Carnage!

On 19 February 2020, the S&P 500 closed at a record high of 3,386.15. Today, just more than a month later, the index closed some 33.9% lower at 2,237.40!

This is the fastest 30%+ sell-off ever, exceeding the pace of declines during the Great Depression. It took just 20 trading days for the Dow Jones Industrial Average to enter bear market territory and just 22 trading days for the S&P 500 to fall 30%.

My DivGro portfolio suffered badly from this carnage and all my capital gains are gone! If it were not for the nearly $100k in dividends I've collected since 2013, DivGro would have been underwater!

My 3 Loyal Sons: How A Wacky Idea Inspired My Sons To Invest In Stocks

Eighteen months ago, I gave my sons a different kind of Christmas present. I gave them seed money, provided they each open an account at Loyal3.com and commit to buying $30 in shares (of any stock that Loyal3 trades), every month, for 30 years. That's about a dollar a day and the equivalent they each spend on a data plan for their iPhones.

To my delight, my sons accepted the terms and started investing in January 2014, each choosing one stock from those offered at Loyal3.

At the end of last year, I turned the tables on my sons and asked them for a different kind of Christmas present. I asked them to e-mail me an update of their accounts and to do a little reflection on their first year as stock owners. I also wanted to nudge them into thinking about the next year and their future as investors.

How Loyal Have You 3 Been?

Last year, I gave my three sons a different kind of Christmas present. I gave each of them seed money to open a Loyal3 account if they would commit to buying $30 in shares every month, for 30 years – about a dollar a day. They accepted the gift and started investing in January, each choosing one stock from the 50 or so offered at Loyal3.

This year, I turned the tables on them by asking for a different kind of Christmas present. I wanted them to e-mail me an update of their accounts and to do a little reflection on their first year as stock owners. I also wanted to nudge them into thinking about next year and their future as investors.

What is a Liebster Award?

Today, Passive Income Pursuit nominated DivGro for a Liebster Award. After feeling honored to have been nominated, I had to Google "Liebster Award" to find out what this was all about. Sopphey Says it is "kind of like a chain letter" in which one blogger nominates 5 other bloggers to answer 5 questions; and then nominates 5 more bloggers for a Liebster Award, with a new set of 5 questions to answer...

Apparently, Liebster is German for dearest, an adjective than means most loved or cherished or a noun that is an affectionate form of address to a much-loved person. Although I'd like to claim those definitions, The Free Dictionary's definitions are probably more appropriate: greatly valued; precious; highly esteemed or regarded...

Taking a Break

No, I'm not taking a break from DivGro. The title of this post is an encouragement to take a break; to enjoy life; to smell the roses...

We've just returned from a wonderful vacation in South Africa, where I hiked the Otter Trail with two of my sons. It was an amazing experience, despite some difficulty we experienced crossing the Bloukrans river. I took the photo to the left on the morning of the last day of our hike.

After our hike, one of my sons bungy-jumped off the Bloukrans bridge, the world's highest commercial bungy jumping site! We also had day visits to two national parks, Addo Elephant National Park and Kruger National Park. At Kruger, we were fortunate to see Africa's Big Five game animals in a single day, which is quite rare!

Diversify!

One of my goals for 2014 is to increase the number of holdings in DivGro to 36 and to balance those holdings across all 10 sectors in my watch list. I reconstructed my watch list, following a similar approach to the one I use every month to identify 10 candidate stocks. In doing so, I arrived at a new target distribution for stocks by sector. This process of diversifying DivGro is going quite well.

Diversification is a way to reduce risk by adding variety to a portfolio. Assuming individual stocks are not perfectly correlated, the positive returns of some stocks should offset the negative returns of others. According to Investopedia, studies have shown that "maintaining a well-diversified portfolio of 25 to 30 stocks will yield the most cost-effective level of risk reduction". Increasing the number of holdings beyond 25 to 30 stocks will reduce risk further, but at a diminishing rate.

Kilokor

When I was in school in South Africa, my parents, both educators, briefly forayed into the real estate business. I think it was to help a friend get back on his feet. My dad created an interesting logo for the business, based on his background as a geographer.

The logo has a circular core, with radial arms pointing out in different directions. My dad explains that he had based the logo on a map of the Witwatersrand, with Johannesburg at the core, and radial arms reaching out to the neighboring towns of Carltonville and Krugersdorp in the west to Springs and Nigel in the east.

Because I can!

This post in unlike any other that I've written for DivGro. It will not share any new insights into dividend growth investing, nor provide an update of my dividend growth portfolio. It won't be all that long, either. And you'll understand why, in a moment. 

I'm writing this post on the balcony of our mini suite on the Norwegian Epic. My wife and I are on a Caribbean cruise. It is our first ever cruise as a married couple and we're doing it in celebration of our 28th anniversary. So far, its been a wonderful experience – something I can highly recommend. And I'm really grateful for the opportunity to celebrate our anniversary in this way!

The cool thing about this cruise is that we're getting it for a bargain price. Cruises are expensive to operate and unsold cabins do not generate income. So last-minute discount deals are available, if you know where to find them. Last-minute is a bit of a misnomer – cut-rate promotions are typically available within 90 days of departure and is a great way to cruise for cost-conscious travelers with flexible schedules. 

This post's title is a tribute to our sons, who asked, indignantly: "Why would you want to post to your blog when you're on vacation?"

A Different Kind of Present

This year, I gave my sons a different kind of Christmas present. I gave them seed money, provided they open an account at Loyal3.com and committed to buying $30 in shares (of any stock that Loyal3 trades), every month, for 30 years. That's about a dollar a day. They all seem to be fired up to give this a go! I'm a happy dad...

My sons are like most young people today. They don't like us to tell them what to do. They don't particularly want our advice, either. They want to make up their own minds. They want to be independent. They want the right to choose and even the right not to choose. They seek and accept advice from anybody who's not their parent, a teacher, or another "older" person that don't get young people or the struggles they face. 

Gazing into the Future

The main goal of DivGro is to generate a reliable and growing dividend income stream. I hope to achieve a 12% yield on cost (YoC) within ten years of inception. And I hope to generate acceptable total returns exceeding the performance of the S&P 500 index.

In this post I'd like to gaze into the future, to ten years from now. If I'm disciplined and lucky, and I follow my plans and strategies carefully, what could DivGro be worth? And what can I hope to receive in dividend income?

Starting with an initial investment of $12,000 and adding $1,000 per month for ten years, I'll have a total of $132,000 invested. Of course, ending with a portfolio value of "only" $132,000 after ten years of investing would be rather disappointing. Hopefully the value of the stock market would gradually increase over time and the value of my portfolio would increase also.