall and will just need to ride out the storm the next few months until we can get some new money into the account and breathe some life into it.

lc table

Above is a table I populate nearly every month on various aspects of the account including the immediate return taken from dividing the adjusted account value by the (total deposited into the account – the total withdrawn). This is taken over the course of 2 years now so the 10% isn’t all that great however as with all of my accounts they have grown dramatically over the years and I have made wiser investing decisions as time has gone on usually. Also returns were so low in October due to the influx of new capital into the account and the notes hadn’t started payments yet essentially making them dead money at the time.

The final table I will show you guys today is a simple interest table by each month.

interest lc

You can see the dramatic uptick with the $3000 I put into the account this summer as we entered Fall and now its on the downswing again.

That just about wraps it up for me, I hope you all learned something today in regards to Lending Club and how I keep track of its performance. I can’t recommend the platform enough assuming it fits your investment criteria. I mentioned earlier my need for liquidity while making a decent return and getting paid monthly to cover my expenses and this platform does just that. I can’t beat the return with what I am getting either and I look forward to putting some more money into it in the future and being able to compound my returns rapidly. I should be able to purchase 8-10 notes a month at my current rate and with additional funds I could compound interest and reinvest in notes every 2 days on average in the future (15 notes a month or $375 in interest and principal every month).

As always let me know if you have any questions!

Thanks,

B^2

How to Invest your first $500

Just a quick heads up, I don’t normally write articles like this, in fact this wasn’t even for my blog. Another Instagram investing page/ blog asked me to write this article and after waiting to hear back from him for 2 weeks and not seeing it posted on his blog either I decided to put this article on my blog since after all it was my hard work and effort to write it.

So, you saved up your first $500 and you want to invest it. First off, I would like to congratulate you on this feat, approximately 78% of Americans (I’m writing this in the United States, sorry to everyone outside the United States that this statistic doesn’t apply to you) live paycheck to paycheck so the fact that you escaped that cycle deserves some kudos. Before you start investing though, we need to get a couple things straight. If you have any high interest debt (i.e. credit card debt) please handle that before you even think about investing. A beginner at investing will have a hard time earning more than the debt is costing not to mention the other ways high interest debt affects your credit score and other financial aspects of your life. So first and foremost, handle high interest debt if you have it before you start investing. Secondly, if you do not have an emergency account or fund, I would highly advise to put your $500 into that before you start investing. Accidents happen, illness happens, the world is an unpredictable place and having extra money in the event of an emergency can be a life saver.

You’ve taken care of step 1 and step 2 and you still have $500 you’re ready to invest with. Congratulations you are about to embark on the path to financial success! Warren Buffett, one of the most successful and renown investors once said, “If you don’t find a way to make money while you sleep, you will work until you die.” That’s what we aim to do! Before we begin everyone should know that all investments carry some sort of risk and have different time horizons to work with. Pending your current financial situation and what you aim to do with that $500 you can take several different routes listed below.

Quotation-Warren-Buffett-If-you-don-t-find-a-way-to-make-money-87-85-65

  1. Invest in yourself

Let me make this clear before you go on a shopping spree, there are ample resources when it comes to free education. YouTube, Podcasts, Free eBooks, Blogs, Written articles, Company financial documents etc. are all at your disposal with an internet connection. Assuming you have exhausted the resources above or are looking for something more detailed I would recommend several investing and financial books and making the commitment to read and follow through on them. To name a few, The Intelligent Investor – Benjamin Graham, Think and Grow Rich – Napoleon Hill, Rich Dad Poor Dad – Robert T. Kiyosaki, The Little Book of Common Sense Investing – John C. Bogle. While not all directly related to stock market investing someone trying to invest their first $500 would benefit from the messages in these books. Note that buying 3-4 books will still leave you with plenty of money from your initial savings, I would suggest reading and using the advice given in the books and in this article to utilize the rest of your capital at your own will. An investment in yourself will yield dividends for the rest of your life to come, it is therefore one of the most essential investments to make early on. If the books above aren’t your forte there are several other books centered around general success that may light a fire in your heart to pursue greatness.

  1. CD/High-Yield Savings Account

Holding your money in a CD or a high yield savings account is a great option if you need your money to remain liquid or you have a short time horizon and low risk tolerance. Besides investing in yourself this option carries the lowest risk but also lower returns than can be seen with the other options. I currently use a savings account with a 2.10% yield. This would generate $10.50 a year in a savings account and while that is not a lot there is extremely little risk in this approach and your money is accessible.

CD’s or Certificate of Deposit have a fixed time period to invest over but have higher returns than a savings account. I quickly searched CD rates for 1, 3- and 5-year terms which produced the following yields respectively 2.8%, 2.85%, and 3.10%. (2/11/2019) These were the best rates I could find while adhering to a $500 minimum deposit and would produce returns of $14, $44, and $82 respectively. Now these returns are low, they slightly outpace inflation, but they are safe and rather liquid. I would recommend this strategy if you are new to investing and are trying to combine strategy 1 (learning about investing) and putting your money in a safe modest return investment until you know what you want to invest in.

  1. ETF’s and Index Funds

An ETF index fund may be the best mix of aggressive and save on this list. Let me pull up some definitions real quick to make sure we are all on the same page.

ETF – “An ETF, or exchange-traded fund, is a marketable security that tracks a stock index, a commodity, bonds, or a basket of assets. Although similar in many ways, ETFs differ from mutual funds because shares trade like common stock on an exchange. The price of an ETF’s shares will change throughout the day as they are bought and sold. The largest ETFs typically have higher average daily volume and lower fees than mutual fund shares which makes them an attractive alternative for individual investors.” – Investopedia

Index Fund – “An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500).” – Investopedia

A S&P 500 ETF index fund provides good returns on average, low expense ratio, little knowledge or analysis required, and it provides a dividend which all contribute to their success. An app that provides these funds for a low cost would be Stash App, in addition to picking an index fund you can also pick a variety of ETF’s including those that track bonds, precious metals, technology companies, banks, etc. For the S&P 500 the following tickers IVV, VOO, SPY will mimic the index closely and save you money on the expense ratio as well.

In this strategy you are investing in the broad market which has experienced volatility recently. The index and ETF’s will experience ups and downs providing more risk but higher rates of return on average. In the event of a market downturn, the investor will not be able to withdraw the investment without realizing losses. If pursuing this strategy, the investor should understand the risk and possible length of this investment as both are much greater.

  1. Individual Stock of a well-known company

This strategy presents the highest risk/reward of the strategies discussed. Buying shares of an individual stock effectively puts all your eggs in one basket which adds to the risk however an individual stock can move both up or down much quicker than an ETF. Companies such as Apple, Google, Amazon, Facebook, etc. are popular options. Some stocks such as Google and Amazon have share prices of $1,000+. In this event you will need a platform that allows you to buy partial shares to be able to purchase these stocks with limited funds. I would not recommend a small cap company, penny stock, or any speculative play.

Whichever platform you choose it should be noted that a platform that minimizes brokerage and additional fees should be desired. With $500 to invest with it is critical to not waste capital on fees. Apps I am familiar with that are friendly toward beginner investors with limited capital include, Robinhood, Stash App, Acorns, M1, and Webull. Like strategy 3 a longer investment horizon is required for individual stocks.

In conclusion, there are multiple strategies to invest your first $500. Based on what your goals, risk tolerance, and investment horizon are you should be able to come to a solid conclusion on what strategy is best for you. Having a realistic approach to investing is vital, expecting 100% returns in your first year is asking for failure and discouragement. Hopefully you found this information useful and can begin your investments on a good note.

Thanks,

B^2

IG @ Bsquared.website

Blog @ Bsquared.website

Email @ Bsquared.web@gmail.com

 

 

 

 

Stock Portfolio Update 1/23/19

Today I’ll be giving an update on my stock portfolio. The previous blog post about my stock portfolio can be found here* it is from September 14, 2018 and will be briefly recapped below.
Last time I had $9,750 funded in my Robinhood portfolio, today we are sitting at $11,500 funded. This was done by putting my income from the internship into the stock portfolio in late September and October. Previously I had profit and dividends of $670.92, today we are sitting at $1,132.90. Several large sales were made to attain this profit including selling the entire O, Realty Income position. While the numbers above show profit, all earnings have been reinvested back into the account and my account value is below the funded portion not to mention the $1.1k profits in their as well. I have several positions that require more maturity and I believe in 2020 I will be in the black. Below are pictures showing my account, for all side by side pictures, the picture on the left will be from September while the picture on the right will be recent.

IMG-2940-2974543385-1536945254322.png IMG_3463

As I am sure you are all aware the markets have been volatile lately and performance hasn’t been the best as of late. As I mentioned earlier in September the account was funded at $9,750, while currently the account is funded to $11,500.

Below I will highlight some of my positions.

IMG-2942 IMG_3467.png

My largest positions is also one of my worst preforming. This is a company and a situation that is getting better but I wouldn’t get my hopes up till 2020 or later. I have cost average down this position substantially and plan to wait on it to recover.

I mentioned ULTA on the last update however the situation hasn’t changed much. Its gone up, down, and sideways and I have used that to my advantage by skimming some profit off the top and buying back the share when it fell. Still waiting for it to reach new highs, price target is going to be reduced from $335 to somewhere around $315-$320 or so.

I sold O, Realty Income, and my total gain is around 22% according to a back of the napkin calculation including dividends and appreciation. While it may not have been the smartest move since I try to stick with my dividend stocks I felt that at the time it was towards the high end of the spectrum and I needed to cost average down other positions. Most of the updates this time around revolve around cost averaging positions. As we approach the end of this article take a look at the final two tables and look at the average price per stock in some of these positions. With the stock market shakeout/weakness I tried to take advantage of the sale and buy where I thought I could expect future appreciation.

IMG-2943-675463075-1536945409533.pngIMG_3468.png

Apple was a hot topic back in September with my screenshot showing a $221 stock price. We all know how that turned out and I’m still holding and collecting dividends on it.

Ford is another position I cost averaged down on, it also helped supplement my dividend income from the sale of O. In September I was holding Ford at $10.74 @ 100 shares, today I’m holding 150 shares at $10.00 yielding 6% on the dividend.

I always gotta harp on my best pick of 2018 so far, P&G still killing it after a good earnings report. Wish I had bought about 10 shares instead of 2 but we live and we learn and I have made some pick mistakes in my investing career that’s for sure.

IMG-2949IMG_3461.png

Dividends are rolling in strong for 2019 after an incredible December. Look for an update on those soon. Other notable mentions as far as my stock portfolio. I cost averaged JD and BABA on weakness as well as FB, and ROKU. I believe these will be great positions in the future so long as I hold while the markets do their thang.

It’s been a rock end to 2018. Here’s to hoping 2019 goes better. Couple of quick notes, thanks you for reading this as always, feel free to drop a comment in the blog or on IG. Pending how my taxes go there may be some changes my accounts will have to undergo. I will keep you all updated and try to keep Uncle Same happy.

Lastly, below are the full spreads of m Robinhood account

Thanks

B^2

OLD

stock port

NEW

sp 12319sp2 12319

 

Dividend update 11-2-18

Back with another dividend update. The last one was almost 3 months ago and since then I have improved my forward dividend by 23 percent! So, lets jump right into it.

Here is my table of dividends as seen on August 5th.

Ticker cost avg percent yield dividend/share share # year equivalent
CEFL $16.92 14.36% $2.43 16 $38.88
LB $32.36 7.42% $2.40 10 $24.00
T $31.89 6.27% $2.00 10 $20.00
STAG $25.85 5.49% $1.42 20 $28.40
F $11.19 5.36% $0.60 80 $48.00
O $55.78 4.73% $2.64 27 $71.28
PG $74.40 3.86% $2.87 2 $5.74
AAPL $157.51 1.85% $2.92 1 $2.92
      Total forward dividend $239.22
      Yield on portfolio 2.81%

 

To recap that is $239.22 in forward dividends on $8500. I have since then increased my portfolio by $3,000 to a standing total of $11,500 as of now.

Below is the chart showing my current forward dividend.

Ticker cost avg percent yield dividend/share share # year equivalent
CEFL $16.55 15.65% $2.59 20 $51.80
LB $32.00 7.50% $2.40 11 $26.40
T $31.89 6.27% $2.00 10 $20.00
STAG $25.85 5.49% $1.42 20 $28.40
F $10.52 5.70% $0.60 115 $69.00
CAT $113.68 3.03% $3.44 2 $6.88
O $55.78 4.75% $2.65 27 $71.55
PG $74.40 3.86% $2.87 2 $5.74
AAPL $157.51 1.85% $2.92 1 $2.92
CBL $4.09 7.33% $0.30 40 $12.00
      Total forward dividend $294.69
      Yield on portfolio 2.56%

 

Some new additions have been made such as CAT, and CBL. I have also increased numerous positions such as F, LB, and CEFL. My percent total has gone down slightly since I have bought positions and added to non-dividend positions such as CHK, BPMX and FB. Unfortunately, CBL took a massive dividend cut of 67.5% and has significantly hurt my forward dividend projection.

I am currently in a holding pattern as I will have no more income coming in for the foreseeable future. I will be using my dividends to purchase more stocks and options and hope that I will be able to generate profits to keep my dividend base growing throughout the school year. I also hope to make some large sales in the future.

Several notes that I will highlight further in my passive income update which should be arriving here this weekend include. Added positions in my stash account that produce dividends and interest payments. Added cash in my savings account which produces interest, as well as added cash into my Lending Club account that also produces interest payments. While not dividend driven my passive income, streams are growing and will continue to grow in the future.

Below is a highlight of my dividends and interest over time.

Dividend tracking 2017 2018
January $0.00 $12.86
February $0.00 $28.19
March $0.00 $33.18
April $0.00 $15.35
May $0.00 $17.72
June $12.54 $28.21
July $6.39 $14.32
August $5.55 $18.42
September $20.68 $35.56
October $17.86 $25.08
November $23.12 $8.80
December $28.13 $17.25
total $114.27 $254.94

 

Reviewing over the last several months we can see August saw a dividend increase of 231%, September saw an increase of 72%, and October saw an increase of 40%.

div 11-2

Currently sitting ~$255 of dividends to be collected in 2018 unfortunately that will be far short of my goal of reaching $500 in dividends received. Consistency is key, and I plan to continue adding to my dividend positions and increase my passive income. With large sales and profits generated from that in the future we should see a dramatic increase in forward dividend in the coming months/years. In the coming months we will be able to see actual YoY gains on the full calendar year and see exactly how much improvement has been made since there have been various accounting changes as well as significant positions added that haven’t materialized quite yet.

As always let me know what you think and if you have any comments or suggestions I would love to hear them!

The Last Splurge

If you follow Grant Cardone at all he preaches increasing income above all else. The 2nd step in the process is to reduce taxes. I have done a relatively good job of that thus far, my internship allowed me to dictate how much income I make because it was a 100% commission job. I have tracked all receipts and have started researching how to minimize my tax bill this upcoming spring as well. The third step in his cycle is to save specifically “save it all”. This requires you to live your daily life without increasing your cost of living while you increase your income.

We see people violating this rule every day, some guy gets a promotion at work makes an extra $10k a year and goes out and celebrates by purchasing a new BMW. That promotion and pay increase did not make any difference since he increased his cost of living. He probably would have been better off getting a $5k pay increase and not blowing the money on material things.

I never was into blowing my money, here and there I would “treat yo self” but nothing drastic. Last summer at the end of my internship which paid me quite well and was a decent increase from the previous year ($150 more a week) I bought my only watch and a piece of wall art. That was my form of treating myself which came out to be about $250.

This summer by the time it is over and with bonuses included as well as any lingering payments I should avg a pay increase of about $350 more a week (no living stipend though) than last summer. I should be able to reduce my tax bill because of my 1099 status this year substantially. (I received about $1300 back last year, but I also had taxes taken out every paycheck and I am not taxed under my current pay system yet.) So, check box 1 and 2 for Mr. Cardone. I should also note I didn’t upgrade my standard of living during this time. I currently live in the cheapest apartment my roommate and I could find that would be able to accommodate a 3-month lease. It is cockroach infested and is pretty hood for a $400 a person month rent ($450 for 3-month lease). I drive the same car, I wear the same clothes, I buy the same food, I buy the same beer, and spend the same amount at the bars.

Onto box #3 spending: Looking over my expenses which I track to the penny, we’re looking pretty good. I went over them in a blog post about halfway through the summer and you can check them out here. I spent some extracurricular on/with my girlfriend for the vacation and everything like that. I also spent some money at the bars and on booze and other non-constructive habits and vices, but that was minimal. Overall, I didn’t blow any of my money. That is until this upcoming weekend.

I plan to spend a bunch of money when I return to home and go shopping with the girlfriend Saturday. I WANT new clothes, new shoes, a new suit, and some other Knick knacks. I say want and not need because that’s just what they are. The clothes I wear are fine but perhaps a bit dated. Some of my shorts and shirts I often wear I purchased 3-4 years ago and some are not in the best condition. I’d still wear them though, so it isn’t necessary I purchase new ones. Essentially this shopping trip is to purchase my “adult clothes” things that I will need in the future after I graduate college. That is why I call it the last splurge. This theoretically should get me the next two years or so of my life in terms of clothing and what not and would be considered the “treat yo self” portion of my saving.

Some of these purchases have been a long time coming for example the suit I currently wear I’ve owned for about 5 years, and I received a gift card for the purchase of a new suit last Christmas. The watch I purchased previously was intended to go with this new suit I plan to purchase. With upcoming interviews for full time jobs and the networking, events and other occasions I plan to attend you could consider this an investment in my dated wardrobe.

So, what do you all think? A waste of time and money or a much-needed update to prepare myself for what comes in my future.