As I cap off my first full year of investing my Sober Savings, I’ve discovered not only that Sobriety Pays, but precisely how much it potentially might pay given the opportunity.
If you’ve been following my Sober Investment strategy and thesis, you’re already familiar with the backstory. But if you’d like to catch up, you can visit my previous installments here. (Sober Investing & Playing With The House’s Money; Amazing Ways To Save & Make Money With Sober Savings)
If you’re in a hurry and just want the Reader’s Digest version, here it is:
One year ago, I calculated how much money my sobriety was saving me. I determined my monthly beer savings was ~$250 and that I was no longer spending $100 a month on marijuana. Therefore I was experiencing a monthly savings of $350, not including drinking alcohol in restaurants. I wanted the number to be conservative and quantifiably representative of my average monthly spend.
Since I generally only purchased pot quarterly (once every three months), I thought it made sense to calculate a quarterly number. The number I arrived at was $1,050 a quarter or $4,200 a year! Again, this number does not include expensive drinks purchased in restaurants and bars. If I throw those in, the annual savings would likely be a couple thousand dollars higher!
So here is my thesis. If took this newly ‘found’ $4,200 per year and invested it in the stock market, could I discover how much sobriety pays? As always, the proof is in the pudding.
Sober Investment Portfolio Update – 26% Return!
Starting with $1,050 a year ago, I purchased a small basket of stocks including Amazon, AT&T, Palantir, and Medical Properties Trust. And while you ‘can’t time the market’ I happened to catch it pretty close to the bottom of the current cycle. I soon discovered that sobriety pays even better when you throw in a little old fashioned dumb luck.
Each subsequent quarter, I added another $1,050 and continued to average in (dollar cost average) to these initial four while adding in a few more along the way. So, over the course of the first year, I hit my investment goal of the full $4,200. What I didn’t expect was the outsized return on my money over the course of the first year. You can see for yourself in the screenshot below.
As I discuss at length in Sober Investing, Playing With The House’s Money, I really couldn’t lose. Previous to sobering up, I was literally pissing the money away or sending it up as smoke. So in my mind, every dollar is ‘found money’. And as you can see, I was able to turn $4,200 into $5,149.
Sobriety Pays In Many Ways
I’ve invested my sober savings in both dividend and speculative (in this cas AI – artificial intelligence) stocks. With dividends, sobriety pays me literally every time AT&T, Medical Properties, and Hercules Capital wires money into my account every quarter.
Here’s a snapshot of how much I’ve made from interest and dividends this calendar year and upcoming projections for the next 12 months:
As you can see, my sobriety pays an estimated $4.87 in interest and $180.51 in dividends over the next 12 months. And this is before I add another $4,200 over the upcoming year! So as the dividends compound, so does my income. Sobriety is paying me to be sober! Sweet!
While dividends are nice, in my first year the lion’s share of my return came from a single stock – Palantir. In fact, Palantir represents ~60% of my total return since inception. This isn’t necessarily something to be proud of and I don’t recommend anyone without a significant stomach for volatility and risk buy this highly speculative AI play. But for me, it’s been a homerun and has provided much unexpected upside.
Thus, sobriety pays me in savings ($4,200 per year), interest, dividends, and increased stock valuations (for all but AT&T and another spec stock – Sentinel, an AI cybersecurity play, which lost a little money). But hey, when investing you don’t need to bat 1,000 and no one ever does. You win some and lose some. Overall, however, I’m winning. And that’s what counts.
My biggest argument for sober investing is that right now if you’re spending all this cash on your addictions and vices. It’s gone… forever. Thus, risking vice money in the stock market is actually a lot less risky than other money. For example, even if I lose 50% of my vice money, I was losing 100% of it before. So I feel like I can’t lose!
But I’m not only not losing this money anymore, but my vice money is actually paying me.
Getting Paid From The Start
Putting this in the simplest way, for every dollar I didn’t invest in drinking and getting high, I’ve earned $0.26. Now it’s worth mentioning that a 26% return is not typical nor something I would expect to see every year. So the return produced by my sobriety portfolio has greatly exceeded my expectations on every conceivable metric.
That being said, I will reiterate – even if I lost half of my portfolio’s value, I’d still be ahead!
Of course, I could have made different choices with this money. Instead of investing it in the stock market, I could have simply put it in my savings account or CD (certificate of deposit). That would have earned me a safe 4-5%. I could have bought Treasury Bonds for a similar 4-5% return. I might have saved up for a family vacation. Or I could have invested my sober savings in home improvements, education, a new car, or any number of lifestyle related things.
Most people would simply allow their savings to be quietly absorbed into their general spending. I might’ve done the same. But I was curious to see how sober savings might compound given the opportunity.
As I’ve written previously, if invested in an S&P 500 fund, $4,200 per year becomes over $356,000 in 20 years! But theory is one thing. This year in review is where the rubber truly meets the road.
Year One – A Retrospective
When I started the sober investment portfolio a year ago, the stock market was squarely in a bear market. And if you don’t already know, starting a stock portfolio during a bear market is scary and full of uncertainty. Yet, there is also tremendous opportunity for those with a strong stomach.
As Warren Buffet famously said, “Be fearful when others are greedy and be greedy when others are fearful.”
Sage advice. But it’s easier said than done! When the stock market gets tough, most people freak out and bail. This is precisely the time one can find the best deals and buy companies at a steep discount. But it’s also the scariest time to jump in the volatile churning shark infested waters of investing.
I expect to see a much tempered return a year from now versus the white hot 26% of this past year. At the very least, I hope to add another $4,200 to the portfolio in the way of another year of savings. This would bring my two year total to ~$9,300 or more if I experience a second year of positive returns.
I plan to add more dividend paying stocks to the mix as well to beef up the income portion of my growing nestegg with the goal of doubling it over the current 12 month projection of $185. And I plan to continue that in the years ahead to build a truly meaningful passive income stream.
I’ll also reserve a portion of the portfolio for speculative plays since I’m playing with the house’s money and can afford to risk some of it.
I have to say, it feels great to be sober! But it feels even greater to get paid by my sobriety to be sober! And to watch those payments compound over time will be a very fulfilling experience.
Stay tuned for the next installment in three months.
