The reason I post this monthly update is both to keep myself accountable but also have a more public discussion about my plans and how I can become financially independent as quickly as possible.

As time goes by, my objective is to be able to live entirely off of these new income streams but also be able be diversified enough to be ok no matter what happens. In many ways, that is what’s behind my interest in dividend income. For now, I prefer to avoid using actual numbers (might change later on) so what I will do is express all of this data in %. The objective of course is for all of these flows to end up generating 100% of my current income. I also want to gradually make sure that my income producing assets are not all locked away in accounts that will only be available upon retirement. In terms of income, I will be using my gross household income. Counting the bonus would only make things more difficult to track and would not represent how I currently live on my finances.

For example, if my base salary is currently 100K, my objective is to make 100K of passive income on an annual basis. This could be done through a variety of methods which I will be exploring of course. A few people tried to figure out how much capital I have by looking at the USDP size. The main issue is that the USDP is only part of my dividend income. I also get income from my ETF holdings, etc.

My primary objective remains to generate 100K in passive income on an annual basis as soon as possible, ideally from a few different sources. My partner just wrote about how he hopes to retire at age 35 which you can check out.

June Updates

-I posted the latest USDP update, with another one coming later this week
-Time to start investing on margin?
-How to build your own mini-Berkshire empire

How Much Do I Really Need?

I am aiming for an income of 100K or so, before taxes as a first goal. To be clear, I feel like I need significantly less than that. Why? I’ve described how I am living off of significantly less right now (I’m paying taxes, paying my house, saving, etc). I also have the option, as discussed of retiring in a foreign location.

Overall, I feel like aiming for the same level of income as I am currently making is very very reasonable and I could easily live with less but why aim lower if I’m confident I can reach that 100K?:)

Why Am I Doing This?

I’m a strong believer in working with clear objectives but also holding myself accountable so writing about these objectives will without any doubt help me reach financial independence more quickly.

Current Passive Income Flows:

5.46% – Dividend/Investing Portfolio: I am currently generating a dividend yield of about 3.43%. This portfolio will be increasing over time. I use a bucket system which I will be writing more about but the main retirement components are a long term dividend portfolio (see the Ultimate Sustainable Dividend Portfolio) and an ETF portfolio (see BuildYourETFPortfolio for more details on how I build mine). I saw a slight increase here thanks to markets rising and a similar yield.

7.48% – Private Investment In My Online Company: I have discussed how my web company has been the best investment of my life so far. I’m happy to say that I was able to slightly increase my monthly income from the company even though it wasn’t expected. I certainly hope that will keep happening.

Total: 12.94%

It’s not spectacular by any means yet. That being said, I am 32 years old and do have a decent base (I could live with less easily).. I will continue to work on getting that total as close as I can do 100%:)

Passive Income Ideas

0% – Real Estate: I have started writing about adding real estate to my income flows. One aspect that I love about Real Estate Investing is how much of an inflation hedge it will represent for my portfolio. So I started looking into some aspects such as investing into residential or commercial real estate as well as the question of becoming (or not) a landlord.

0% – P2P Lending – I started exploring the idea and wrote my first post about it here

0% – Annuity – No intention of buying an annuity for the time being

0% – Farming – I know it sounds crazy but I’ve started looking into it as you can see from my post a couple of weeks ago

0% – Other ideas – I could end up starting other businesses or projects will I’ll certainly keep you posted about.

What I Am Not/Will Not Include

-Pensions: I do know that the government will be paying me a sum of money once I retire. However, given how poor government finances look like these days, I personally think it’s crazy to count on the government actually fulfilling its promises. It won’t happen. Yes, there will be money, but not anywhere what is currently being promised. Whatever I do end up getting will be a nice surprise.

-I feel like I am being extremely conservative here. By not including my government pension and also not including the fact that lower revenues will mean less taxes to be paid, I’m overestimating the amount of passive income that is truly needed. That is more than fine by me. I’d also like to think that my house will be paid by then making my level of spending lower all things being equal.

My Long Term Passive Income Objectives

January 2014: $12,000/year
January 2018: $25,000/year
January 2023: $50,000/year
January 2030: $100,000/year

I love seeing that little blue line above the red one, it’s a very nice thing to see:) The trend isn’t as convincing but I do expect that my trend will be flat and then have some nice bumps as I start building new trends!

Do you have any questions or comments? I’d love to hear any ideas or how you’ve been managing on your end as well!

The post Passive Income Targets – June 2013 appeared first on Intelligent Speculator.

Today’s new trade is one that I probably would never have considered until very recently. OpenTable is the type of stock that is incredibly scary to short but it does seem to have lost some of its momentum and feels like a good play at its current levels. Before going further here are the numbers on these two companies:

Ticker	Name	Price	EPS	PE Ratio	PE Next Year	Return YTD	Sales Growth	Analyst rating	Book Value	Beta	Revenue/Share
OPEN	OpenTable Inc	66.61	1.06	59.42	29.18	37.58	15.85	3.29	7.5	1.24	7.14
TRIP	TripAdvisor Inc	63.75	1.39	44.8	29.51	53.89	19.76	3.43	5.58	N/A	5.47

And the quarterly Y/y revenues growth:

TRIP Revenue Quarterly YoY Growth data by YCharts

Long TripAdvisor (TRIP)

TripAdvisor was not at the top of my top social web stocks earlier this year but I’ve always held it in high regards.  The company is quite possibly the best positioned travel website out there which is saying something when you consider rivals such as Priceline (PCLN), Travelzoo (TZOO) and others. When I look at the numbers above, I see two comparable stocks but TRIP just seems more attractive no matter what metric you’re focusing on.

Next earnings release: July 24

Short OpenTable (OPEN)

OpenTable is a stock I’ve been very hesitant to trade. I do know the product very well and like many of you I’m sure, am a regular user. It’s a great product and I do think the company will do well over time. That being said, I don’t see anything that would justify its current P/E ratio that is almost identical to TripAdvisor. The company will struggle to keep up strong double digit growth and I do think it’s a stock that has significant downside at its current level.

Next earnings release: August 2nd

Disclaimer: No position on either TripAdvisor (TRIP) or OpenTable (OPEN)

The post New Trade: Long TripAdvisor ($TRIP) & Short OpenTable ($OPEN) appeared first on Intelligent Speculator.

General Readings

-The robots are losing @ BusinessWeek
-Eurozone unemplyment out of control? @ CuriousCat
-Bitcoins and other bizarre investments @ HopeToProsper

Dividend & Passive Income Readings

-6 dividend stock to profit from the stock squeeze @ TheDividendGuyBlog
-McDonald’s: Appealing under $100 @ DividendMonk

Tech Stock Readings

-Will Zynga (ZNGA) shareholders be compensated for their patience? @ SeekingAlpha
-New Apple iOS is better and worse at the same time @ TheVerge

chart credit: BusinessInsider

The post Weekend Readings appeared first on Intelligent Speculator.

It’s Not Rocket Science

You start early, open a savings account, start adding money into that account every month and invest that money into a clear and established strategy (ETF’s, dividend stocks, etc). It’s fairly easy to setup.

The big problem of course is that the majority of the population lacks the discipline to do it. Most would say they can’t afford to do it but if you pay yourself first, you will see that no matter what your income is, you’re able to save a certain % of your money.

It’s Not About How Much You Make

If you look at people that are forced to go bankrupt, you’ll see that some are high school dropouts with low income but you’ll also find athletes and execs that have made millions of dollars. It’s really not about having enough money.

What Else Can Be Done Then?

The Australian government decided to take action forcing all of its working citizens to save a certain % of their salary every year. I have mixed feelings about this kind of solution but it’s not a terrible idea either. The biggest problem I see is that having the government get MORE involved in my retirement sounds like a bad idea. I’d hate the government to tell me how much to save, where to invest, etc. It’s just rarely a good idea to get more intervention.

On the other hand, if I know that most Americans (and others) are not saving nearly enough, this seems like the only way to make sure that they have something saved up. Will it necessarily be enough? Of course not. But it would be a very good start. In the wake of all the recent scandals, I’m not sure adding more government involvement would maybe at some point everyone will agree that the current system simply does not work.

What are your thoughts on such an initiative?

The post Should The Government Force Us To Save Money? appeared first on Intelligent Speculator.

Apple Reinforced That Confidence

If you remember well, when Apple (AAPL) upgraded its iOS over a year ago, it was forced to come out with its own mapping software because its deal with Google was going to expire. That ended up being a disaster for Apple as the product didn’t come close to meeting expectations. Instead, it made it obvious that the only way to get good maps would be waiting on a Google app which did end up being released a few weeks later. Since then, Apple has been working extremely hard on improving its product and while everyone would probably agree that it has done just that, it’s still years behind Google’s maps.

In Comes Waze…

Waze is a unique product in the sense that it’s a mapping product used by tens of millions of users which also has a social aspect. Users tend to add and share information about traffic, road obstacles, etc. That makes it unique and explains why Apple and even Facebook (FB) are reported to have made offers in the past few months. Apple’s offer was too low and Facebook did not want Waze to keep its Israel based HQ which ended up paving the way for a Google deal. Larry Page offered a reported $1.1B and for Waze to remain independent.

Why Is Google Making This Move?

I think it’s a very fair question to ask. The main thing that buying Waze brings is the ability to keep it out of its competitors hands. Google has a competitive advantage in maps. One that can be leveraged over and over. If I take a minute and look at Facebook’s social advantage, it’s a lot more tricky to manage. Why? Because potential competitors are coming up every few months (from Instagram, to Tumblr, Vine, etc). It becomes very expensive for Facebook to keep buying these companies. On the other hand, there are only a handful of decent mapping products and it’s very expensive and difficult to build one from scratch. Waze could have been leveraged to build better Apple maps or a more precise Facebook local. Instead, for a fairly small amount of money, Larry Page just made it even more difficult to compete with Google maps.

In my opinion, this was a brilliant move by Google. In retrospect, it’s not surprising though. Was it worth +$1B for Microsoft, Apple or Facebook to get a helpful partner in competing with Google maps? Perhaps. But it was worth much more than that for Google to keep one of the few solid mapping companies out of the hands of its competitors.

What are your thoughts on the Waze acquisition by Google?

The post Is Google’s ($GOOG) Waze Acquisition Smart Defense Or A Desperate Move? appeared first on Intelligent Speculator.

Long TripAdvisor (TRIP) & Short Travelzoo (TZOO)

TRIP data by YCharts

Long eBay (EBAY) & Short Yahoo (YHOO)

EBAY data by YCharts

Today’s new trade is one that I’ve done several times in the past few years, with good success mostly. I trade 2 job seeking sites, Monster and Dice. The rational remains the same on the trade. Before going further here are the numbers on these two companies:

Ticker	Name	Price	EPS	PE Ratio	PE Next Year	Return YTD	Sales Growth	Analyst rating	Book Value	Beta	Revenue/Share	Sales 5Y Growth	EPS 5Y Growth
MWW	Monster Worldwide Inc	5.55	0.52	18.07	12.35	-3.56	-10.39	4.1	7.6	1.79	7.89	-9.03	N/A
DHX	Dice Holdings Inc	9.3	0.62	15.81	13.85	-	9.06	3.67	3.22	1.64	3.19	7.86	18.27

Long Dice Holdings

I’ve generally felt like Dice has been able to focus on a few key industries and has done very well doing so. They have strong niche websites that help job seeking candidates and companies in specific sectors find each other. That has been a working formula and the growth continues to be solid on all fronts. I don’t see a ton of growth coming but it is valued at a decent P/E ratio of 13.85 (based on next year’s expected earnings).

Next earnings release: July 25

Short Monster Worldwide (MWW)

Monster has always tried to be the answer to all. It targets every industry in almost every country. That is the type of thing that companies such as AOL (AOL), Yahoo (YHOO) and IAC Interactive (IACI) have been unable to do. It’s incredibly difficult to get that done, especially when a player like LinkedIn (LNKD) seems much better positioned. Monster has seen declining earnings and very low earnings

Next earnings release: August 2nd

Disclaimer: No position on either Dice Holdings (DHX) or Monster (MWW)

The post New Trade: Long Dice Holdings ($DHX) & Short Monster Worldwide ($MWW) appeared first on Intelligent Speculator.

Your Own Number

ING made a splash when it started advertising that we all should know and work towards saving “our number”. As I discussed, I do understand that there are several unknowns, especially considering numbers like inflation. Even a rather small change in that number can have massive consequences, especially on those who have retired. That being said, I believe in planning, with the best available estimates. Then, over time we can adjust that number. It’s still better to have a number and adjust it over time than not having anything.

Where To Start

Before even starting, one thing I’d say is that there are a million different ways to do this. I will not give my exact numbers but will give some estimate here:) It’s important to remember that a few changes can make a massive difference, those can include moving to a new location which I discussed earlier this month.

Salary for my wife and I: $120,000
After taxes salary: $80,000

I think the main number to look at here when trying to determine at how much I will need. The first number I’m looking for is how much I currently have every year to spend. That number is my before tax numbers. I will then take out the following expenses:

-annual savings $15,000
-mortgage (should be paid by then): $30,000
-work related expenses (work clothes, transport, etc): $5,000

So that gives me a total of $30,000 that I need to generate before taxes assuming that everything else remains the same.

It’s important to consider that my tax rate will be significantly lower considering the lower income and some of it coming from capital gains. So I could likely be ok with $50,000 or so?

There will likely be more changes:

-govt or other pension: I prefer not to count on this at all as I think that most governments will have to break many promises if they want to avoid going completely broke
-travel: I am likely to travel more once I retire, so ideally I’d have something extra saved for such expenses
-sure I might have to move to a place with a rent at some point but the extra income from selling the house should be enough to compensate

So what would be my number?

I’m sure a lot of other changes that I cannot even consider now will occur. That is why my number will change every time I recalculate but that is more than fine.

What about you? What is your number?

The post How Much Do You Need To Retire? appeared first on Intelligent Speculator.

General Readings

-Should we trust economists? @ TheAtlantic
-Is the NSA spying on all of us? @ WashingtonPost

Passive Income/Dividend Readings

-Top Canadian dividend stocks @ TheDividendGuyBlog
-Coca-Cola (KO) dividend stock analysis @ Dividend-Growth-Stocks
-Pepsi (PEP) to buy Sodastream? @ Reuters

Tech Stock Readings

-The power of Amazon (AMZN).. fascinating @ TechCrunch
-Zynga (ZNGA) announces major layoffs @ TechCrunch
-Wall Street Hates Facebook (FB) @ Wired
-Apple (AAPL) getting ready for iRadio? @ Bloomberg

The post Weekend Readings appeared first on Intelligent Speculator.

Already, Amazon has been a major force in getting companies such as Barnes & Nobles, Best Buy and so many others to go further down the road to bankruptcy. There are few public companies willing to take such a long term view and I’d argue that perhaps none takes it as far as Amazon. Is the company making money selling its Kindle devices? Most analysts strongly doubt it.

In Come Groceries

Amazon has been running Amazon Fresh, a grocery delivery service for a few years now and is apparently ready to start scaling to other regions in the US and abroad. On the surface, it doesn’t look like a very attractive business:

-margins are already low
-many established competitors
-keeping and delivering “fresh” food will be a challenge
-such a local service that it will require warehouses in many more locations
-will require dealing with thousands of local producers (as opposed to dealing with a few international companies)

Of course, if you know how brilliant Jeff Bezos is, it makes sense to figure out why he could be doing it. As others have pointed out, and I’ve argued in my post about owning Amazon as a long term play, the main competitive advantage that Amazon has revolves around its warehouse, distribution and sales process which is as streamlined and efficient as you’ll find. Google and a few others are looking at competing but I just don’t see that happening. At least not anytime soon. But if Google wants to build on that advantage, it needs to make sure that more users use it more frequently. The best way of course is venturing into areas such as Groceries where scale matters, where others will not venture because the margins are too low and where consumers spend a significant amount of money every month.

Impact Of Amazon Fresh’s Expansion?

I personally don’t think there will not be much impact on earnings and revenues from this expansion but it will give us a better look into what Amazon’s long term strategy is which will be incredibly fascinating.

What do you guys think of Amazon competing for your grocery budget?

Disclaimer: No position on Amazon (AMZN)

The post Do Amazon’s ($AMZN) Grocery Plans Make Sense? appeared first on Intelligent Speculator.

What I Do Not Want From My Mini Berkshire

Two main things that I would not look to replicate:

-Having shareholders: Buffett and Berkshire have shareholders that they invest for and while using other people’s money is a great way to get bigger, it’s not something I’d look to do at this point.

-Paying Dividends: While Berkshire does not pay out dividends to shareholders, I do expect to depend on income from my investment fund at some point and would thus need to rely on some income at a certain point.

Similarities Between My Mini-Berkshire And The “Real” Thing

Positive cash flow: Berkshire gets very important cash flows from its insurance businesses that generate cash flows. I would also build a strong foundation on the back of income generating assets such as dividend stocks, ETF’s, real estate, etc. This would enable me to reinvest money, but also remain cash flow positive even when I end up living off of the portfolio.

Hold Cash: One of the unique aspects of Berkshire is how much cash it holds at all times. This can be a drag on returns but it also makes it possible to get good opportunities when there is panic. Buffett has frequently been buying big assets when everyone else was trying to get out, jumping in at very good prices. Having a lot of cash opens up opportunities and makes it possible to be more flexible.

Buy Based On Fundamentals: You might say that most of Berkshire’s investments are boring and it’d tough to argue. I do like buying companies that I understand and that I can get a good feeling on the valuation I’m paying and what I’m actually buying.

Investing in sound businesses rather than go bargain hunting: One mistake that Buffett has said he makes is when he goes bargain hunting. Buying great businesses at good prices is good. But buying average businesses at below-market prices is bad. I’m not interested in buying such businesses. As I’ve discussed in the past, it’s very difficult to try catching a falling knife.

Needs to outlive me: I don’t think many doubt that Berkshire will outlive Buffett. I certainly plan on having my mini-Berkshire also outlive me. Hopefully, it can give my kids a good start in life

The more I think about this, the better building this type of fund makes sense to me.  What about you?

The post How To Build Your Own Mini Berkshire Empire appeared first on Intelligent Speculator.