It’s the new year and the start of another decade! I admit its been over a month since I last published DGI #5 and that is because I had begun contributing to my Roth IRA which I finally maxed out at the end of 2019.
Why max out the Roth IRA?
Given that growth in the Roth IRA is tax-free and withdrawals after the age of 59.5 are completely tax free, it is a better deal for me (as I do not contribute to a 401k). Additionally, if I were to withdraw my capital earlier, I will only be penalized and taxed on my gains – not my principal.
If I were to withdraw the principal towards medical or education expenses after 5 years, I will not be penalized or taxed either because that is a consideration/allowance as per IRS rules of early withdrawal.
Given that I did not want to actively manage my Roth IRA but keep the concept of dividend gains and re-investment in mind, these are the ETFs I went ahead with:
With these ETFs, I am certain of earning over 3.25% in dividends (relatively safe) over the years. The are actively managed and I need not worry much about their performance as I am in long.
Main Portfolio update
What I really love about my portfolio – which in no way is perfect or “ideal for all” is that it gives me a small payout almost every day or week. With 65 holdings (out of which I am really not happy with five), I collect small portions of “rent” if you may while doing absolutely zero work for it. Here are screen-grabs of dividends that came in since the last DGI update.
Since I started investing in October, I’ve gotten a decent payout of $47.85 so far – all of which was re-invested back into the portfolio – not to mention the capital gain itself.
While many would say $47.85 is insignificant, I couldn’t agree and disagree more. Compared to the amount invested it does seem low but that’s only because I just started and contributions are small. If you recall what I mentioned in DGI #4, it’s all about one step at a time. First, earn enough to pay for subscriptions, then enough for gas then for rent and so on. I am step one right now and it will take me some time to get to gas for the car.
However, the re-investment will create a snowball effect as time goes on and I will be glad I started when I did (even if the markets were high).
Healthcare grew about 12% as I added in a slice when I saw a momentary dip in prices. Additionally this growth is fueled by advances in medical research and approvals by the FDA for drug releases into the open market and/or for testing.
My Concept Roth Dividend slice has also been doing well (8% growth) although I wish I would’ve rather invested that money in an actual Roth IRA (as I wouldn’t be taxed on gains).
Of all the slices, I think my timing on purchasing the stocks I did for Real Estate REITs was overpriced. I have seen a net loss of 7% and the prices are now at the levels where they are better to buy at. However, I don’t see them slide more than 10% and it is well within my risk tolerance. As long as they do not slash their dividends, I will hold them and ride the wave – while ofcourse following their performance.
While I’ve noticed stocks like Apple, Tesla break their own records, I unfortunately never bought into them. By the time I thought about it, the prices were already too high and I did not want to take a big risk. Exxon Mobile has made major discoveries in Guyana and that has been boosting their prices. I’m expecting them to post an amazing quarterly result and hopefully they raise their dividends.
There are other top stories that I’ve been following but not really writing out due to paucity of time. As mentioned earlier, Seeking Alpha, Charles Schwab and Market Watch/Wall Street Journal are great sources for information as well as real time data.
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If you’d like to learn more about investing apps out there, check out this article: