A Perfect Storm to Build Wealth

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Net Worth Update May and June 2022

It couldn’t be any more fitting that I started writing this update on Independence Day because financial independence is what we’re all about around here. I’ve been knee-deep in the grind and climbing towards the next rung on the old financial independence ladder, so I missed a couple of updates. The good news is that I’ll make up for it with this super update that will cover both May and June to get myself back on track. A unique set of economic circumstances is how I would describe this “rebear.” It is not quite a recession and not consistently a bear market, which is why I think it may be the best time to grab your finances by the horns and build wealth. 

The Perfect Storm in Your Favor

An overwhelming number of available jobs and record-high employment makes it nearly impossible to call this a recession. Yes. I’m aware that we are currently plagued with high inflation and consistent interest rate hikes that will make borrowing money more expensive for individuals and big businesses. But what if you’re not a borrower and you’re looking to build your personal wealth right now? Then the stars are aligned just for you!

Stashing Cash Finally Pays

The first step on any wealth-building journey is an emergency fund. And if you haven’t noticed the interest rates on high-yield savings accounts have been climbing all year long and with some betting the fed will raise interest rates a full one percent, it doesn’t look like the rates on HYSA are going to slow down any time soon. I’ve watched the interest rate on my HYSA increase no fewer than three times since May. Since we know every little bit counts, there hasn’t been this much incentive to save an emergency fund in years. 

You Get a Job, You Get a Job, You Get a Job!

The side hustle is a term that most would say came into our lexicon about 10 years ago. And if you were thinking the same thing, you would be wrong. The expression “side hustle” was first used in 1950…and meant the same thing then, that it does today. A side hustle is a side business, it is work that someone performs in addition to their full-time job in the evenings and on weekends to earn extra income. When used correctly, the side hustle is one of the most powerful tools in the wealth-building arsenal. 

Employers are generous and more flexible than ever these days, making it possible to fit a side hustle into almost any schedule. If you can focus and make your financial goals a priority, a side hustle will put you on the fast track to reaching your financial goals. After two paychecks you should find yourself flush with cash and the only thing you’ll need to do is stick to the plan and direct the money toward your immediate savings, investment and debt payment goals. 

Remember, the side hustle can be used incorrectly and make your situation worse than it was before you started because again. It’s that powerful. How can you use it incorrectly? The first and most common way is to use it as a license to spend more and find yourself in more debt and less saved than when you started the hustle. If you allow this, you’ll find yourself drained and realize that you wasted a tremendous amount of time and energy digging a deeper hole for yourself. 

And while all income streams like real estate and a brick-and-mortar businesses are anything but cheap right now, equities are. While most are crying about the 20%-30% decline in their portfolios, now is the perfect time to be growing or starting a portfolio right. The wealthiest 10% of American households now own 89% of all U.S. stocks, a record high that highlights the stock market’s role in increasing wealth and wealth inequality. Steven Rosenthal said it best, “The top 1% own a lot of stock, the rest of us own a little.” 

There is a silver lining to the economic cloud the world is facing. Often the doom and gloom are shared so frequently that it’s all we can see. But if a brighter financial day is what you’re looking for, the ground has never been more fertile. All you need to do is start planting. 

Okay, time for the May and June updates:

As you can see, I’m still below my March high but at least I’m trending in the right direction this month. It will take just under $10K to reach the next milestone. Gone are the days when we can look to the stock market for a boost to our net worth. Increased cash and bond holdings are the only way to move your net worth up. 

I spent the first half of the year putting all my extra cash into stocks but will spend the second half of the year building back that cash position. I know having a lot of cash outside of your emergency fund is a drag, and according to the prophet, Ray Dalio ‘cash is trash’ these days. 

Never mind the fact that some of the largest, most stable, and most successful companies in the world hold over a $100 billion in cash. Apple has $202.6 billion, Google $169.2 billion, and Microsoft $132.3 billion. So, if you’re like me and extra cash is the equivalent of a weighted blanket, then you’ll also be pleased to know that someone just as prestigious in the world of business and investing, Mr. Warren Buffet, informed his shareholders at the last shareholders’ meeting that he prefers to hoard hold at least $30 billion in cash and cash equivalents at Berkshire.  

Buffett said, “We want our company to be financially impregnable and never dependent on the kindness of strangers (or even that of friends).” According to the billionaire, “Low cash reserves harm your financial independence.”  

I have nothing to add. It seems Mr. Buffet has dropped the mic because we are all about financial independence around here!

Okay, time to find out how many companies paid me dividends in May. 

May 2022 Dividend 
SBUX $              23.01 
T $              30.69 
PG $              12.25 
JEPI $              78.10 
O $              13.23 
MAIN $                9.82 
AB $              78.83 
APPL $                1.16 
OHI $              31.57 
CLX $              11.60 
CVS $                9.54 
total  $           299.80 

I had 11 companies pay me in May. And YOY (yield over yield) for the month of May, the dividend payout has increased by 90.03%. The consistent buying that I did during the first quarter of 2022 is starting to make a difference. In the second half of 2022, I plan to have a more focused buying strategy.  Buying and building in only 2-3 positions as opposed to a little bit of everything that I own. 

  • SBUX was expensive in 2021 reaching all-time highs twice. The only money going in came from dividend reinvestments. In late February 2022, the price began to drop and by March it had dropped below $100, and I started buying in the low $70’s
  • T is still paying a solid dividend even after the cut. I pick up shares whenever it drops below $20
  • MAIN is a monthly paying dividend stock that I’ve had for a couple of years. Throughout the pandemic, they continued to pay and raise the dividend. They also pay a special dividend once a year, which means I receive 13 dividend payments a year from them. I don’t add to this position as often as I would like. 
  • CLX is a position, that I would like to build but the price has been climbing lately
  • CVS is another position that I will continue to buy having fallen below $95 as of this writing.

The June Net Worth Updates:

It is another down month. While my equity holdings continue to increase, my net worth is not reflecting it. However, my net worth has been holding steady at around $240K through some of the biggest market drops. No, it doesn’t feel great watching my net worth go backward but it is part of the process. Not once have I felt compelled to sell or do anything different. My only plan as mentioned earlier is to start building up my cash reserves again starting in July so that I can make larger, more significant buys whenever the market drops. 

On the dividend side:

I had 13 companies pay me in June. And YOY (yield over yield) for the month of June, the dividend payout has increased by 157.19%. Again, the consistent buying that I did during the first quarter of 2022 is starting to make a difference. Buying large amounts of stock in the first month, of the first quarter has set me up to see the growth I want in my portfolio (my goal is to make at least $3,000 in dividends this year). And it looks like I’m on track to do it. 

June Dividend Payout 
BAC $                12.33 
PEG $                35.65 
3M $                15.33 
ENB $                63.62 
VYM $                55.63 
VTSAX $                15.42 
JEPI $                90.47 
O $                13.28 
MAIN $                14.21 
UPS $                10.96 
SPG $                31.91 
ASG $                20.36 
DOW Inc $                  4.90 
TOTAL $              384.07 
  • BAC is the second largest bank in the country (second to JP Morgan). With $2.50 trillion under management, the stock has never taken off the way I thought it should. I continue to reinvest the dividend and receive the dividend increases but I don’t plan on adding anything to the position unless the price drops significantly. 
  • MAIN: I received another special dividend this month, which is the second one this year.  This stock continues to surprise me and while I buy a few shares every few months I plan to make a significant buy later this year. 
  • DOW hovered at all-time highs most of the year and is finally falling. Near its 52-week low, my plan is to start building up this position in the second half of the year.

Well, that’s all folks. I’ll continue to work hard to improve my dividend income and reach my net worth goals. I hope you do the same. 

Remember, it is a fight to build wealth no matter where you are in the process. Everything around us conspires to take money out of our hands. But you must fight the good fight. Continue to save, invest, and grow your net worth even when it seems impossible. Save your pennies (copper) until they become dollars (cotton).

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