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The novice (that’s me) makes his first investment

My first legal act after my eighteenth birthday was to open a retirement account.

If you’re familiar with me, you’ll remember that I grew up on welfare and became interested in money as a teenager. I didn’t want to be in the same position my parents were in, so a week before I turned eighteen I was on my way down to my credit union, determined to take my first steps.

When I got there, I asked to talk with someone about retirement planning, but I ended up having to wait a few days. The credit union didn’t have someone on staff to handle retirement planning at my branch, so they had someone come down from another location to meet with me.

Initially, I was extremely risk adverse, and terrified of the idea of losing any of my money. Call me poor, but I was poor, and I didn’t want to lose what I had.

After all, I had slaved away at a pizza shop for that money.

The financial planner told me that I was probably better off being aggressive with my investments and explained that I had, in all likelihood, forty or more years until retirement. I thought he might be trying to pull a fast one on me, but I eventually agreed to purchase the mutual fund he recommended in a Roth IRA account.

Since then I’ve learned that, no, he wasn’t trying to scam me out of my money by recommending I take an aggressive approach.

He was just dealing with one paranoid eighteen-year-old who had never invested in his life.

The mutual fund from hell

See that heading?

That was a joke.

The mutual fund I ended up buying in my Roth was called the Growth Fund of America and was offered by American Funds.

At the time, a share of the fund was trading for about $25. I invested an opening contribution of $350 and scheduled regular contributions of $100 a month for a few months.

I ended up contributing another $400 before I halted my contributions.

I was going to be out of town for a few months and didn’t know what my income would look like, so I decided I was better off waiting until I was back to make additional contributions.

It turned out that I never ended up making another contribution. Eighteen-year-olds aren’t known for their consistency. Go figure.

How long I held it

I ended up buying a few shares here and there through a taxable account over the next couple years, but I never bothered to pay much attention to my Roth until the fall of 2014. Around that time I started following the stock market again and was excited about the idea of getting started with regular investing.

Part of that was because the shares I’d bought through my taxable account had gone up 182.52%, and I wanted more of the action. I was motivated and a little greedy.

I finally scrounged up the log-in information for my Roth and looked at how it was doing.

Since I invested my initial $750, my shares had appreciated to about $46.70 a share, or an increase of around 73.94%. Not bad, right?

I wasn’t upset with what my mutual fund’s performance, but I realized that there were a lot of stocks on the market that had performed much better than that, while paying a dividend.

Despite how well it had done, I wasn’t sure if I was really getting my money’s worth.

After all, I opened my Roth in the spring of 2010. That 73.94% was really 21.13% annually. Call me arrogant, but I wondered if I could have gotten a better return myself.

Well, I knew I could, because my taxable account had returned 73% annually since I had started investing.

Comparing my mutual fund to individual shares

I started to get the idea that I might be better off managing my money, instead of paying someone else to do it for me, so I started comparing my Roth to shares I was thinking about buying.

I decided I would act as if I had bought the shares in September of 2011 since that was when I opened my taxable account. When I compared how my mutual fund had done to stocks on the market, it came up short more often than not.

But the straw that broke the camel’s back was when I compared it to Wells Fargo.

If I had sold my mutual fund and bought Wells Fargo stock in September of 2011 I would have been able to buy 27 shares of Wells Fargo and I would have been buying in at $23.69.

From then until September 2014, the shares would have appreciated 118.02% to $51.55 a share. In addition, I would have collected $85.05 in dividends.

By letting someone else handle my investments I had lost out on about $306.23 in capital appreciation and dividends.

I was done. No one else was going to manage my money.

I sold my shares and emptied my Roth.

(And then I had to pay $85 when I filed my taxes.)

What I bought when I sold

As soon as the money cleared through my bank account I transferred it into my taxable brokerage account. I had been looking at a couple different stocks, but eventually, I decided to buy GE.

I’ll admit, I didn’t do any in depth technical analysis of the stock. Instead, I read through several news articles about GE and the direction Jeff Immelt was taking the company. I also looked at new initiatives and products they were launching. I was inexperienced, but I liked what I saw.

But the biggest factor that led to me buying shares of GE was their price and GE’s dividend payment. At the time, shares were trading for about $26 dollars a share and paying a $0.23 dividend per share.

As someone who was almost completely new to the idea of dividend investing it sounded like a great deal to me. I bought 42 shares and sat back.

How things have turned out

So how have things turned out for me?

That depends on when you ask me.

GE has been a bit of a wild ride for the last three years. Initially, it tanked down to the $23 range right after I bought it, before jumping up when they sold GE Capital.

Since then, it’s mostly been a slow climb upwards, flirting with the low 30’s in terms of value. At times last year, I was looking at paper profits of about $200 on my fairly small holding, but this year has been miserable. GE has posted an incredible 19.13% decline this year, and I’m now back in the red for my initial purchase.

And how’s my old mutual fund turned out?

Since September 2014 it’s returned an incredible 5.55%.

Yeah, that’s right. A solid 1.85% annually.

I’m no mathematician, but that’s better than GE has done for me over the same time.

Looks like I’m a fool.

Well, sort of. Until you look at dividends.

I’ve collected $107.10 in dividends since I bought GE, which is $44.94 greater than what my gain would have been if I had kept my mutual fund.

And that’s a big reason I decided I would be better off managing my own money instead of paying someone else to do it. My mutual fund, in addition to charging me an annual management fee, keeps all the dividends they receive from their holdings.

I decided that if I was going to be invested in the market and my money was going to be producing dividends, I should be the one to receive them, not the managers at my mutual fund.

And it’s exactly those dividends that have been responsible for out-performing my mutual fund, even with GE’s 19% decline this year. That’s only going to be truer now that I’ve started a DRIP, which I hadn’t been doing until January this year.

Closing thoughts on mutual funds

I’ll be frank. After my experience with one, I’m not a big fan of mutual funds, but I think they can be great options for some investors.

In particular, I do like low-cost dividend paying index funds, and that’s what I recommend to most of my family and friends when they ask me what they should invest in.

But for me, they’re not right, at least right now. I do plan on buying an index fund through my company’s 401k plan when I start working, but most of my money will probably remain self-managed.

I like the idea of being responsible for my own investment decisions. If I lose money I’ll only have myself to blame, and I won’t have anyone else to be mad at. If I make money, I won’t have to share any profits with a manager or other investors.

For me, self-managing has worked well, but a large part of that is that I’m a buy and hold investor. When my investments start losing money, I stop looking at my brokerage account for a couple of weeks. Inevitably they go back up.

I’m in this for the long haul, not the short-term. As long as that’s the case, I’ll be buying individual stocks.

What are your thoughts?

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Few people are willing to sacrifice so that they can be wealthy.

If building wealth was easy or quick, everyone would do it, but instead, most of us walk the journey alone.

Our family and friends don’t really understand us. They don’t get why our eyes light up when talking about business, personal finance, or frugality.

We understand how important it is to have a solid financial foundation to support us, but the road to financial independence can be a lonely one.

So lonely, in fact, that we might get burned out and discouraged from time to time.

Something that inspires me to keep pushing forward when I start feeling burned out is to look to my left and right and see others making the same journey, and making progress. Nothing fires me back up and ignites my passion like seeing someone else succeed at one of my passions.

Today, I want to share 9 up-and-coming finance and investing blogs that inspire me to continue my own journey towards finding wealthy.

The bloggers I look up to

To be included in my list, each of these blogs must have started in 2017, be at least a month old, and have at least one post from this month.

Additionally, I’ve intentionally picked people who are just starting out or recovering from a few setbacks on their journey towards financial independence.

Why?

Because I don’t think there’s anything more inspiring than someone starting out or refusing to let a setback keep them down. Life, and wealth, is about focusing on a goal and overcoming obstacles.

Each of these people are focused, and they’re overcoming the obstacles they face.

So, without further ado, let’s get started.

1. Save like your life depends on it with Saving George

Saving George stands for saving George Washingtons, as in dollar bills.

This is a great place to go if you’re looking for someone who is passionate about saving money and living a frugal lifestyle. Jmeeks7 is laser focused on taking financial freedom from life one step at a time, and he will tell you to save, save, save your money like it’s the only thing that matters in life.

He also has a habit of bluntness and doesn’t sugarcoat anything, which is a huge plus in my book. I love how often he blogs about saving money and reducing expenses, and it’s a good reminder to me that me and my wife need to do better with this.

In fact, reading through his blog in preparation to write this post sparked a discussion between my wife and I that helped us to realize we’ve gotten lazy with our savings because we already have a decent size emergency fund. That’s a big no-no, and we’ll be working on improving.

I highly recommend you take a look at Jmeeks7’s post called “Save a Little Now, Have Much More Later” because I think it’s a good reminder that we should be passionate about finding new ways to save money. I also love that he’s still driving a beater car because it saves him money and that he brings it up as an example of practicing what he preaches.

Most of his posts don’t take more than a few minutes to read, but he posts several times a week, and it’s time well spent.

Some Advice From Jmeeks7 of Saving George

What financial advice would you give to your 20-year-old self, if you could?

As far as advice I’d give myself at 20…..I’d DEFINITELY not party as much! I was horrible! I’d go to bars and just literally waste hundreds of dollars each and every week never caring about tomorrow.

I would also start investing in my 20’s! OMG imagine what the compounding would do for me over the decades! I also think I would read more books instead of headbanging all the time. Education is POWER! I would most certainly seek advice from financial experts and learn how to budget. I wasted my youth trying to get women and drinking like a fish. Like the song by Cher says…..If I could turn back time.

Anyway, I’ve learned a ton through my lifetime mistakes and I’m just trying to pass what I’ve learned along to others. Hopefully, with savinggeorge.com I can do that. Thanks so much for your interest. It means alot to me.

2. It only takes A Dime at a Time

A Dime at a Time is written by Lucy, a woman who, in her 50s, has decided to tackle her debt and work towards financial independence with her husband. You can tell that the experiences that led them up to that point have weighed on them, but that they’re determined not to let the past control their financial future.

Lucy is extremely regular when it comes to updating her blog and sharing her thoughts on her journey towards financial freedom, but everything she shares is very readable and relatable.

You can get through her posts quickly, but they also draw you in and make you want to keep reading.

Full disclosure: I let myself get sucked into what she’s written and spent a few hours on her site just reading.

One of the things I like the most about her posts is her sense of humor. She doesn’t take herself too seriously, but at the same time she manages to convey a sense of urgency about getting out of debt. She’s also great at taking the small victories and focuses on every accomplishment, no matter how small.

I think, so far, my favorite post is her June progress report. Why? Because I started reading through her blog from the very beginning, and it’s inspiring to see how far she’s come. Watching her make progress on the things she was struggling with in the beginning of her journey this January is awesome!

3. Live your life with Best Life Katy

Best Life Katy is a fairly new blog, but it’s easily one of my favorites.

Katy is a 24-year-old financial professional who is working to pay off her student loans and take control of her life.

So far, she’s paid off approximately $14,000 in debt, and is working on the remaining $11,000. She’s very transparent about her financial position, and has a great attitude that comes across very easily.

In addition to the debt she’s paid off, Katy is also getting ready to marry her fiancée, and will be working to help pay off his debt – a substantial $54,000 – once her debts are paid off.

One of the things I like about Katy’s blog is her post called “How to Talk to Your Partner About Money” where she offers great advice on how to approach money with your significant other. My wife and I followed a similar strategy when we got married, and it’s made finances much more peaceful.

I also like her blog because Katy is focused on simplifying her life and finding joy in the little things, and you can tell that from the tone of her posts alone.

I find it very inspiring.

Some thoughts from Katy of Best Life Katy

What makes you passionate about your financial journey?

I’m passionate about the end goal – financial freedom. I have plans for my life that don’t mesh with a standard 40-hour work week. And I don’t want to wait until I’m 65 to enjoy my life! In three years, my fiancé and I are planning our first mini-retirement to hike the Appalachian Trail for 5 months. This would be impossible if we weren’t able to pay off our debts and save enough to take sabbaticals in that time frame.

What’s the biggest mistake you’ve made with your money? How did you overcome it?

The only regret that I have is choosing to go to a private college instead of getting in-state tuition at one of the great state schools in my home state. I could have saved so much on loans and still gotten a good education, but I just didn’t have the knowledge about loans and finances to make that choice. I’m still in the process of overcoming it – aka paying off my loans – but I should be rid of that debt in about 18 months!

4. Invest long-term with Buy, Hold Long

Buy, Hold Long is written by Caleb, an Australian investor who is trying to build his passive income while he works as a civil engineer.

Since starting his blog, he’s been able to pay off his car and a personal loan to a family member.

Now, he’s slowly paying off his student loans using the Australian government’s student loan repayment system that gets automatically deducted from his paycheck like our Social Security and FICA taxes are. I agree with him that this is a better system than we have in the US, and you can read about that system in his net worth update from the end of 2016.

I have to admit, I have a little bit of a soft spot for Caleb because his net worth and forward dividend income was almost identical to our when I started following him. I like to think of him as my Australian parallel.

Sadly, he’s starting to pull ahead as a result of being able to contribute more to his portfolio working full-time than we can while we’re in school. Either way, his blog is definitely worth reading through. I think he does a great job of combining technical analysis with a readable experience.

5. Manage your money with The Dinero Pro

This guy rocks.

The Dinero Pro is written by Javi (Javier), who is a history teacher. He and his wife paid off $34,259.37 in debt and are now working on boosting up their emergency fund and building wealth.

Additionally, Javi is working towards obtaining his American citizenship, and I’m excited for when he reaches that life-changing milestone. He’s had a couple setbacks along the road, but he hasn’t given up.

One of the things that make reading Javi’s blog so fun is that he shares genuinely useful and thought-provoking advice. Want an example? Check out his post about different kinds of insurance and why you should have them.

I also like his discussion about multi-level marketing companies. In fact, I made a rather lengthy comment on that article that you can read if you feel so inclined. Hint: I don’t like MLMs.

Another thing that I really like about the Dinero Pro is that I feel like you can get a sense of the kind of person Javi is just by reading his posts. He comes across as someone who is an extremely hard worker, optimistic about life, and ready to do what it takes to succeed.

He conveys a sense that if he works hard enough and is ready to learn, he can overcome any obstacle. I think we can all learn from that.

Javi’s thoughts on finances and money mistakes

What makes you passionate about your financial journey?

I grew up poor in a small Mexican town. My parents struggled to make ends meet. It’s not because they didn’t try. Simply, no one ever taught them about managing money. Therefore, I want to make sure people don’t get taken advantage of. To educate them and help them take control of their own money.

What’s the biggest mistake you think people make with their money?

I think people believe wealth has or can be generated easily and quickly. Even I fall into that trap. Nothing can be further from the truth. Also that you can borrow your way into wealth. The reality is that in order to build a lasting legacy, we must work hard, invest consistently, and stop trying to wear a hat that’s bigger than the cattle.

6. It’s just money with Just Another Dollar

Just Another Dollar is written by Ryan and Alyssa, a couple that found themselves with $101,000 in debt at the start of 2016. During the year they moved from Minnesota to Colorado, forcing Alyssa to take a lower-paying job and increasing their debt. By the end of 2016, they had $107,000 in debt and finally decided to do something about it.

One of the great things about Just Another Dollar is that you get a two for one deal with every post. Some of them are written by Ryan, and some of them are written by Alyssa. That means you can hear about their journey towards financial freedom from two separate perspectives.

I like that because you get to hear about their individual struggles and the way they come together to help and support each other where they’re weak. Alyssa is quick to admit that she’s had to make uncomfortable changes in the way she gives gifts, approaches eating, and looks at diet and exercise. Ryan, on the other hand, admits that for a CPA, he’s terrible with money.

Aside from the different perspectives that Ryan and Alyssa bring to their financial journey, I also like that Just Another Dollar features monthly and quarterly reports on how they’re doing paying down their debt. Currently, they’ve paid off about 27,000 in debt. Talk about awesome!

For a recommended post, I suggest you check out “Car Buying: 7 tips to survive the used car salesman.”

What makes Ryan passionate about wealth

What’s do you think is the most exciting thing you’re doing to improve your financial situation? What makes you passionate about money and wealth?

Over the last six months, Alyssa and I have truly become a team working toward a common goal. Seeing the massive amounts of debt we are paying off each month is very exciting for us. It’s amazing how motivating it can be to think about the future we’re creating together. My passion for money and wealth comes from wanting to spread the knowledge to as many people as possible. A financial education is one of the most powerful tools one can have, and when used correctly it can change the lives of generations to come!

7. Fix your financial life with Mending Pockets

Mending Pockets is written by Trisha, a traveling instructor who works in the cruise line industry and teaches people about technology and photography. She’s working on paying off over $120,000 in debt (not including interest) and started Mending Pockets to share her what she’s done to be successful.

Trisha says that she accumulated her debt one dollar at a time, but that spending well above her means and making foolish decisions while she was going to college was a big contributor. After college, she had several setbacks due to medical expenses and eventually found herself in a total mess.

The squirrels chewing through her car’s wiring didn’t help either.

Her journey started when she realized that if she didn’t start making serious changes she would be paying off her debt until she was into her 50’s. She got a little mad and a lot focused on making sacrifices and changing the way she looked at and approached money. By the time she started Mending Pockets she had already paid off $98,700.23 on a single income.

Her primary motivation is to make sure that her readers learn from her mistakes and don’t end up finding themselves in the same financial hole that she was in.

One of the things I like about Trisha’s posts is that they’re always very engaged and focused. You almost get the sense that Trisha is a mountain of a person who faces her problems with a calm determination to see herself through them.

Another feature of Mending Pockets is the Success Stories that Trisha shares, where she chronicles the stories of women who have either paid off large amounts of debt or found success as entrepreneurs. In addition to reading those stories, I also highly recommend Trisha’s post “10 Reasons Why You Need a Budget to Achieve Financial Freedom.”

8. Move mountains with Small stones

Small Stones is written by Mrs. Small which is an alias. Mrs. Small, her husband, and their son live in the UK and are focused on paying off their debt and achieving financial freedom through a set of clearly defined goals.

They hope to save an emergency fund, pay off their unsecured debt, pay off their mortgage, and become financially independent by 2029. Considering that they have over £285,000 in debt, that’s no small task.

A woman of many strengths, Mrs. Small and her husband are paying off their debt and she is working full time while completing her MBA. Interestingly, she has a great post talking about “Why am I doing an MBA?” where she talks about why she has continued to pursue her degree. She also talks about when she thinks an MBA makes sense and when it doesn’t. As someone who has thought about getting an MBA, I especially appreciated her post as a frank discussion about the benefits and downsides of it.

Mrs. Small has also struggled with infertility and has undergone several rounds of IVF while trying to become pregnant with their second child.

After their last attempt, Mrs. Small suffered a miscarriage six weeks into the pregnancy, which led to her reflecting on her motivation for wanting another child. She has a great post about that titled “On the cost of conceiving a family.” I think it’s worth a few minutes of your time.

9. Get back to Common Sense on Finance

Common Sense on Finance is written by Patrick, a New England blogger who has decided at 22 that he wants to emulate some of the personal finance bloggers he looks up to by sharing his own journey. He’s currently working part time and in school, and he plans to graduate in December of this year.

One of the things I like about Common Sense on Finance is that Patrick spends time to go over some of the principles of personal finance that I’ve learned in the past but haven’t review for a while. A good example of that is when he reviews the Rule of 72 for calculating how long it will take you to double your money.

Additionally, he takes time to investigate and calculate his own numbers when it comes to things like retirement. One of my favorite posts he’s written is called “The importance of finding an accurate return,” where he talks about why you shouldn’t inflate your numbers when you’re calculating how much money you’ll need in retirement.

Patrick also shared his net worth for the first time in a recent post, and I was very impressed. I wish that I was doing as well as he is when I was his age. It was definitely a big inspiration to me to take a good look at my own investments and decide where I can improve.

Lessons learned from Patrick of Common Sense on Finance

What makes you passionate about your financial journey?

I am excited about my financial journey because I am starting out so early, so I know that my greatest asset right now is time! I started a money blog this year because I thought that I could help other people start their own financial journey.

What’s the biggest mistake you’ve made with your money? How did you overcome it?

I have been very fortunate to have grown up in a household where financial responsibility was a priority, but one regret is how I invested my money when I was starting out. I thought I could pick the next hot stock and be a famous investor.

Through trial and error, I learned that I was not smarter than the rest of the stock market. In 2015 I decided to start taking a more passive approach and I have been more successful with that approach. During my first few years, I lost out on some stock market gains because I was invested in the wrong places. I found out that I am better at saving than I am at invested, so I focused more attention on saving; I am very happy to have made this change!

Closing Thoughts

Thanks for reading about some of my favorite up and coming blogs. Who have you recently discovered that you love to follow?

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School started at the beginning of September, and it’s been a little crazy for me.

I’m currently in my first year of my integrated graduate studies, and I’m taking a few additional credits to fill the rest of my generals for my bachelor’s degree at the same time.

I also have a couple other projects I’m working on, which means that I have less time to write than I would prefer. I’m thinking that my dividend income updates will probably end up coming more towards the middle of the month instead of the beginning from now on.

September Dividend Totals

So how did September turn out for us? I’d say it wasn’t too bad, all things considered. We received dividends from four different companies; BAC, ARCC, DNP, and SSI. In addition to our dividends from each of these companies, we also received a dividend from our brokerage account, all of which together totaled to $24.85.

March, June, September and December are some of our smaller months, but I’m really pleased with this month because our income jumped to almost $25, which is a few bucks more than we normally get. For comparison, we received $22.92 in June, so this month is an increase of 8.4% relative to that.

I’m hoping that the upward trend we saw this month will continue and that we’ll break $25 in December. As it stands, our dividend income this September was almost $10 more and 57% higher than last year, when we only earned $15.83.

As much as I wish we earned as much this month as we did in July, I’m still happy because we’re heading in the right direction. One day we’ll have enough dividend income to cover our expenses, and I can’t wait for that day to come.

Our Yearly Dividends

As of September, we were 75% of the way finished with the year, so how are we doing on our goal to receive $400 in dividends? As a matter of fact, we’re doing pretty good. So far, we’ve received a total of $319.41 in dividend income during 2017, putting us at 79.85% of the way to our yearly goal.

Sounds awesome, right?

Well, it gets better. I’ve done the math, and we should hit our yearly goal in October, since I’m expecting we’ll receive at least $94.27 in dividends, putting us at $413.68. Seems to me we’re about to knock this one out of the park!

So how about our forward dividend income?

At the end of this year, our goal is to have a forward dividend income of $500 dollars, and we’re so close it almost hurts. Right now, our forward income is $499.55, so we’re a measly $0.45 away from hitting our goal.

When I started dividend investing three years ago, I never thought I’d be able to say that. I know a few other dividend bloggers have hit that mark much quicker than we have, but that’s not what amazes me. The fact that we’ve been able to create a stream of passive income that large while we’ve been in school is, personally, one of the best things we’ve accomplished. It represents an investment in our future that will pay dividends for years to come. Pun intended.

Making up for lost time

Also, I mentioned last month that we’ve had to halt contributions to our portfolio because of a few changes to our financial situation. I wish that weren’t the case, but my wife and I have been talking and we’ve come up with a plan to make the most of it.

It’s called our tax return.

Thanks to our son being born, we now qualify for several tax benefits we didn’t before. As an accounting student, I’ve had a little exposure to taxes, so I went ahead and estimated our tax return based on a few assumptions about our earnings. The number I’ve come up with has varied a bit, but the lowest amount I think we can reasonably expect to receive is $5,000.

Our plan is to use a bit of that money to buy a new laptop for my wife, a GMAT prep course for myself, and dump somewhere around $1,500-$2,500 into our portfolio. We also plan to use the rest to replenish our savings, depending on the actual amount we get.

I’d rather that we were saving a regular amount every month, but a lump sum that large will make up for what we’ve missed out for an then some, so I’ll take it.

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One of the sad realities of being a dividend growth investor is that management likes to lie.

Far too often, a firm’s management has incentives that aren’t aligned with investors like you and me. I’m a big believer that over time we’ll be able to see which companies are putting their own interests first. The market will punish them in due time.

Sadly, we won’t know about it until after the fact, and we might be caught up in their shenanigans because we’re chasing what looks like a great deal. Getting greedy with your investments is a good way to lose money. Too often I’ve heard people brag about bagging a “fat yield” or an “outperformer” only to see the dividend cut a few quarters later.

I’ve even allowed myself to become a victim of this kind of greed. Nothing stings like having been made the fool.

Today I hope to share a few of the ways that management likes to blur the line so that they can make it look like things are going well. In each of these cases, an inevitable dividend cut is coming, whether this quarter, next quarter or next year.

Get out from in front of the train so you don’t get hit.

Different kinds of dividends for business purposes

All dividends are not created equal.

In fact, there are several different kinds of dividends, and the kind of dividends you’re receiving make a big difference when it comes to whether you’ll still be getting paid later on down the road.

First, I want to explore what I mean when I say there are different kind of dividends from a business perspective.

When a company pays you a cash dividend there are a few different ways they can finance the dividend. Ideally, your dividends are paid out from the after-tax profits of the business.

So, for example, let’s say that the business has revenues of $1,000, and after all the expenses are totaled, earnings before taxes of $154. Assuming the business is subject to a 35% corporate tax rate, it would then be required to pay $53.90 in corporate income tax.

1000 – 846 = 154

154 * .35 = 53.9

154 – 53.9 = $100.10 in after-tax net income.

The company you own now has a couple of options for that $100.10 net income. They can retain it in the business as cash (assuming it is cash), reinvest it, buy back stock, or pay a dividend.

We hope they’ll pay a dividend. Dividends paid from the earnings of a company are called ‘regular’ dividends.

If they decide to use $50 to pay a cash dividend, we’re happy as investors, and we’d like to assume that all dividends are paid out following this scenario.

The reality is they’re not.

5 tricks of the dividend doomed

Sometimes a company will get involved in some shenanigans so that they can continue to pay, or worse, increase, a longstanding dividend payment.

As an investor, you should be aware of what those tricks are, and how to spot them. Typically, a company will use these shenanigans because investors sometimes react poorly to dividend freezes and cuts. To stave off a meltdown in the share price, the company will use one of these tricks to prop up the dividend payment.

Return of capital dividends

The first one you should be aware of is what’s called a capital dividend, or sometimes a return of capital. A capital dividend is when a company pays a dividend out from their paid-in-capital instead of from their earnings.

How does it work? Time for an example.

Let’s assume that Company A has 5,000,000 shares issued and outstanding and has a current dividend policy of paying $0.12 per quarter, for a total dividend payment of $600,000 or $2,400,000 a year.

Let’s also assume that things aren’t going well for Company A. In fact, they’re bleeding cash. They know that come March they won’t be able to pay for the dividend from the company’s nonexistent earnings. In January, the company can hold a follow-on offering of their stock to raise additional capital. Let’s say they sell 1,200,000 shares for a price of $8 a share.

The company receives a cash infusion of $9,600,000. Happy day!

Not only can they now afford to continue operations in the hope of returning to profitability, they can also afford to pay their quarterly dividend.

When they pay that dividend, they’re returning $600,000 in capital to the shareholders, using funds directly sourced from the shareholders. They are destroying stockholder equity. The sad thing is that many shareholders will be caught unaware when, inevitably, things fall apart later and the company has to cut its dividend anyway.

Watch out for this trick, and take it as a serious sign that it might be time to get out.

A variation of this trick is using cash reserves to pay you a dividend instead of paying out from the company’s profits, and you should be just as concerned.

Debt to pay the dividend

Another trick that companies will sometimes use to pay their dividend is debt.

The basic idea is the same as the example we covered above. The company doesn’t have the earnings required to cover the dividend payment that shareholders have come to expect.

Instead of freezing or cutting the dividend, management decides to take on more debt to pay for it. If we’re using the same basic example again, instead of a stock offering the company would secure a line of credit or issue bonds.

While this method isn’t as directly detrimental to shareholders as returning capital, it’s still a terrible thing for management to do. Shareholder’s now have another creditor between them and the business assets, and the business hasn’t done anything to fix the problems causing the cash flow shortage to begin with.

Faking a dividend raise

This trick is a little different than the others, but the main idea is the same.

Essentially, all of these tricks are a way for the business to pretend that things are normal and they’re still operating at a profit when the reality is entirely different.

Sometimes a business will have a payout ratio small enough to continue with its current dividend policy, but earnings have started to decline and won’t sustain the kind of dividend raises the firm had in the past.

Instead of freezing the dividend, the company will raise the dividend by a pitifully small amount so that it can claim a continued streak of dividend raises. For example, a company paying $0.46 a quarter would raise their dividend to $0.465.

Technically, it still raised the dividend, but a 1.09% raise is a token gesture at best.

In my opinion, this is a horrible thing for a company to do. I feel it signals management is more concerned with maintaining the status quo than they are in fixing the looming problems on the horizon.

The “totally normal” one-time event

Let’s pick on Sears a little.

Sears has been going through a tough time for the last little bit. When I say a “tough time” what I mean is you won’t be able to find a store in five years, because it’s sinking like a ship made from sponge. It’s been bleeding off cash and selling stores, brands, and assets left and right.

Sometimes, a company like Sears will have been paying a dividend for a long time. Unable to be honest with investors, management might try to pull the wool over investors’ eyes by selling off a brand and then using that cash to continue paying the dividend.

Sears, for example, did something similar when they sold the Kenmore and Craftsman brands. They tried to paint the sale as a good thing for Sears that added value to shareholders. The reality is that the company made a one-time sale and lost an asset.

Like Sears, a company that uses a sale like this to pay the dividend is destroying shareholder value.

Even worse, a company will sometimes try to use fuzzy accounting to hide the sale as a normal part of their revenues, making it look like they had great operating profits. What they really did was sell the cash cow.

Be on the lookout for any sudden jumps in revenue, and especially look out for dividends financed by discontinued operations or one-time sales.

The “buy what we’re selling” scrip dividend

This one is uncommon, but it still exists and you should be looking out for it.

Sometimes a company will be losing money but want to placate its investors. Instead of freezing or cutting the dividend, they’ll issue something called a scrip dividend.

A scrip dividend is when the company pays you an imaginary dividend.

Okay, not really, but close.

A scrip dividend is when the company admits that they don’t have enough money to pay the dividend from cash reserves or corporate profits so they give you an IOU instead. They’ll promise to pay you the dividend they would have normally paid you, sometimes with interest, when they have the cash.

The idea is like dividends in arrears for preferred stockholders but should be a warning to you. In the case of dividends in arrears, this kind of thing is normal. In fact, it’s part of the incentive for you to purchase shares that don’t carry any voting rights like common stock would.

For a common stockholder, you should be raising your eyebrows and walking away when management tries to take you as a sucker with this kind of thing. Bad things are on the way.

Last points for the dividend investor

If you’re eyeing a company and considering adding it to your dividend growth portfolio, be on the lookout for these tricks.

Although this isn’t an exhaustive list of the things management might do to fool you, you should be aware of them. Also, keep in mind that just because management has cut its dividend doesn’t mean that you’re looking at a bad investment. You should be more worried when management refuses to cut its dividend even when it clearly should.

Lastly, you should be reading about a company’s dividend policy through their investor relations portal or in their SEC filings.

Did I miss anything? What tricks have you seen management try to get away with to fool careless dividend investors? Let me know in the comments.

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Yes…it’s the middle of September. I let these get away from me, and I don’t really have a good reason for it. But I’m back, and I’m trying to settle back into regular updates.

July Dividend Totals

As far as our dividend income, July was a one of our biggest months this year. We received dividends from 5 of the companies in our portfolio, including GE, MITT, PNNT, NLY, and DNP. In addition to our dividends from each of these companies, we also received a dividend from our brokerage account, all of which together totaled to $79.89.

July is typically one of our biggest months of the year, and we ended up with a 34.58% increase from last July. While that increase isn’t as big percentage wise as some of our previous months, $79.89 is more than we individually pay for our phone bill, my dental insurance, and our electricity.

We’re also steadily climbing towards our first $100 month. I’m estimating we should hit somewhere around $93 in October, then have our first month over $100 in January. Talk about awesome!

August Dividend Totals

August, on the other hand, was a fairly low month for us. We received a grand total of two dividends. One came from DNP, and the other was a dividend from our brokerage account. All together, that brings our dividends from August to $5.46, bumping us up to a total of $294.66 for the year and putting us one step closer to our $400 goal.

Our Yearly Dividends

As of July, we were 58% through the year and 72.3% of the way towards our goal of receiving $400 in dividends during 2017, with a total yearly dividend income of $289.20, then up to $294.66 with August added in.

You want to know what makes that number so awesome? We officially broke our record for last year, when we ended up earning $281.00 in dividends by December 31st.

So how about our forward dividend income?

At the end of this year, our goal is to have a forward dividend income of $500 dollars, which is a huge deal for when we only made about 27k last year. As a percentage of our total income, that $500 represents 1.8% of our yearly income. I’ll take it.

But here’s where I have a bit of bad news. Since it’s now September and we’ve received more dividends since July, I don’t know what our forward dividend income was any more.

However, if you add in August’s dividends and calculate our forward dividends as of today, September 15th, we’re coming in at $494.78, so we’re super close to hitting our goal!

I’m especially happy about that because we’ve had a few changes to our financial situation in the last two months that have, unfortunately, led to our temporarily halting contributions to our portfolio. More details on that in a future post.

Either way, by the end of the year we should be able to make both our forward dividend goal and our $400 goal for actual dividends received, and that’s something to be proud of.

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How I Learned About Real Estate

Growing up, real estate was a mystery to me.

My parents never owned their own home, and when we weren’t living with my grandparents we were renting. My mom talked about buying a house at one point and started looking at houses, but we never had the money to make it happen. Home ownership seemed totally out of reach.

Because I was ignorant about real estate, I was always afraid of it. All I knew was that buying it meant a huge amount of debt, and real estate had been a huge factor in causing the recession when I was in high school.

I’d heard all the horror stories about people losing everything by buying real estate. I’d heard about how dangerous it was. I’d heard that being a landlord meant calls at 2 am and tenants breaking things. I’d heard about mortgage notes being called and people losing everything.

With all the terrible things I had heard, I couldn’t understand why so many people still bought real estate.

What I hadn’t heard was a success story.

Then I met one.

My Friend the Millionaire

I had a friend of a friend that I’d always hear talking to people about real estate. I thought he was chasing a get rich quick scheme and usually didn’t stick around long enough to hear more than a few words in passing.

Trouble was, I was forced to be around him once a month without much to do besides listen.

When you have to sit around for long periods of time, you tend to listen to anything anyone has to say even if you don’t care at first. Eventually, I realized the reason he was always talking about real estate was that he was a real estate investor.

The big moment came for me when I found out that he wasn’t just blowing smoke. He owned over 50 properties and was grossing more than $300,000 a year in rental income.

The reason he was always talking about real estate when we were together was that he was genuinely passionate about his business, and he wanted to share how he was making money with people who were willing to learn. I decided that I needed to sit down with him and see what he had to say.

I asked if we could meet, and he immediately agreed.

A couple weeks later I went to his office with my wife and talked with him for about two hours. I still had a lot of fears and doubts about real estate, but he gave me thorough answers about how he got started and what he did to make sure he was successful.

He bought his first property when he was 19 and working at a dead-end job, right before the market fell out from under him for the recession. Instead of selling at a loss, he just kept making payments and saving everything he could.

A year later, he bought another property and rented out the first one. A year after that, he bought another. He kept buying houses until he could buy more than one at a time and he had accumulated over $5,000,000 in real estate. During that time, he quit his job, earned his realtor’s license, and started managing properties.

Like I said, he was eager to share how he made money with others. If you used him as your agent and bought a rental property, he would give you a discount to manage it for you. He would keep giving you that discount every year you bought a new property. Last I talked with him, he had started partnering with developers to build apartment complexes.

I Was Inspired

After talking with him, I wanted to be like my friend.

But more than that, I was impressed by how much he was doing to make sure he covered his bases. He was thorough and had a plan laid out for how he would manage every risk involved with his investing. He knew where to find deals, how to capture cash flow, how to find good tenants and keep them, and make sure tenants didn’t destroy his properties so he didn’t have to evict them.

I decided I wanted to be like him.

My wife and I spent the next few weeks talking about what he had told us, and then went back to him with follow up questions.

I wish I could say that we left that meeting ready to buy our first investment property, but the truth is that we weren’t in a position to start right away. We did go over the kind of property that would be a good fit for us and looked at a few, but we ran into a snag. We had enough income to cover our potential mortgage payments during the summer, but we wouldn’t be able to do it during the school year when we had to reduce our hours.

Much to our disappointment, we decided to shelve our real estate investing until after we graduate and I’m working full time. That said, my experience talking with my friend gave me a few reasons why I’m planning on owning real estate in the future.

Why I Like Real Estate as an Investment

One big reason I plan on owning real estate is the possibility of a phenomenal return based on your cash investment.

Although I’m opposed to debt, I do view debt used to finance a real estate investment that is cash-flowing from day one as an acceptable debt. I do not, personally, believe in the idea of “good debt.” In my view, all debt is bad debt, but I can accept this kind of debt because it provides an opportunity to obtain a true asset.

There was a lot in that last paragraph, so let me break it down a little.

Defining Real Estate Investments

When I say cash-flowing I mean that the investment is providing free cash flow from day one. Free cash flow is the cash provided by the investment after all liabilities and expenses are paid. For real estate, that means the mortgage, property taxes, homeowners insurance, utilities, maintenance costs, etc.

Any rent you collect should be above all those expenses, and I recommend you have conservatively high estimates on all of them so that you don’t get caught with your pants down.

When I say acceptable debt, I mean that I recognize that debt is a form of risk and should be recognized as such, in addition to the principal owed and interest payments due. I feel most people fail to factor that risk into their calculations as a cost of their capital, and erroneously classify debt as “good” so long as it allows them to do whatever it is they want to do with it. I feel that this is naïve and immature.

When I say true asset, I’m mostly following the definition of an asset Robert Kiyosaki uses in his book Rich Dad Poor Dad. Kiyosaki’s definition is that an asset is anything providing you with additional income that you do not have to work for.

If you cashflow $300 a month on your rental, after all your expenses and saving for future maintenance, you have a true asset. A home you live in is not an asset.

An Example of the Power of Real Estate

Going back to the cash on cash returns that real estate provides, let’s use an example.

Let’s say I have $10,000 to invest.

In scenario A, I invest that $10,000 into the stock market through an index fund. This year the Dow is up 8.69%. For this example, I’ll assume that it matches that return over the rest of the year and the next five years, at which point I’ll cash out my investment. At the end of five years, I’ll have averaged an 8.69% return and get $15,168.69 for a total return of 51.69%.

In scenario B, I use that $10,000 as a down payment on a single-family 3 bedroom 2 bathroom, 2,000 sq/ft house with a current value of $200,000. With a 3.89% rate, which is relatively average for my current market, my mortgage payment is just shy of $900, so we’ll round up. A comparable home in my market would rent for approximately $1,500 a month, or $18,000 a year.

Let’s assume that, after my mortgage and all other expenses I’m able to cash flow $150 a month, or $1,800 a year. In addition to that $1,800 in year one, I also receive $3,404.48 in equity due to my tenant paying down my mortgage for me, leaving me with a return of $5,204.48 for the first year.

Let’s say that at the end of year five I sell my property for $200,000 and cash out. My mortgage balance at sale would be $167,434.98, leaving me with $16,565.02 in cash after a 3% sales commission to my agent. In addition to that, I’ve also collected $1,800 a year for five years for a total of $9,000 to add to my return. My real estate investment would have yielded me $25,565.02 for a total return of 255.65%, or 51.13% per year.

Such an astronomical return on my initial cash investment is only possible because of financial leverage and is one of the greatest reasons to choose real estate as an investment tool.

Closing Points

I want to point out that I wouldn’t turn down the chance to get an 8.69% annual return, and I don’t think you should either. Don’t discount a solid return because you’re chasing a phenomenal one.

I also want to point out that my example had several assumptions built in. You can drastically change the outcome of my example by tweaking just a few things, and you shouldn’t view real estate investing as a no-brainer that will never go wrong.

On the contrary, the last recession showed us that there’s a whole slew of things that can and will go wrong if you’re not prepared for them. You need to fully understand the risks, particularly when you’re using debt as an investment tool.

You need to be well informed about what kind of investment strategy you’re trying to pursue. I favor a buy and hold strategy, but that doesn’t mean you should.

As a last point, if you’d like to learn more about real estate, I recommend the book Building Wealth One House at a Time by John W. Schaub. I’d also recommend having a listen to the Biggerpockets podcast.

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Disclosure: This post contains affiliate links, which means I’ll earn a small commission if you sign up. That said, I’m already a customer, and I’ll stay one whether you join or not.

Phone costs are ridiculous

I think you’d agree that cell phone service costs are insane.

When I was 20 I decided I was throwing away way too much money every single month just so I could use a phone.

Does any of this sound familiar to you?

Spending a huge amount on your monthly phone service, paying through the nose for data, getting locked into a contract, or being slapped with fees if you decide to cancel your service?

Wireless providers are sharks, and plenty of people are dumping money into their phone plan. It only gets worse if you have to pay for a family plan.

If you’re sick of being had by your wireless company, I want to share how my wife and I ended up saving $930 a year on our cell phone bill with Republic Wireless.

But first, a little background:

A boy and his cell phone

I bought my first phone when I was sixteen years old. I paid for it with my first paycheck from my first job because I wanted to be able to communicate with my friends.

Actually, that’s a lie.

I bought my phone because I wanted to flirt with a girl from my math class.

What I didn’t realize at the time was that it was going to cost me $65 a month to flirt with her. At the time, I didn’t have any other expenses and I really wanted to flirt with her. So off I went, doing my best to make her fall for me.

She did.

But the story doesn’t end there.

Fast forward two years and my phone decided to die with no warning. Off I went to the mall to buy a brand-new Motorola Droid.

The Droid was one of the first Android phones and was the first smartphone I ever owned, and I loved it. What I didn’t love was the extra $30 a month for data.

But, in the beginning, most data plans were unlimited and I didn’t have a stable internet connection, so I decided $95 a month was doable.

It helped that I still didn’t have that many expenses. I was living with a friend for free and didn’t buy a car until I was 22, so all my money was disposable income. What was $95 a month when I could flirt with girls, keep in touch with my friends, and use the brand-new Facebook app?

I finally had enough

I had my Droid for almost 2 years, then spent some time serving as a missionary and had a phone given to me by my church. Thanks to a hefty early cancellation fee when I left to serve my mission, I realized that I was paying a ridiculous amount of money for my phone, and I decided I was done.

I was sick of seeing a phone bill that cost more than internet, TV, or even car insurance. I started looking for something better.

Eventually, I found Republic Wireless:

About Republic Wireless

Republic Wireless is a small mobile virtual network operator with a heavy focus on VOIP calling over Wi-Fi. A mobile virtual network operator is a cell company that leases bandwidth from a larger carrier like Verizon, AT&T, Sprint, or T-Mobile.

In Republic’s case, they started out leasing bandwidth from Sprint and then roaming to Verizon towers if you left the Sprint service area. Today, they lease bandwidth from both Sprint and T-Mobile.

What makes Republic unique is that they have a “Wi-Fi first” policy. They try to route all their calls through Wi-Fi and only run them through a cell network when you aren’t connected.

They also aim to have a seamless handover between Wi-Fi and cell networks when you leave a Wi-Fi area during your call. The technological aspects aside, running their service, this way is a cost-saving feature, and Republic aims to pass those cost savings to you as a customer.

How I found out about Republic, and why it took me ages to switch

Although I’ve been a customer for over 2 years now, I didn’t sign up for Republic the first time I heard about them.

When I started college, I was hanging out with a friend of mine and talking one night. We were talking about budgeting and finance, because I’m a nerd like that, and I was complaining about how expensive cell service was. Back then I was paying $45 a month for Virgin Mobile, and although I still thought I was paying too much for my service, I was happy that I had unlimited data and wasn’t paying $95 anymore.

Just as I was getting riled up, my friend whipped out his Moto G and told me he paid almost nothing for his phone through Republic Wireless. I had never heard of them, and I was skeptical about coverage when he told me how their service worked.

He told me I should switch, and I told him no. I didn’t want the annoyance of dealing with dropped calls and shoddy service. I stood by that for a while.

In fact, I didn’t sign up for Republic until I’d known about them for almost a year and had other several friends and my brother and sister-in-law tell me I should switch. I’m stubborn like that.

Eventually, I was out of town for a couple of weeks and ended up in an area where Virgin had poor service, so I decided that when I got home I’d give it a shot. After all, what did I have to lose?

The biggest selling point for Republic, in my opinion, is their price. At the time, they were offering unlimited talk and text for $10 a month.

Yeah. $10.

They also offered 4G data plans starting at $17.50 and moving up from there. I bought a Moto G from them and went with the $10 a month plan. I was giving up data, but I spent most of my time around Wi-Fi networks, so I decided I’d see how long I could go without it.

Turns out I could go quite a while.

PS, with their new plans, my wife and I would be paying $15 a month and $20 a month, respectively.

How we’ve saved $930 a year using Republic

I’ve been with Republic ever since, and my wife switched over when we got married.

If you figure that I was paying $45 a month and my wife was paying about $60 a month through her parent’s family plan, switching to Republic means that we’re saving $77.50 a month on our phones. I don’t know about you, but I can find much better things to spend my money on.

$930 a year adds up.

Fast.

That’s more than we spent on our last vacation:

Paid for courtesy of our tiny phone bill.

How would you like to fund a vacation with the money you save from switching to a lower-cost wireless provider?

My wife and I are grandfathered into what Republic calls their 2.0 plans. We pay $10 a month for my phone and $17.50 a month for my wife’s. The 2.0 plans offer you a discount if you don’t use all your data, so my wife and I usually end up spending less than $30 a month for our cell service, after taxes.

Want proof?

Here are some of our cell phone charges for the last year:

Back when I signed up you could only buy a phone from Republic because Republic loaded a custom ROM into their devices. Today, they let you bring your own phone or buy from them using their Republic 3.0 phones.

The trade off to having a wider variety of phones available is a slightly more expensive price.

My plan would be $15 a month, and my wife’s would be $20 a month, although she would double the data she currently has. We’d also lose the refund for unused data, which is a big reason we haven’t switched yet.

After taxes, we’d end up paying about $40-$45 a month for service.

Obviously, $45 a month for a family plan is still amazing, and we plan on upgrading after we graduate, but we’re cheap college students.

What we like about Republic Price

So why do I stick with a no-name provider like Republic instead of paying for service from one of the big four carriers?

First of all, the price is absolutely unbeatable.

Even with their new plans, I challenge you to find a better deal, anywhere.

Want to know why I’m so confident?

We just bought new-to-us second-hand phones that are way nicer than our old ones. We were thinking about switching to Republic’s new 3.0 plans but wanted to see if anything better had come along in the time we’d been Republic customers.

I spent hours looking through dozens of wireless providers, including the big names like AT&T, Sprint, T-Mobile, and Verizon and smaller ones like Freedom Pop or US Cellular.

Guess what.

I couldn’t find a better deal.

Sure, I found cheaper plans, but all of them would have required us to sacrifice in service or options.

So I’m pretty confident Republic is where it’s at.

Service

Another thing I like about Republic is their coverage.

Since buying my first phone with Republic, I’ve been to no less than 9 different states, on both coasts, and our northern border, and not once have I been without service. When I first switched over to them I was a little nervous, but I don’t think about it anymore when I’m in a new state because it’s never been a problem.

I’ve also been in several out-of-the way locations, and I usually keep service just as long or longer than my friends on other carriers.

I’ve even had a few times where, thanks to Republic using Verizon towers to roam, I’ve been the only one with service.

Not bad for a no-name carrier.

I also like Republic’s Wi-Fi calling.

When you’re on a Wi-Fi network and get a call or send a text, Republic handles it flawlessly. They’ve also developed hand-over technology so that your calls don’t drop when you leave a Wi-Fi network and you’re talking.

Instead, you might have a moment where the sound dims, but it picks right back up. Most of the time I don’t notice it.

Change your plan at the drop of a dime

Another feature that I’ve used, and love, about Republic’s service, is that you can change your plan whenever you want.

Well, I should say you can change it once a month for free, but you get the idea.

Take me for example. A couple of months ago I was in Houston and needed to call I Lyft to get from the airport to my hotel.

Like I’ve said, I don’t pay for data, so that would typically be hard to do with an app that requires data to work. All I had to do was jump on my Republic app and switch my plan to one of the data plans, and I was calling a Lyft two minutes later.

I used data for a couple weeks until I was done with it, waited for my billing cycle to reset, and then switched back to the talk and text plan only.

I like this feature because I don’t have to worry about not having access to WIFI when I need to get on the internet and do something in a new place.

In my opinion, that’s a serious selling point for someone who doesn’t want to pay a ton on their phone bill but still wants to be able to use data in an emergency.

What we don’t like

Let me say again, my wife and I love Republic, but I’d be lying if I said that it’s not without its flaws, and I’ve noticed a few in the two years we’ve been with them.

Pop-ups and Xfinity Wi-Fi networks

Because Republic uses a “Wi-Fi first” policy, they try to make it as easy for you to connect to any Wi-Fi network you enter.

When you walk in range of an unsecured network, a small pop-up will come up on your screen and automatically direct you to accept the network provider’s terms. That’s all well and good, but it can be a frustrating experience when you get anywhere near a Xfinity Wi-Fi network.

I’m not sure if you’ve noticed, but Xfinity lets customers piggy-back on other Xfinity networks. That means that when I walk into an area with a Xfinity network I get a pop-up on my phone telling me to connect.

Every. Single. Time.

I am not a Xfinity customer, so I can’t connect. And, if there was ever any chance of me becoming a Xfinity customer, this experience has totally ruined it.

I will never buy internet from Comcast because they have never given me a moment’s rest from their merciless assault on my phone screen.

It’s also, in my opinion, one of Republic’s failings. I wish they would stop prompting me to connect to a network after I’ve declined to do so, over and over.

Personally, it’s a little infuriating to be in the middle of a text and have my screen grabbed from me, repeatedly, to try to get me to connect to a network.

I understand Republic wanting me to connect to Wi-Fi, but I’d much rather you wait until I return to the home screen instead of interrupting what I’m doing.

That’d be nice. Just saying.

Update:

My wife thought it was hilarious that I complained so much about this. She did some poking around and found out that you can disable this feature through the Republic app.

So basically, I just spent two years being infuriated for no reason. I am a fool.

Wi-Fi network woes

Another thing my wife and I don’t always appreciate about Republic is that it will occasionally hold our text messages, calls, and voicemail hostage.

What do I mean?

Some Wi-Fi networks are configured to block Wi-Fi calling.

When that happens, I’ll connect to the network and proceed into the dark zone of coverage, where I am in service, but the Wi-Fi network hates me and wants me to be miserable. Usually, I don’t realize it.

This isn’t really that big of an issue, and it’s not really Republic’s fault, but it can be something you’ll need to watch out for when you switch over. I’ve mostly had this problem at on my school’s network, and it seems to be something they do when the Wi-Fi network is nearing peak usage.

Not a big deal really, since it doesn’t happen most of the time.

Closing thoughts on our free vacations

Alright, our vacations aren’t free, but they might as well be with how much we’re saving on our phone bills.

In seriousness, my wife and I love getting our phone bill every month, and I hope that you will too if you decide to switch over.

We’ve been recommending Republic to our friends and family for a long time, and I think they’ve earned our business. They’re not perfect, but I’ve seen them make consistent improvements to their service and business over the two years I’ve been with them.

They’re the first wireless company that I’ve felt like cares about their customers, and I’m genuinely proud to give them my business.

If you use a ton of data, you might find a better deal for a higher price-point. But if you’re ready to switch most of your data usage to a Wi-Fi network and save buckets of cash on your phone bill every month, I wholeheartedly recommend you give Republic a try.

Also, I should note that I’ve had a few friends who really like Google Fi, so that might be an option for you if you want to save money on your phone bill but don’t want to go with Republic, for whatever reason.

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A while ago I wrote about the tax benefits of dividend income versus ordinary income you would earn as an employee. At the end of my piece, I briefly mentioned that if you own a REIT you’ll be taxed at ordinary income tax rates for most dividends you receive.

Today I hope to explain why REIT dividends are taxed at higher tax rates and why that can be a good thing or a bad thing depending on your situation.

Different kinds of dividends for tax purposes

To start off with, I want to cover some of the different kinds of dividends you can receive.

In my first piece on dividend taxation, I explained the difference between qualified dividends and ordinary dividends.

As a brief reminder, ordinary dividends are the dividends you receive that are not qualified to be taxed at the lower 0-20% tax rates that qualified dividends are taxed at. Qualified dividends are dividends that do qualify for lowered taxes.

Usually, you can determine exactly which of the dividends you received over the year are ordinary dividends by looking at box 1a on your 1099-DIV. Your qualified dividends are listed in box 1b, but are included in the total in box 1a, so don’t freak out that you’re going to get taxed twice. You’re not.

Just know that any difference between the two will be taxed at your ordinary income tax rate.

Taxation of corporate earnings

Now that we’ve covered the difference between ordinary and qualified dividends, we need to talk about the taxation of corporate income. The first thing I have to tell you is some bad news.

Remember how I said that dividends are taxed at lower tax rates than ordinary income?

I sort of lied.

When dividends are paid to you they’re taxed at lower rates, but the truth is that they’re being taxed for the second time. Let me explain.

The way the United States has structured their corporate income taxes is similar to the way the structure our individual income taxes, with a progressively higher tax rate based on income brackets. The corporate tax rate in the US ranges from 15% to as high as 39%.

One quirk about the US corporate tax is that the maximum effective rate is actually 35%. The higher tax rates in some income bands are designed to produce tax revenues that would have been the same as having a flat 35% income tax rate no matter what your income was.

Like individuals, corporations in the US are able to take certain deductions and exemptions that decrease their taxable income, which is then used to calculate their income taxes owed.

From that amount, they can then take other deductions and use tax credits to further decrease their income taxes. Frequently, they are even allowed to defer portions of their income taxes for the year into the future, which is a good thing if you’re aware of the time value of money (TVM).

Once all deductions, exemptions, and credits have been factored in, you arrive at the net income for the business, which can then be distributed to shareholders as dividends. The fact that those dividends are then taxed again when you and I received them is why I say that they suffer double taxation.

That second line of tax is one of the reasons some financial advisors and investment analysts are downright negative when it comes to the payment of dividends.

They argue that shareholders would be better served by reinvestment into the business, where they can produce additional gains for the shareholders without being reduced by tax.

I invite them to look at Enron.

Or Valeant.

Alright, just kidding.

Technically they’re correct, but there are several other factors that play into whether a shareholder should want a dividend. I feel that they tend to ignore those factors in favor of the answer that is most mathematically correct.

Life is, in my view, more complicated than the math implies.

REIT history & taxation

Since we’ve covered the way most companies are taxed in the United States, it’s time for us to discuss REITs, and how they’re taxed.

REIT, if you didn’t already know, stands for real estate investment trust. They were first created during the 1960’s and have gone through several iterations as the legislative environment has changed over the years.

The basic idea behind a REIT is to allow investors to invest in real estate without having to front huge amounts of money themselves. Instead, investors can buy shares in the REIT like they would any other publicly traded corporation.

To be classified as a REIT, a company has to have a minimum of 100 shareholders and derive at least 75% of its operating profits from real estate investment.

This structure greatly reduces the capital required to invest in real estate and allows investors like you and me to diversify our real estate portfolio instead of staking all our capital in one real estate property. Additionally, REITs are required to pay at least 90% of their profits out as a dividend to their shareholders, so you can be sure that a profitable REIT will pay you a dividend.

The big advantage to REITs, aside from capital outlay and diversification, is how they are taxed.

In exchange for meeting requirements to be considered a REIT, REITs can deduct the dividends they pay from their corporate taxes, leaving them with an extremely low tax rate.

Sometimes no tax rate.

Because REITs are largely exempt from income taxes, the dividends they pay out are ineligible for classification as qualified dividends. In exchange for exemption from corporate taxes, shareholders have to include their dividends as part of their ordinary income.

So, if you’re in the 25% tax bracket and receive $100 in dividends from a REIT, you’ll be required to pay $25 dollars in taxes on those dividends.

Sounds like a raw deal, right?

Advantages of a REIT

Well it might not be such a raw deal after all.

Let’s consider some of the advantages to REIT dividends and how they impact you as an investor.

First of all, if you’re like me and my wife, our income tax rate is 0% because we’re poor college students. I don’t care about my REIT dividends being taxed at my ordinary income tax rate because I don’t have one. (Please note: technically we’re in the 10% tax bracket, but our exemptions and deductions eliminate our taxable income.)

Better, the only taxes I pay on my income right now are FICA and Social Security, so I’m A-OK with skipping out on these because my dividend income isn’t derived from employment.

Depending on how many kids you have and your annual income from your job, you might also fall into a 0% tax bracket.

If so, invest in REITs without any fear of taxation. You’re getting a proportional share of 90% of the REITs profits without paying a dime to Uncle Sam. I’d take that deal any day of the week.

When it comes to REIT dividends, the only reason you should care about tax rates is if you fall into the 25% or greater tax brackets. For 2017 that means you need to be making more than $37,950 if you’re single, $75,900 if you’re married, and $50,800 if you file head of household.

If your income is lower than those amounts, your dividends will be taxed at the 10% or 15% rate and be comparable to the qualified dividend tax rates you’d get if you invested in something other than a REIT.

If you are in the 25% or higher tax brackets, see my list of disadvantages of REIT dividends below.

Another advantage to REIT investing.

If you invest in a REIT you can be assured of a high dividend payment, provided that the REIT you invest in is profitable. A natural result of being required to pay out 90% of their profit as a dividend means that you can expect a higher dividend payment relative to other investment opportunities.

At the same time, you’ll notice I didn’t say you’d be getting a high dividend yield. For the best REITs, investors tend to drive up the share price, decreasing your yield. When that happens you’ll probably end up with a higher yield than normal, but it’s not a guarantee.

A final advantage to investing in a REIT is one that I already mentioned, but I’m going to bring up again.

Investing in a REIT means that you can invest in real estate without having to front a few thousand dollars as a down payment. You can also diversify your real estate portfolio very quickly since the REIT or REITs you’re invested in will have multiple properties in their portfolio at any given time. You’re also spared the trouble of learning the ins and outs of real estate by yourself since you can take advantage of the REITs staff and their expertise.

Disadvantages of a REIT

Since a discussion about REITs wouldn’t be complete without covering some of their disadvantages, let’s talk about those now.

First thing’s first: taxes.

If your household income is above the threshold I mentioned earlier, REITs are taxed higher than qualified dividend income.

An example of REIT vs qualified dividends

So let’s say that you received $1,000 of dividend income, you’re single, and your annual income is $55,000. If you had invested in a company that paid qualified dividends that extra $1,000 of income would be taxed at 15% and you would owe $150 in taxes on it. By receiving a qualified dividend you’ve reduced your effective tax rate from 17.25% to 17.21%.

On the other hand, let’s assume the same, but this time you invest in a REIT and receive $1,000 in dividends. Since they’d be taxed at 25% you’d owe $250 in taxes, and your effective tax rate would increase from 17.25% to 17.39%.

That might not seem too bad yet, but it only gets worse the higher your tax bracket and the higher your REIT dividends.

That said, you shouldn’t avoid investing just to avoid taxes, as I discuss in my piece on common tax misconceptions.

Another problem with REITs is management.

Yes, I know I said an advantage to investing in a REIT is that you can rely on management’s expertise. The bad thing about management is that they might be incompetent. Real estate is an investment vehicle which, unfortunately, allows fools to make a lot of money and look very wise when times are good, much like the stock market.

The problem is what happens when times are bad.

Real estate is more illiquid than other investments, so a poorly managed REIT will have a harder time turning things around relative to some of their publicly traded peers. Some REITs even manage to lose money when times are good because there’s always a bad deal that looks attractive floating around somewhere.

If you invest in a REIT you need to understand that management might, unintentionally, screw you. If you were to invest in real estate for yourself you’d have no one to blame for your mistakes but yourself.

I also think that a disadvantage to REITs as your primary investment vehicle into real estate is that you’re unlikely to learn the ins and outs of real estate on your own. In my view, the best time to invest in a REIT is after you already own a few pieces of property yourself.

I don’t think this disadvantage is a deal breaker, but I’m also not a fan of the investor who invests in REITs and never does anything else with real estate. Ignorance is not your friend.

Closing thoughts on REITs

As I’ve said, there are a few great reasons you should invest in a REIT. For me and my wife, those advantages outweigh the disadvantages some of the time, and we’re long on two REITs. But other than one specialized REIT I’m still evaluating we’re not planning on opening a new position in a REIT anytime soon.

That said, I think there are also several disadvantages to REITs, not the least of which is their tax implications to high-income earners. I’ve watched several REITs implode and cut their dividends since I started following the sector.

REITs aren’t something that I recommend to most of my family and friends because I know that they’re unlikely to be able to make a good investment decision or understand what they’ll do to their taxes.

Additionally, REITs have a big problem built into them.

They make it too easy to get greedy, and greed leads to poor investment decisions. Chasing high dividend yields can be a terrible idea, and REITs almost all have high dividend yields.

So should you invest in a REIT?

Maybe. If you’re willing to accept the risk and if you understand the tax implications. I hope this article helped you to understand them better, and if you have any questions you can always reach out to me and I’ll do my best to answer them for you.

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June Dividend Totals

June is officially over, and it’s time to report on how things have been going for us in our investing journey.

When it comes to dividend investing, June is one of the most exciting months for us because I open new positions or add to existing ones.

This month I added to our positions in MITT, NLY, and PNNT. I wrote a post about our purchase a couple of weeks ago, and I’m still super excited. As much as I love taking advantage of DRIP investing, nothing beats the boost we get to our dividend income when we deploy additional capital.

Speaking of which, we had a record-breaking June, with dividends coming in from four different companies, which paid us a total of $22.72.

In addition to the dividends paid to us by our companies, I’ve also decided that I’m going to include any dividends paid in our brokerage account as part of our dividend income, which bumps us up to $22.92 for the month. I’ve also retroactively included the $0.15 from last month in our yearly dividend income total.

I’m happy to say that this June is a 53.11% increase from last June, when we only received $14.97 in dividend income.

We might not be pulling in a huge amount per month right now, but $22.92 is almost enough to cover our gym membership. Even better, that’s almost $23 that we didn’t have to work for and that will allow us to continue to grow our wealth.

Our Yearly Dividends

Alright, now that we’ve talked about how we did for the month, let’s check out our progress on our yearly dividend income goals.

As of now, we’ve officially crossed the halfway point and are 50% of the way through the year. Not only that, but we’ve officially broken the $200 mark for dividends received year-to-date, coming in at $209.31!

Last year it took us clear until October to reach the same milestone, so we were able to hit the same point in 60% of the time. That’s a huge improvement!

Additionally, we’re now 52.32% of the way towards our goal of receiving $400 in dividend income for the year. We’re still just a little ahead of schedule, but we should leap ahead next month and then maintain a slightly diminished lead to finish out the year. Right now I’ve got us projected to make it to somewhere around the $430 mark once all is said and done.

Sounds awesome to me, but how about our forward dividend income?

Forward Dividend Income

At the end of this year, our goal is to have a forward dividend income of $500 dollars, which would be a 77.94% increase from our total dividends received last year, before I started tracking our forward dividend income.

As far as I reminder, we started the year with a forward dividend income of approximately $390. Last month, our forward dividend income was $419.17.

Between our dividends reinvested this month and the money I put into adding to our positions in MITT, NLY, and PNNT, we’ve jumped up to a forward dividend income of $489.02. We’re only halfway done with the year and we only have $10.98 to go to reach our goal!

I wish I could say we’ll keep jumping up like that for the rest of the year, but a downside to how little we can put into our account each month is that big bumps like this only happen twice a year.

That said, I’m confident that our dividend reinvestment will push us pretty darn close to the $500 mark just in time to make our next purchase in December. If all goes well, that purchase should push us up to around $550 in forward dividend income, blasting through our yearly goal.

But we’ll have to wait and see.

More Good News

Remember last month when I told you that we’d transferred our emergency fund from our savings account into a higher yielding money market account?

This month I logged on to see how much interest we had accrued and was met with a wonderful little message:

I wasn’t expecting a 10% bump in our interest rate, but I’m happy to take it. It sure kicks the pants off of most of the savings and money market accounts available today. Building wealth is all about celebrating the small victories and focusing on the positive, especially when you’re just getting started like we are.

Thanks to our interest bump, we’ll now be making just shy of $150 a year in interest on our rainy-day fund.

We could be making a lot more than that in the stock market. In fact, we’d be making closer to $1,100 a year if our emergency fund was allocated the same as our current portfolio.

But, again, we’re not counting on this to increase our net worth, but it will help us fight inflation a little bit. An emergency fund is more about our peace of mind than it is what we could be doing with the money.

To finish up, remember:

Little by little the bird builds his nest.

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Would you like to earn a great return on your money with minimal effort on your part? I mean, come on, who doesn’t want to get paid for doing nothing?

My wife and I already have a dividend growth portfolio that we’re building, but if you’re like me, you probably intend to get into in several different investment vehicles. For us, we’re looking to get into real estate in the next couple of years.

In the meantime, I try to keep my eyes open for different opportunities and ways to make money that can provide us with a decent return without requiring the capital that you need to get started in real estate. Recently, I’ve heard more about peer lending and decided I wanted to look into it.

What is Peer-to-Peer Lending?

Peer to peer lending is like crowdfunding for loans and financing.

From the borrower’s side, a peer lending platform will let people borrow money from strangers like you instead of from a bank.

This can be a good option for people who are looking for better financing terms for their debt, for people who have maxed out the credit available to them and need another option, or for those who can’t qualify for traditional financing for whatever reason.

From the investor side, peer lending is a way to earn a better return than they would be able to find in most savings accounts, money market accounts, certificates of deposit, or some bond funds and annuities. If you invest in your money with a peer lending platform you’ve essentially become the bank for someone else.

Sounds like a win-win, right?

Sadly, most peer-to-peer lending platforms require you to be an accredited investor. I poked around a bit, and the two peer lending platforms I found that didn’t require you to be an accredited investor are Lending Club and Prosper Lending.

For this article, I’ll be looking in depth at Prosper Lending, and if I ever feel like it, I may do the same for Lending Club.

About Prosper Lending

Prosper was founded in 2005, is headquartered in San Francisco, and claims to be the first peer lending platform. But before I get into the details of investing in Prosper loans, there are a few other things I think you should know about Prosper.

First, back in 2008 the SEC determined that Prosper had violated the Securities Act of 1933 and ordered them to shut down. The SEC did this because it classed the sale of Prosper’s debt notes to investors as a securities sale, and Prosper was not registered to sell securities to investors.

Prosper restructured their business model, and were allowed to resume business in 2009. Under their new terms Prosper itself is considered the obligated party for their notes.

In other words, if you invest in their loans, Prosper itself owes you, not the original borrowers. The original borrowers are classed as creditors to Prosper. In essence, Prosper has stepped between you and the borrower so that they can comply with SEC regulations.

The second thing you should know about Prosper is how their investment process works.

Since their founding, Prosper has originated over $9 billion in loans, typically with fixed terms of 3 years or 5 years. Their minimum loan value is $2000, and the maximum loan value Prosper offers is $35,000. Prosper charges a 1%-5% origination fee to its borrowers, depending on their risk class, and a 1% annual servicing fee to investors.

Prosper classifies their loans as AA, A, B, C, D, E, and HR, with the loans they determine have the lowest risk classified as AA and going on down to HR, which stands for High Risk. For both the borrowers and investors, the yield on the loans is determined by their risk class.

In addition to their risk class, Prosper also allows you to view additional information about their borrowers, including their credit score, occupation, income, and parts of their credit history.

Prosper allows investors to buy chunks of each of their notes in $25 pieces and recommends that you buy a large portfolio of $25 chunks so that your risk is spread out between several different borrowers. Instead of one investor holding the entire amount of a $5,000 loan, you might end up with 200 investors each owning one $25 segment of the $5000 loan.

After a loan is originated, its tracked in your dashboard and you receive a monthly interest payment until the principal is paid off.

I’ve heard a wide variety of recommendations, but it seems that the general consensus among the investor community is that you should invest a minimum of $2500 and spread yourself between 100 different notes in order to make Prosper worth your time as an investor.

Why You Should Invest in Prosper Loans

Alright, now let’s get to the fun stuff. Why should you invest in Prosper notes?

For one, Prosper notes provide you with a way to diversify your investments. Instead of investing in stocks or traditional bonds, you are essentially purchasing individual bonds from Prosper, the repayment of which is contingent upon debt payments Prosper receives. (Yeah, you’re not actually buying the note. Remember what I said earlier about how Prosper is structured since its relaunch.)

Another good thing about being an investor is the return you’re earning. According to Prosper, the average investor earns an 8.01% return on their investment. Taken directly from their website, this is how they calculate that average:

“Estimated returns are calculated by (i) taking the weighted average borrower interest rate for all loans originated during the period, adding (ii) estimated collected late fees and post charge-off principal recovery for such loans, and subtracting (iii) the servicing fee, estimated uncollected interest on charge-offs and estimated principal loss on charge-offs from such loans. The actual return on any Note depends on the prepayment and delinquency pattern of the loan underlying each Note, which is highly uncertain. Individual results may vary and projections can change. Past performance is no guarantee of future results and the information presented is not intended to be investment advice or a guarantee about the performance of any Note. Based on data from May 1, 2017 – May 31, 2017.”

Which is to say that your return might vary from the average, and is highly dependent on the kind of loans you choose to invest in. Prosper provides the following estimated returns for each loan class:

AA: 4.2%

A: 4.81%

B: 5.53%

C: 7.72%

D: 11.08%

E: 13.17%

HR: 11.65%

Essentially, prosper estimates that if you invested only in B grade loans, for example, you would end up earning 5.53% on your investment, after fees and loan defaults are factored in.

In addition to your return, one good reason to invest in Prosper is that you’ll receive a monthly income in the form of interest payments on your investment and have a (sort of) guaranteed return of principal after all is said and done.

If you have a pile of cash sitting around, this might be a good way to make sure you beat inflation, and it sure kicks the pants out of most CD’s available today.

Another attractive benefit from investing in peer lending products like those Prosper offers is that you can select your own loans based on whatever metrics you choose to focus on. If you have a high risk tolerance, you’re free to invest in high risk loans. If you have a low risk tolerance, you can protect your principal by selecting AA and A grade loans.

You’re also able to set up an automatic investment based on the criteria you select. Prosper will then buy loans that match your criteria as they become available, until you no longer have investable capital in your account.

Why You Shouldn’t Invest in Prosper Loans

Okay, now that we’ve covered a few of the reasons why you should invest in Prosper loans, let’s go over a few reasons you shouldn’t.

First off, you really shouldn’t invest in Prosper if you’re going to need money soon. Like I said, Prosper offers notes that are in 3-year and 5-year denominations, so if you know you’ll need a chunk of change anytime in the near future Prosper is not the place for you.

Prosper used to allow investors to sell their notes on a secondary market, but that service was shut down at the end of 2016 and hasn’t been reintroduced. That means if you buy a note from Prosper you have to hold your note to maturity, so if you’re looking to have liquidity in your investments I would suggest you go with something else.

Another reason you shouldn’t invest in Prosper is that you don’t actually own any portion of the note you’ve invested in. The fact that you’re buying a bond from Prosper means that the borrower who owes the loan you “invested” in has no legal obligation to pay you back. Instead, Prosper owes the loan and has complete control over what action to take if it defaults. If they want to sell it off and you, personally, would rather keep it, you get no say.

Investing in Prosper means you’re sacrificing control over your investment.

For that matter, if Prosper itself declares bankruptcy you’re out of luck when it comes to getting your money back. There will be a long line of creditors in front of you, so you’ll end up losing your principal and the interest you’ve earned.

That means that if you decide to invest in a Prosper loan you have to be comfortable with Prosper’s long-term prospects, not just the likelihood that the loan you bought will repay.

Prosper has attempted to mitigate this risk by creating two legal entities, one called Prosper Funding, and one called Prosper Marketplace. However, since Prosper Funding is a subsidiary of Prosper Marketplace they haven’t really solved the problem. If Prosper Marketplace declares bankruptcy Prosper Funding is a viable source for creditors to reclaim their capital, and Prosper Marketplace will be a likely source to recoup losses if Prosper Funding goes belly-up

Another reason you shouldn’t invest in Prosper is that some of your loans will default, meaning a loss of principal and interest gains. If this happens to you, and it will eventually, you need to have enough of a return on your other notes to cover your loss or you’ll end up earning a negative return.

If you’re not comfortable with the idea of losing some of your money to defaults you need to go somewhere else to invest. Stocks, for example, are far less likely to completely wipe out your principal without giving you an option to get out and preserve at least some of your investment.

The Bottom Line on Prosper

Having gone over a few of the reasons why you should and shouldn’t invest in Prosper loans, let me finish off by saying a few things.

I think Prosper can be a good investment for you.

If you understand the risks and you’re comfortable accepting them there’s an opportunity to make a great return through Prosper. I wouldn’t recommend you put your life savings into Prosper, but it would be a great supplementary investment to help you earn an above average return on your additional capital.

Every investment carries risk, and Prosper is no different. If you’re not willing to risk anything you’ll inevitably lose when it comes to money. That said, that doesn’t mean this investment is the one you should take a risk on.

I also think that Prosper can be a terrible investment for you.

If you’re the kind of person who gets caught up in get rich quick schemes, Prosper’s probably a great place to lose your money. Especially if you decide this is your chance to make it big and sink your life savings into it.

If you get greedy when you see a loan with a 24.99% interest rate, you’ll probably make sub-par investment decisions and destroy your returns. You need to take a disciplined approach to investing, and I don’t think Prosper is the best place to develop that approach.

Lastly, for those of you who are interested in investing in Prosper, I’ve created an Excel spreadsheet where I’ve run some analysis on every Prospers loan since their inception in 2005. Be warned, it’s pretty big. Since 2005, they’ve issued 710,212 loans and had 58,693 defaults. I’ve summarized those defaults by loan amount, interest rate, and credit rating and run a basic statistical regression.

I’d like to come up with a predictive model, where you can plug in those variables and decide if the risk of default is acceptable to you, but I’m still working on it and didn’t want to delay this post any longer. I’ll give you an update here when I finish it.

If you have any questions for me as you’re reading through the spreadsheet, please get in contact with me.

To finish up, I’m curious. Do you have any experience with peer lending? If so, what are some of the benefits to investing in peer loans, and what are some of the risks that I missed?

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