October Freedom Fund Update: Earnings Increased 25% Over a Year Ago

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Welcome to the monthly update of our journey to financial independence, where we report on the progress of our FI tree, aka Freedom Fund. Our mangoes are almost ripe and we’re projecting to reach our goal by July 2017. This means that we’ll have enough investments to live off of without ever having to work again to pay for living expenses. We’ll consider ourselves financially independent when our Freedom Fund is able to support our lifestyle indefinitely. Our Freedom Fund is comprised of mutual fund investments, short-term reserves and a real estate property.

Quarterly Earnings Report

The quarter end is an exciting time for us because we get to collect our dividends. These are the fruits of our hard-earned money. Our earnings for the quarter were $3,425. In the 3rd quarter of 2015 we earned $2,743. This represents a 25% increase from a year ago. Besides our savings effort, some of that increase can be attributed to shifting into a more aggressive asset allocation aligned with our long-term goals.


Investment income from mutual funds and ETFs.

Our goal is to reach an annual dividend amount of $17,500. Our total earnings for the past 4 quarters were $14,662 (see graph below). We are $2,838 away from meeting our dividend income goal!


Freedom Fund Progress

Percentage of Freedom Fund reached in September

We had a high-spending month in September. Part of it was due to our awesome Colorado Trip. Another, unavoidable, expense was the school taxes that were due for the rental property. These kept our net worth from moving up as usual. Our investments also had another tiny loss in the market for the month, but the quarter performance was okay overall, returning 5%.


Our Freedom Fund moved up to 91% from 90% the month before. Our investments can cover annual expenses up to $32,185 a year. That puts us $2,815 shy of our annual income goal of $35,000!

Year to date gains


We’re on the last leg of our Freedom Fund savings. Gaining that last 10% could be a very exciting and challenging milestone, considering the prospects of lower market returns on the horizon. We can’t predict nor control the market’s movements, but we do have control of our savings and investment decisions.

My biggest question right now is: if we get into a bear market and stay stuck in the 90’s, or drop into the 80’s or even 70’s for an extended period of time, at what point do we stop putting money into the Freedom Fund and move on to reaching other financial goals, such saving cash for big short-term purchases? I guess we’ll have to wait and see how things play out.

What were your financial goals for the month? Did you meet them?

Risk disclosure: All investing involves risk, including the possible loss of principal. The material contained on this website is for discussion purpose only and should not be misconstrued as financial advice.

Featured image by Tookapic

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September Freedom Fund Update: We're in Good Shape for Retirement!
November Freedom Fund Update: Progress is Not Always Visible

Mr. Enchumbao

Mr. Enchumbao retired at 44. He worked for 13 years at Vanguard, primarily as a Communications Project Leader in the Institutional Division, helping people save for retirement.

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2 Responses

  1. EL says:

    To help answer the question you have, if the market drops to 70%, I think it would be prudent to continue investing as to allow you a security buffer or extra funds to allow you to give to charity / Family. Giving back should be just as important after reaching a great milestone. Also buying stocks on sale is icing on the cake. Good luck in the 4th quarter.

    • Yes, we’ll probably continue investing a little more than planned and just put some cash on the side once we have a retirement date. The cash on the side is not in fear of market drops but to cover short-term expenses that we’re planning for. I’ve never been in this situation, since the last time we had the recession I was paying off debt and changing my life behaviors. If there was a recession now, without any debt to pay off, I think we’d cut our discretionary expenses by a big chunk and invest even more than usual in the market.

      As far as donations/contributions, we’re big on giving back and helping our parents so we’ll put some aside for that as well. It does make you feel good to be able to give back. Thanks for the comment and tip!

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