I originally was going to make two posts but ultimately decided it best to combine the two topics as both were in the same vein of reminiscing for the year that was 2020 .
For the year I earned a total of $35,876 in passive income versus $32,382 in 2019. This was a 10.67% increase year over year which fell ~2% below my targeted growth of 12.5%. Yes the pandemic with its dividend cuts greatly hurt my progress. However, I did not take it lying down and repositioned my portfolio over the summer. Without this adjustment my annual increase would have been closer to 8% or 4.5% below my growth target.
The largest reposition of my portfolio was reducing my REIT exposure from 19% down to 13% while the remainder was eliminating weaker or small positions across multiple sectors.
The other large portfolio change was I reduced my cash holdings from 10% to 5% and went on a buying spree in the utilities sector which started to bear fruit in the 4th quarter and added quite a bit to my forward dividend income already making 2021 a much better year.
Looking at my age 53 goal, I closed out 2020 at 90.20% complete. I’ll turn 53 in October of 2021 and this leaves just 10 months left to achieve my goal. After running multiple projections it looks like I may end up short on this one but I will continue to push. I am currently calculating I would need an additional $16,000 of new cash invested over and above what I currently save & invest. I definitely do not have room in my budget to save an additional $1600 a month so this will be a challenge.
My forward annual divided just cleared the 40K mark coming in at $40589. Using this figure I updated my comparison to median household income in the U.S and was pleasantly surprised to see I now meet at least 80% of median household income in 5 states (+3 states) and the number of states where I was less than 50% shrank to 4 (was 5). I only started this comparison in October of 2020 so not a big base to measure improvement but this time next year will be more interesting.
COVID: What I Learned and Observations
A global pandemic was something new for all of us and here is a quick rundown of things I learned and interesting observations
- I was disheartened we needed a pandemic to get people to wash their hands after going to the bathroom. Really?
- When stocking up for a disaster the first thing you should buy is…toilet paper?
- I had to learn how to cut my own hair. I over-payed to buy clippers but it was well worth it.
- Being an introvert finally paid off. Lots of folks struggled being isolated from family, friends, and co-workers but being an introvert this was a walk in the park. My work productivity actually improved.
- After procrastinating for 24 years I finally built the home office I wanted.
- I didn’t need Pro Sports. Watching sports was a large part of my entertainment consumption. When sports were cancelled earlier in the year I was surprised how easily I did not miss it and when sports came back my consumption dropped by 90%. Guess I discovered other things in life
- In spring, sports and film Industry were labeled as nonessential jobs but my job was essential. Puts things in perspective, too bad they make way more money than I do.
- There are a lot of people struggling in silence. I need to continue making food donations.
- Checking in with and helping elderly neighbors, its not a chore to reach out.
- I am humbled by the amount of hours and dedication health care workers have.
- My kids wanted to have real conversations with me that had more than 10 words.
- Locked up with my wife for 9 months and we never argued, guess we can handle retirement together 🙂
- It has never been more apparent that passive income is a necessary survival tool in modern times.
All things considered this was not too bad of a year from a saving & investing perspective given the challenges. For 2021, my goals will remain the same as 2020 as I continue towards retirement which is now just 7 years and 10 months away.