Uff… no time to post – but a short update from DividElephant

Although nothing dramatically changed in my life, I didn’t find time to update the blog for almost two months. I think it’s actually not the worst thing doing stuff that makes fun (or does not make so much fun like working… but I guess I still have to do it for a couple of years) and don’t care about the blog and my portfolio all the time. (Too) hot weather + lot of work + spare time stress = no blogposts.

After weeks of not caring a lot, I just updated my spreadsheets because I didn’t include my recent purchases, which happend in June already. I bought 12 shares of Whirlpool Corp. (WHR) at € 155,21. I had that stock on my watchlist for a while and after the recent drop in prices I finally bought it. I like the business (washing machines, kitchenware and fridges are boring as hell) and the figures also look good. I also like the company’s attitude and the view they have on our society.

The second buy was a more emotions-driven buy because I just wanted to own Warren Buffett’s company. Berkshire Hathaway also dropped in price last weeks and I grabbed 16 shares of BRK.B at € 122,06.

Of course I also bought 25 shares of VTI on 8 of June – and I have to admit, that it’s pretty awesome to buy that ETF and don’t care about facts and figures pretty much. I seriously think to enlarge my portfolio’s share with Vanguard’s Total Stocks ETF beyond 100 shares what was my plan in the beginning (the position in VTI should substitute my 1% yielding money I had in my savings account). Maybe I’ll just continue buying 25 shares on each month’s 8th until end of the year. This would lead to 225 shares and approx. 23.000 Euros invested into VTI (assuming an averaged purchasing price of € 100/share) by end of the year. Should be less than a quarter of portfolio’s value and I think that’s not the dumbest idea.

From dividend inflow perspective the last months were also incredible. I didn’t reach a new record though, but it’s just fantastic receiving almost 200 Euros per month just from dividends! In May I received € 196,83 and in June € 165,73 – and the outlook is even better. My calculations show, that I’ll receive more than 200 €/month in four out of twelve months in 2015. My forwards for 2015 dividend-income show already more than 2.000 Euros p.a. – according to federal statistics department, Austrian’s median net-income is 2.033 Euro per month. From now on I am going to receive an one month salary per year on top! Not bad.

Dividends in April

While I hit a personal record in March, I wasn’t really scary but a bit curious how my dividends will develop in April.  And what could I say than “WOW” again? Well, it wasn’t as much as in the month before, but I was still able to receive more than 200 Euros in dividends.

The overview:

BHP Billiton € 52,33
SCANA Corp. € 16,90
Coca Cola € 15,90
Cisco € 15,99
General Electric € 16,47
Munich Re € 68,70
PepsiCo € 14,46

Totals dividends received: € 200,75

YOY: +496 % (€ 33,68 to € 200,75)
January-on-April: +155 % (€ 78,75 to € 200,75)

The two non-quarterly-paying companies Munich Re and BHP Billiton stood for more than 50 % of April’s dividends, so my July & October (and January next year) won’t be that good, but in the meantime I’ll invest of course and so the dividens are most likely to increase also in these months.

 

Income & Expenses April

Oh boy, a lot to do and no time to do the stuff which makes a little bit more fun than working. With a big delay, the overview of DividElephant’s expenses and the attached income:

Rent (incl. groceries): -€ 800,00
Gym membership: -€ 109,00
Health insurance: -€77,30
LC insurance: -€ 16,57
Food@work: -€ 84,00
Restaurants: -€ 128,00
Entertainment: -€ 71,20
Food: -€ 13,50
Household: -€ 28,00
Doctor: -€ 70,00
Holiday: -€ 60,00
Total expenses: -€ 1.457,57

Income: € 3.596,63

Savings rate: 59,47 %

I’m happy that my savings rate goes up a little bit. Unfortunately in May/June I have to pay the big chunks of money related to our this year’s holidays so I fear it will go down in that two months. But for the last month, figures seems okay and I could accomplish my goal of spending less than 1.700 Euros by far. Spent less on restaurants, entertainment, and food at work. Had no big extra-expenses, so everything’s okay on that side. :)

Recent Buy: Realty Income Corporation

My recent purchase of a single stock was right at the last day of April and it was Realty Income Corporation. I have to admit, that I’ve never heard of this company before I started to have a closer look on all the great investing blogs 2 years ago. But O was one of the first companies I put on my watchlist, since the nickname of it is “The Monthly Dividend Company” (and I think they might have registered that phrase as a trademark).

Realty Income Corp. owns more than 4.000 real estate properties in almost every state of the US and their portfolio includes tenants throughout all kind of industries. Just to name a few of the best known tenants: FedEx, Diageo, Walmart and also the US government are within the 20 biggest tenants. At the current price levels, Realty Income Corp. is yielding roughly 5 % which is not bad at all I would say. That O pays a monthly dividend doesn’t hurt either.

 

I bought 50 shares at a price of 43,85 Euros.

Recent Buy: Vanguard Total Stock Market ETF (VTI)

I just bought an ETF. When I began my journey back in the beginning of 2013, I considered if I should invest into ETF or individual stocks and I decided for investing in individual stocks. From my point of view it was the better option for me, because a. I don’t have to buy fees for something, I can do on my own (having stocks in my portfolio) b. I can choose or avoid the stocks, which I want to hold or which I don’t want to have in my portfolio (e.g. tobacco companies or armament manufacturers) c. I think I can learn more, when I have to look for individual stocks and observe the figures of companies. On the other hand, it’s almost impossible for a stock picker, to outperform an index. And even the great Warren Buffett recommends to invest cheap index funds.

So why did I invest into the Vanguard Total Stock Market ETF?

Couple of days ago, I received a bank’s statement, that they ‘unfortunately’ have to reduce my savings account’s interest rate by 0.2 %-points from 1.4 % to 1.2 %. That’s a ridiculous low interest rate! I decided to cash out a certain amount from my “emergency funds” and invest it into a secure alternative investment vehicle. And for me, this ETF is such a safe vehicle. Sure, this ETF also has its volatility, but I guess the money put in there is secured at a certain level. I’m in the lucky situation, that I have nothing expensive which could get broken and needs expensive repairs (like a car). If my fridge, washing machine and bathtub will be broken at the same day, I’m in the lucky situation to pay for it cash from my monthly salary. And I still have some money left on this emergency funds (something like 2.000 Euro) and I also want to increase it until the end of year to somewhere around 5.000 Euro again. But at the moment I think it makes more sense to invest this money in the sense of “I want that this money increase its worth”.

What is this Vanguard Total Stock ETF actually?

Vanguard is an investment management company, founded by John C. Bogle, who is the inventor of index funds actually, in 1975. Vanguard creates and manages a dozen of different funds and ETFs. The ETF I invested recently is called Total Stock Market ETF and this ETF invests in 3.798 individual American companies (so “Total Stock Market” perhaps is a little bit misleading, because one could assume it’s an ETF invested world-wide). I chose this option, as it is the ETF version of John Collins favourite investment tool, the VTSAX (Admiral Shares Vanguard Total Stock Market Index Funds) — it’s very well diversified and the absolutely cheapest product I could find.

How does my plan, shifting money from my emergency funds into stocks, look like?

I already have a plan because I want to stick to a certain routine and don’t want to be tempted, to try to time the market. That’s the reason why I set a fixed date (always the 8th of a month) and certain quantity of shares (25) I’ll buy each time. That’s because 25 shares equal to something around 2.500 Euro (I don’t expect that the price of the ETF skyrockets or tanks in the upcoming months) and within four months, I should have invested roughly 10.000 Euros in the ETF. It also helps me to avoid going crazy when the ETF price is cheaper (“I have to invest 6.000 Euros now”) or a little bit higher (“I just buy 15 shares and wait for a decline”).  Simultaneously I transfer 200 Euros per month to my emergency account, which leads to approx. 2.000 Euro that are going to flow to the savings account, so the account balance will be 5.000 Euro at the end of the year. I also have some money left each month I could invest into individual stocks. The last weeks I was very busy and didn’t find so much time to look for stocks I want to invest in, so it might be possible that at least in April I won’t buy any individual stocks anymore. But maybe in May some opportunities occur (I’m curious if the markets decline a little bit in the “sell in May and go away”-month).

Bought 25 shares of Vanguard Total Stock Market ETF (VTI) @ 99,88 Euros.

*Dividends March 2015*

Whoa! What a fantastic month it was. I received more than 200 Euros in dividends, which marks an all-time-high. Not less than 13 individual companies paid some dividends in March.

The overview:

Wells Fargo € 12,51
Pfizer € 19,54
Johnson & Johnson € 13,09
Chevron € 18,56
IBM € 11,43
Roche € 40,61
Unilever € 17,03
Microsoft € 13,65
DuPont € 16,59
McDonald’s € 17,83
Eaton Corp. € 14,06
Total SA € 18,21
Coach € 17,29

Totals dividends received: € 230,40

YOY: +458 %
March-to-December: +58 %

My passive income for March marked an absolutely record. Driven by the strong US-Dollar, my dividends increased by more than 450 % compared to March ’14 and almost 60 % compared to December, where more or less all the same companies paid out their dividends. Roche’s dividend payout is just annually, so the dividends in June should be a little bit less (as long as the amount of companies stays the same, as well the FX rate)

Income & Expenses March 2015

The first quarter of the year is over and so I’m going to publish my last month’s income and expenses as usual.

Rent (incl. groceries): -€ 700,00
Gym membership: -€ 109,00
Health insurance: -€77,30
LC insurance: -€ 16,57
Food@work: -€ 112,00
Restaurants: -€ 151,00
Entertainment: -€ 133,95
Food: -€ 19,35
Household: -€ 9,00
Doctor: -€ 140,00
Shoes: -247,00
Charity: -€ 70,00
Total expenses: -€ 1.785,17

Income: € 3.134,49

Savings rate: 56,95 %

All in all I’m not that unhappy with my expenses in March. I still had to visit my physiotherapist twice and bought three pairs of shoes which totalled to roughly 400 Euro, which is more than 20 % of my total expenses last month. My food-related expenses were a little bit higher than usually, but nothing to freak out. I hope that my expenses in April will go below 1.700 Euro.

The joy and burden of living in a central european country

I like living where I live because it’s a safe and stable country, no dickhead of one of our neighbouring country thinks about or even attends to invade us. It’s also good to live here because you can go to a doctor without paying anything, if you have a serious disease you get the full treatment to recover soon — without paying any additional Euro. You can send your kids to all kind of schools and universities, where they could make their degree without having a shitload of tuition and working the next 10 years just to pay back their fucking university debts. I don’t need a car because we have a thousands of kilometres of public transportation network here, connecting busses with trams, and metros with trains. I have access to that wonderful service by just paying € 1 per day. If I’d lose my job, I’d get € 1.400 per month for a couple of months as an allowance. Even if you don’t find a job for ages, you’d get at least “a little anything” (I think that needs oriented guaranteed minimum is something around 800 Euros per month you’ll receiving from state). If you’re 65 years old you could retire today and receive for the rest of your lifetime an amount, depending on your last income and the amount you paid during your working life — that should also be applicable for future-me, but it’s not really hard to see the fact, that this could not work. Less babies + longer life expectancy = bad pension outlook for everyone who is younger than 40 years old.

Therefore, I and every single Austrian (respectively persons, who live here even when they’re not of Austrian citizenship), living in that country, pay taxes. Last year, for example, I earned close to 81.000 Euro pre-tax, I cost my employer 100.000 Euro, because roughly 1/3 of my salary has to be paid by my employer for payroll taxes. Me personally I had to pay roughly 31.000 Euros in taxes and social security fees. And of course I also pay taxes when I buy food, go to the cinema, visit the hairdresser, pay my rent, get some dividends, etc. I don’t know exactly how much, but I guess that I had to pay at least 10.000 Euro in taxes for products, services and goods for which I paid 25.000 Euros in total. Summing up that figures, “my” share on the government’s tax-income was (maybe) 60.000 Euros. Not peanuts, but you cannot construct a single kilometre of a highway with that amount or treat a cancer patient with a 2-year chemotherapy.

I have no problem with paying taxes, because I think it’s a really good thing if a country has a solid infrastructure, a social reliable structure and can provide all kind of good things like medical treatments and schools to people who earn not enough money to pay for that on their own.

But from time to time I feel kidded. Like these days.

The two governing parties decided to make a tax reform. They want to save 5 billion Euros and distribute that amount through less income tax to us people. Not a bad approach acutally. Unfortunately they didn’t decide to make a reform of governmental administration (e.g. evaluate if Austria really like a dozen of public health insurances, or nine federal states with nine governments and hundreds of districts which also have a local government, etc.)

One of the points financing that tax reform is the increase of taxes on dividends and capital gains tax by 2.5 % basis points from 25 % to 27.5 %. I don’t have a big problem with the fact that the government is trying to make it harder for individuals to create wealth. It’s the plain ignorance that this tax increase is “a part of the rich people to realize that tax reform”. In such discussions the phrase “middle class” is often used. According to our politicans, owning stocks is just for rich people. Instead of incentivise and encourage people to take care of their financial future, they penalize this middles class people and stigmate them as “rich” and doing politics with that. Yes I earn a good chunk of money and I am in the lucky situation that at the end of month I still have some money remaining which I could invest. And yes, single moms, earning 1.100 Euros after-tax are not able to invest in stocks because they couldn’t barely live on their income. The government doesn’t have the foresight that the state cannot take care of all people’s pensions in the next decades. And the government doesn’t manage to create circumstances for people — all people: rich people, the ones who earn good money, the ones who earn less money — to invest in stocks. And that sucks! Because in the end the really rich people receiving millions in dividends pay – theoretically – the same tax rate as I do with an income from dividens of € 2.000. In reality someone who’s really rich and earning millions (or even some hundred thousands) through dividends has probably his own trust and pays just the half in taxes (now: 13.75 %).

I’ll invest my money in future as well, even if the taxes on dividends and capital gains would increase to 30 % or 35 %, which was a first proposal from the reigning parties. But it really makes me sad that nobody in that country is able to understand, that this is obviously the wrong way.

Income & Expenses February 2015

Also a little bit later than usually, my income and expenses for the month of February:

Rent (incl. groceries): -€ 800,000
Gym membership: -€ 109,00
Health insurance: -€77,30
LC insurance: -€ 16,57
Food@work: -€ 90,20
Restaurants: -€ 151,00
Food: -€ 14,75
Doctor: -€ 210,00
Hairdresser: -€ 45,00
Total expenses: -€ 1.513,82

Income: € 3.450,41

Saving rate: 56,13 %

Expenses were very okay last month! I had to pay a lot for physiotherapy (the back still hurts and some expenses also relevant in March) but I can apply for a refund of my expenses in this case, but I guess it will take some weeks/months. My expenses for lunch at work are a little bit higher the last months than usual, I guess the restaurants increased their prices in December and January. ;-) I also needed a haircut so bad and therefore I visited a haircutter which was not the cheapest in my city, but I guess that once-a-year expense is still reasonable. :D

I’m afraid that my expenses in March are a lot higher because I had to buy some bike related stuff and three pair of new shoes (after a colleague confonted me with the really bad shape of a pair of shoes I wore at work – not a big deal but I think also time to buy some new ones, even if I keep in mind that they are four or five years old).