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Announcing Exciting New Updates to “The Road To $1 Million” Portfolio!

In the pursuit of financial freedom, dividend investing stands out as a powerful strategy. Our “Road To $1 Million” Portfolio has always offered a unique and effective approach to building wealth through dividends. This strategy is about more than just collecting dividend payments; it’s about intelligent allocation, compounding, and strategic reinvestment. We are excited to announce some significant enhancements to our portfolio strategy that will make it even more dynamic and adaptable.

The Old Strategy: Weekly Investments and Tactical Allocation

Previously, our strategy centered around a disciplined weekly investment approach. We contributed a set amount (typically $500) to the portfolio each week. This $500 were split across most of the stocks in our portfolio each week, with a weight based on fair value, yield and dividend growth. While this type of investment makes it easy to achieve long-term growth, it also limits the potential of opportunistic purchases we could make when a favorite stock goes down. For example, recently CRM (which is one of our core companies in the portfolio), lost ~20% of its value due to lowered guidance. Because of our investment approach, we were able to only buy ~2% of the $500 on CRM for a couple of weeks, before the stock started recovering. We therefore decided to change our approach to allow more flexibility in our stock purchase selection and to better track our goal of 33/33/33 strategy (33% Core ETF, 33% Hedges, 33% Stocks).

The New Strategy: Opportunistic Investments and Enhanced Flexibility

While our previous strategy was effective, we have made some exciting changes to increase its flexibility and adaptability, making it even more powerful.

Opportunistic Investments Based on Fair Value

Instead of fixed weekly investments, we now invest whenever the best occasions arise based on fundamental fair values. This allows us to take advantage of market conditions and invest in undervalued assets at the right time. We aim to maintain a 33/33/33 allocation: 33% in core ETFs, 33% in hedges, and 33% in individual stocks. Max target allocation for a single stock will be 4% and 10% for an ETF.

Dynamic Allocation and Dividend Growth

We focus on companies and ETFs that are growing dividends rapidly, as well as high-yield stocks. Our portfolio spreadsheet now includes fair values, percentage dividend growth over the last eight years, current dividend yield, discount to fair values, current shares held, their value, and their weight in the total portfolio. The discount column is color-coded to highlight stocks at varying levels of discount to fair value.

Flexible Dividend Utilization

Dividends are still paid out in cash and used for the next reinvestment, avoiding automatic DRIP. This method allows us to dynamically adjust our investments based on current market conditions and opportunities. As dividends compound over time, their contribution towards the investment target increases, potentially leading to a self-sustaining growth model.

Portfolio Monitoring and Updates

We no longer provide weekly target allocations but instead update the fair values of our holdings regularly. This ensures that our investment decisions are always based on the most current and accurate data. Additionally, our portfolio strategically includes short-term securities like USFR and hedges, including return-stacked ETFs, bonds, and managed futures. We monitor market conditions and deploy these funds when the market drops significantly, maximizing long-term returns.

Real-Time Trade Alerts and News

To keep our readers well-informed, we provide updates on trades and dividends weekly at the bottom left of the spreadsheet.

Conclusion

The Road To $1 Million Portfolio strategy has evolved to become more flexible, opportunistic, and dynamic. By strategically investing based on fair value, focusing on dividend growth, and utilizing dividends effectively, we are confident that this enhanced approach will accelerate our journey towards financial independence. Join us as we continue to navigate the path to $1 million, leveraging the power of disciplined investing, tactical asset allocation, and the compounding of dividends.


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Road To $1 Million

Start Date: 04/17/2023

As of 06/08/2024:

  • Portfolio Value: $36,926
  • Left to reach $1M: $963,074

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