The Sharpe Income category be found by clicking on that red ‘Sharpe Income’ tag next to this post title, or by clicking here.
We continue the discussion from the last entry.
We began this project with only $500. All in an effort to help out the small retail investor who doesn’t have a lot of money, understand the importance of growing an income account, as opposed to a trading account. The following numbers are taken from our PDF that is attached below. Remember that the numbers are computed off of Friday’s close …
Total Sharpe Income Balance: $3,103.57
Total Sharpe Income YTD Return: + 5.40 %
Sharpe Income YTD Paid Yield on Cost: + 2.45 %
Total Sharpe Income YTD Maximum Draw-down: – 6.84 %
iShares Barclay’s IEF Return: + 1.20 %
S&P 500 Index YTD Return: + 7.24 %
S&P 500 Index YTD Maximum Draw-down: – 11.24 %
So let’s first cover our basic house-keeping. We have placed this weeks ‘capital deposit’ in the category reserved as “dry powder”. Cash that we simply have ‘on hand’ and can move about as we wish. Of that cash, 85% of the capital deposit was placed as reserved for a future deposit towards the ‘capital gains’ strategy. 15% of the capital deposit is placed towards reservations for the purchase of more income assets.
As well, we were paid a dividend from Wells Fargo (WFC), and this has been recorded on the spreadsheet and the PDF. You remember Wells Fargo (WFC) right? The stock everyone hated even 45 days ago? The stock that is up around 18.83% in that same periodicity? You know … that stock? Well, we were also paid a dividend on that, so our yield on cost (the amount of dividends, based on what we initially paid to own the stock), has risen to 2.31%.
Try getting 2.31% out of your bank in less than a years time.
And as the month of December wears on, we have more dividends coming in. And that is the point of what we are demonstrating here, namely … growing an Income account.
Microsoft (MSFT) will pay us a dividend on December 8th, 2016. International Business Machines (IBM) pays on December 10th. Union Pacific (UNP) will pay us on December 29th.
Money will be flying in this month.
I am still watching an instrument that I would like to add to the project. The average annual yield for that instrument at the moment, is about 5.90%. No it is not HYG or JNK.
But we’ll talk about that in the future.
The link to the Google Drive Spreadsheet that you can view, that we will edit, build upon and refer to over time can be found at this link.
We continue the Sharpe Income project with this next entry.