Saturday, March 29, 2014

Preface: Part 2 - Investments

Dividend Stocks
I've been dabbling in the stock market for about 10 years now.  When I started out, I was single with no kids...I am now married and have two kids.  Needless to say, my tolerance for risk has certainly changed now that I have a family.  Nevertheless, I've certainly learned a thing or two from the various mistakes I made along the way.  But it was from those mistakes, that I believe have transformed me into the kind of investor I am today.  Today, I find myself more conservative than in the past, yet still look for the growth potential.  The main difference, however, is that today I only invest in companies that pays a dividend.  In fact, I am happy to say that earlier this year, I sold my last non-dividend paying stock in our family portfolio.  We now only own dividend paying stocks in our portfolio and receive approximately $1,700/year in dividends.  
Lesson learned: Don't chase the home run...In investing, slow and steady generally wins the race.
In my first 5 years of investing, I think it was merely a hobby.  My portfolio would grow a little, then shrink, then grow again, then shrink.  It was like riding a roller coaster because I had no clear direction to my investment strategy.  I did what many experts say not to do, that was I bought and sold based on internet articles and the media.  On occasions, the media did end up being correct. However, those occasions were few and far in between, and most of the time I simply ended up buying and selling at the absolute worst times because I let my emotions influence my investment decisions.
Lesson learned: Invest with a clear plan and pay attention to a companies fundamentals, not the media.
Today, I no longer let the media or my emotions influence my decisions.  Although it took many years of trial and error, almost 10 years to be exact, I can finally say that every buy and sell I make now follows a pre-established investment strategy.  I'll define my investment strategy in greater detail on a future post; but generally speaking, my primary goal is to buy dividend paying stocks and simply continue to build the annual dividends payout within my portfolio.  I plan to use this income stream to supplement my retirement.  What I find most appealing about dividend stock investing is that you can one day decided to live off the dividends, yet still preserve the portfolio value for future generations.  I must give credit to the growing community of dividend growth investing bloggers out there for this revelation.  It was through following bloggers like:  All About InterestThe Dividend Guy Blog, Dividend Mantra, Dividend Growth Stock Investing, DivGro: A Dividend Growth Portfolio, Captain DividendCompounding Income,  Average Dividend YieldPassive Income Pursuit, Dividend Hawk, and Dividend Ladder that resulted in my "AH HA!" moment.  I am truly grateful to have discovered this community but now only wish that I would have discovered these guys sooner.  So with that, I say thanks to all dividend growth bloggers for my "ah ha" moment, and also thanks for the continuous inspiration and valuable insight.  I enjoy reading each and every one of your posts and I hope to one day provide similar value to the dividend blog community as your content has provided to me.

Lesson learned: Compound interest is a powerful tool, but so is compound dividends. 
UPDATE: I've since created a blogroll to list all of the blogs I currently follow: BLOGROLL

Peer-to-peer lending 
In addition to continued investments into our family's dividend stock portfolio, I have also been growing our exposure and returns with peer-to-peer lending.  Although there are a few different peer-to-peer lending sites out there, our family has decided to stick with the two largest peer-to-peer lending site: and  Since these are the two largest sites, I found that they are more trustworthy and therefore have more borrowers.  As a result, there are more many more notes available for investors to choose from.  
Even after a few years of existence, I still consider peer-to-peer lending as being in its infancy.  The reason is because I believe there are a lot of people who still doesn't know such a thing exists.  But as peer-to-peer lending becomes more and more popular in the coming years, I feel these two sites will continue to improve and peer-to-peer lending will contend as a truly viable investment alternative.  To our family, peer-to-peer lending is, and will always be an investment alternative.  In fact, my plan is to eventually replace our current emergency fund with peer-to-peer accounts.  Since investors receive steady monthly payments from all the notes they have invested in, and the payments are liquid, one can theoretically use the cash flow from the payments to live on for a decent length of time. 

Our family has been investing in peer-to-peer lending notes for approximately 2 1/2 years and currently receive approximately $700/month in payments from both Prosper and Lending Club. Currently, we are re-investing the payments we receive back into new notes in an effort to grow our accounts and the monthly payments we receive. Since we own over 800 notes (between both accounts), we receive a payment from borrowers almost daily.  And as soon as we have $25 in cash available in a particular account (occurs almost every other day), you'll find me looking for a new note to invest in so the money is never sitting idle for long. I must say that this is compound interest at it's best!!  
Lesson learned: Always keep your eyes open for new investment opportunities because as society and technology evolves, so do investment opportunities.


  1. When I first learned about DGI the light bulb definitely turned on. I wasn't ever really comfortable with the 4% withdrawal rule of thumb and felt that I'd need a huge portfolio to build in extra margin of safety in case a prolonged bear market came right as I retired.

    Great job on the P2P lending. $700 per month is awesome. I'm hoping that it finally gets allowed here in Texas because I think it could be a way to generate a bit more yield and diversify a little bit more.

    Also, thanks for the mention!

    1. I didn't realize some states do not allow P2P lending. It's definitely been a great alternative investment for our family. Hope they allow in in Texas soon.

  2. Ahh, I was just getting excited about P2P and then I noticed that Texas is excluded... :(((

    1. Thanks for stopping by and leaving a comment. Hope they allow P2P in Texas soon.

  3. Totally agree with the conservative route for your dividend stocks though judging from your portfolio still seems a bit aggressive to me. Just my 2 cents :)

    1. DivHut - you are correct, our family's dividend portfolio is not yet as conservative as I'd like to be. I'm still trying to rebalance the portfolio. I hope to slowly sell the riskier holdings and pick up more stable stocks to hold on to for the long haul.

      Our portfolio has come a long way from where it was just a few years back with no more than than $1-300 in dividends a year. I feel that we are now moving in the right direction but know that we can't do it over night. Slowly, our portfolio will transform one new purchase or sell at a time.

      Thanks for stopping by and thanks for the feedback.