Annual Update – 2016 Review

Welcome to the annual 2016 update. This is part of  a series where I track our financial progress on a regular basis. I present four parts in this series: (i) Investment & Portfolio Update, (ii) Passive Income Update, (iii) Blog Update, and (iv) Goals Update.

1. Investment & Portfolio Update

2016 saw a big change in direction of my overall portfolio. I decided to cut the number of individual stocks I own as life has gotten busier both personally and professionally. In addition, the current economic environment does not give me a lot of confidence to stay fully invested and decided to move to a cash-heavy position over the summer.
On an ongoing basis, I continue to invest in index funds regularly, which gives me broad market exposure and is currently on “cruise-control”. I have a smaller set of companies that I focus on and make bigger bets on each instead of spreading myself too thin by investing in 40, 50, or 100 companies. Studies have shown that the Unique risks drops substantially by owning as little as 12 stocks. To be on the safer side, I want to focus on a approximately 20 companies and invest in those stocks instead. I have discussed more about this topic in the past — see this post. As a result, you will notice a lot of sales in the following image.
I present the following image which summarizes all the purchases (excluding the regular ETF/seg fund purchases which occur regularly on a monthly basis), all the sales, and all dividend increases in my portfolio.

Companies listed without any activity during the year mean that we did not add or remove these positions in our portfolio, nor did those companies have any change in dividend policy. These investments remain dormant in our portfolio.

2. Passive Income Update

Our total annual passive income totaled $9,099.70! Needless to say, I am extremely pleased with my progress over the years and I just managed to clear the goal of reaching $9K in annual passive income.

On a quarterly basis, our passive income saw another all-time high in Q4 2015.

Year

Q1 Q2 Q3 Q4

2013

$383.65 $516.32 $718.33 $1,063.97

2014

$1,322.47 $951.18 $1,055.79 $1,803.90

2015

$1,546.87 $1,960.10 $2,076.81 $2,256.01

2016

$2,167.95 $2,404.43 $1,965.95 $2,561.37


You can read my previous quarterly updates here.

“Other” Passive Income

Passive income that we achieve is split between investment income via dividends + options and what I call other sources of passive income, which includes cash back rewards credit card, affiliate programs, advertising revenue from this blog, interest on cash and writing premium articles for Seeking Alpha. As you can see from the chart below, our other category has performed well through 2016. This other income gets transferred into our investment accounts helping us compound our investment growth.

I realize that some of our sources of passive income are not completely passive, as it requires us to put some time and effort into it. However, I consider these sources to be semi-passive and I wrote an article to capture my thoughts on the scale of passivity of each income type. Be sure to check out Passivity of Income.

3. Blog Update

Based on the pageviews, the following were the most popular posts on Roadmap2Retire.

A wide variety of topics based on reader preferences, including a couple of guests posts. Its great to see the interest generated by these posts and gives me an idea of what the readers are more interested in.

4. Goals Update

Right. Onto the goals that I set and see how we did overall on that front.

  • Total passive income of $9,000 Achieved!
    • Our total passive income for 2016 was $9,099.70. I set a high goal at the end of 2015 and what looked like a failed goal even until a couple of days ago, it turned out that we had achieved this goal for the year. I am ecstatic with this progress and look forward to setting an even higher goal for 2017 and trying to beat it going forward.
  • Achieve better balance across asset classes and sectors Achieved!
    • For the time being, I am happy with our asset allocation…we are close to 1/3 cash, 1/3 real assets (gold/silver and real estate) and 1/3 in other DGI stocks. I have detailed the reasons for picking this in this post. This is a short term allocation, and I will be slowly adjusting our portfolio going forward to align with our long term goals.
  • Take atleast two finance related courses Failed!
    • I took only one course in 2016. The course was Financial Markets taught by none other than Robert Shiller. I was hoping to take another course in Q4 of 2016, but life got busier and I missed this goal.Take atleast two finance related courses
  • Blog Growth: Achieve 15K pageviews consistently through 2016 Failed!
    • I was not able to keep my blog traffic up and fell well below the target of 15K pageviews per month.
  • Write an e-book Failed!
    • I started writing an ebook earlier in 2016, but was not able to dedicate enough time to keep working on it. I have struggled with this goal for a few years now and hope to find enough time and motivation to work on this in the coming years.
All in all, not bad as far as all the goals go. Here’s to hoping that 2017 will be better…I will be sharing the 2017 goals in the coming days.
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That’s all folks! Thanks for reading. Be sure to leave a comment at the bottom – I love to hear from the readers on your thoughts and opinions.

24 thoughts on “Annual Update – 2016 Review

  1. Nice update, it looks like you are making some really good progress. $9k in passive income is a great accomplishment, I have a long ways to go to catch up!

    Best wishes in 2017!

    Eric

  2. JC says:

    Overall it looks like 2016 was a good year for you guys. Over $9k in passive income is awesome and I expect bigger and better things for you in 2017. Overall considering all of the turbulence we had in 2016 I’m pretty happy with how the year went. I failed on many fronts from what I was hoping to accomplish, especially with the blog and other writing, but I still have lots of ideas. Much like cash flow you need your time to be free and 2016 didn’t prove to have too much free time. All the best in 2017.

    • Thanks JC. 2016 was a great year for me in a lot of different ways — personally, professionally, financially etc. Couldnt have gone any better 🙂 I hear you on being busy with the newborn and the thing is….I can never get enough time with our daughter. I am making sure that I dont spend too much time in front of screens when Im home so that I can be with her and not distracted. Precious days…

      All the best in 2017 for you as well
      R2R

    • Hi IH,
      The PMs are already rallying and we are seeing a repeat of Jan 2016 🙂 I am in the green big time in some of my securities and tempted to take some profits. For now, I have just written some covered calls and letting the market take care of that decision.

      Wishing you the best for 2017 and beyond
      R2R

  3. Can’t blame you for focusing the stock portfolio. I agree that it becomes challenging to manage and stay up-to-date with too many positions. Plus, as you mention, a portfolio of like 8-10 stocks pretty much diversifies away 90% of all non-market risk anyways. Have you read Joel Greenblatt’s book “You Can Be a Stock Market Genius?” If not you might enjoy it (also The Magic Formula).

    I think I’ve mentioned this before but I do like how you’re doing this and the thinking around your passivity index. I’m going to steal that idea for myself and thinking about my own life 🙂

    Thanks again for sharing and best of luck in 2017!

    • Thanks Jay. Theres no point in trying to invest in 50 or 100 companies. Its why index funds were made — so that you can avoid spending your time worrying about every single one of those management decisions and stock price valuations etc.

      Im glad you like the passivity index idea. By all means, go ahead and use it 🙂

      cheers
      R2R

  4. That is truly fantastic. Look at that growth over the years! 9k a year is nothing to scoff at, I would be happy to reach the same mark as you in that same amount of time. Thanks for sharing, all the best for 2017.

  5. Hi R2R,
    Congrats on $9k of passive income in 2016! I like the summary chart of stock activity too.
    I also dialed back a bit on individual stocks for similar reasons as you.
    Best wishes,
    -DL

  6. Sam the Man says:

    Actually, if you stayed invested you would have made some good gains. You purchased gold/silver at their highs a big no no. The purpose of buidling a dividend growth portfolio is to shield you from over trading, changing strategies, and to focus on long term goal of income stream.

    just my 2 cents
    good luck to your future endeavor

    • You say that was a gold/silver top and I say that it was the first leg of the next bull market 🙂 Its this kind of disagreement that makes a market — for every buyer, theres a seller. For the record, I am still sitting on pretty good gains on my gold/silver investments after the recent rally. So, Im glad that I picked up more shares when they were beaten down in Nov/Dec.

      Good luck to you too in 2017 and beyond
      R2R

  7. I see some fails on your list, but I don’t think they are truly fails. While you may not have hit your mark, look at your progress and growth in passive income, pageviews, etc. You are leaving this year in much better shape that you entered it if you ask me. Congrats on the great progress and keep up the great work R2R. Get ready to knock those goals OUT OF THE PARK in 2017!

    Bert

    • Thanks for the kind words, Bert 🙂 Overall 2016 was a great year financially and I cant complain one bit. Hope you had a great year for the books and wishing you the same for 2017!

      R2R

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