Need help understanding these numbers? Visit our first monthly income report for more information. Or you can (and we recommend that you do!) start at the beginning and read through all of the Income Reports.
Our Goals For November Were:
- Grow the equity base of the businesses by $2,200
- Grow our share of earnings from equities to a new monthly total of $253 passive income
- Work no more than 20 hours.
- Our total income goal (both active and passive) for November was then: $2,453 or an hourly rate of $123 per hour
Online Earnings
We had a very good month in both our Amazon store and our equity investments. First, Amazon:
We managed to grow the equity base in our Amazon storefront by $2,305. That means after overhead (our typical salaries, fees, expenses, and a non-typical $400 software upgrade) we managed to have enough left over to add $2,305 to the money-pool we call ‘assets’.
Quick definition: We define ‘assets’ as anything that is actively earning us money. By adding to our ‘assets’ we are directly increasing our earnings. By increasing our earnings we are directly increasing the value of our business.
We started to see first of the holiday rush this month. But it’s not quite in full swing yet. In fact, we usually see something that you might think is a little strange this time of year…
Our biggest volume isn’t Black Friday.
Or Cyber Monday.
In fact, it isn’t in even in this year.
For us, probably due to the specific types of products that we sell, the real holiday rush starts in January. Not to mention all those gift cards that change hands in December.
Our main challenge/concern this year will be ensuring that we have enough inventory to fully capitalize on January.
I can, with near certainty, state that we do not have enough inventory.
Sales volumes have been unusually high, thanks to Covid. Supplies have been limited, also thanks to Covid.
All in all, we expect it to be a net wash. We don’t believe this year will be any different than any other, for our business at least.
Online Earnings for November: $2,305
Hours Worked
We had another successful month in the fight against work (for our small business at least). Our plan to reduce our catalog size has been working out nicely.
A few months back we trimmed our catalog, eliminating all but the most profitable items we carry. We believe it is better to have a few great sellers than many mediocre ones.
This has let us work less hours without any notable drop in income. Who doesn’t love that?
Altogether, Leslie and I worked just under our goal of 20 hours on our small businesses, and almost all of that was spent on this blog.
Our goal for next month: We will work no more than 18 hours (combined).
Passive Income from Investments
Our goal was to grow our monthly passive income from investments to $253, and we did!
We had enough extra income, and mercifully low personal expenses this month, that we invested extra cash into the stock market. Go us!
How do we decided when to invest extra money into stocks?
Do we time the market? NO
Do we speculate on short-term price movements? NO
Do we make purchases based on market pundits, elections results, news stories, vaccine data, a roll of the dice, or flip of the coin? NO
If we decide to buy more than our usual amount of stock (as of this writing we invest at least $600 per month because that number is mathematically likely to get us to our $1 million goal) it is because we have cash on hand that we cannot responsibly invest within our businesses for a higher rate of return.
As of this writing, I estimate that S&P 500 has earnings of about 3% of its purchase price. I have purchased all the inventory I believe I will sell in the next 30 days. I have purchased all the upgrades to the business that I need. I see no other way of investing the excess cash in a way that will earn me more than 3%.
If you’re curious where I got that number: I simply inverted the trailing P/E ratio that Standard and Poor’s publishes on their website. At the time of this writing, the published P/E is 31.24. I then took 1 / 31.24 = 0.032 or 3.2%. You can also solve this algebraically using [current price of SPX] / E = 31.24, then solving for E.
So I now have 3 options:
- We can take that money as income and buy things with it (the money is effectively lost because anything I buy will be consumed)
- We can leave it as cash in my bank account (Where it will lose 2-3% per year to inflation. At best, in a high-yield account, the interest will offset inflation for a net gain of basically zero)
- Or we can invest in the market for the 3%
Bonus: The S&P, over the long term, has a history of turning each dollar of it’s earnings into three dollars of market value. So that 3%, given a few years to run, will probably average out closer to 9% per year.
Double bonus: Those earnings that stay within the S&P (as opposed to those paid out as dividends) grow tax deferred! You only pay tax on any gains in the market price when you sell, and not a moment before.
We had extra cash, so we invested it.
Our current monthly income from investments: $261
Total Online and Passive Income
Total online and passive income for November 2020: $2,566
Because we worked a combined 20ish hours, this means Leslie and I each earned $128 per hour
Our Goals For December
We are going to set a goal for keeping our equity base the same:
We’re doing this because we are planning another round of upgrades and expansion expenses, and the nature of these means several large purchases. If we can managed to cover these costs without lowering our equity base, I will consider it a bona fide miracle.
We will continue to cut back on our working hours. Let’s see how low we can go!
Our goals for December:
- Maintain the equity base of the businesses at $2,305
- Grow our share of earnings from equities to a new monthly total of $266 passive income
- Work no more than 18 hours.
- Our total income goal (both active and passive) for September is then: $2,571 or an hourly rate of $143 per hour
Find out if we met our goals in the Income Report for December 2020.
