11-03-2013, 09:54 AM
That's a pretty interesting idea, KenBob. I think most of us probably track a whole range of portfolio metrics, and a couple of things that I look at are in the same ballpark as the one you suggest, but not nearly so formalized.
I keep track of how much I paid out of pocket for all of the shares in my dividend growth portfolio, and also the current market value of just those original shares. But then I also track the value of my portfolio with reinvested shares. So for example (just using made-up numbers), say that over the years I paid $100,000 out of pocket for all of the original 3000 shares in my portfolio. Now those original 3000 shares are worth $125,000. But I also keep track of the portfolio with reinvestments, so now I actually own 3250 shares of my various companies, with a total market value of $135,000. So I've got some broad metrics with and without reinvestment.
And more to your point, if my portfolio is generating, on average, say, $500 in dividends each month, and I am contributing $1000 of new money each month, then my monthly "KenBob Number" would be 33 percent ($500 / $1500). This number should naturally climb over the years as your portfolio builds and the snowball effect takes hold. So in a sense, it could be a measure of the maturity of the portfolio. But only if the investment of new money is very consistent over the years. If you had to raise cash for a major unexpected event and you had to stop investing new money for a while, your KenBob Number would shoot up to 100 percent.
I keep track of how much I paid out of pocket for all of the shares in my dividend growth portfolio, and also the current market value of just those original shares. But then I also track the value of my portfolio with reinvested shares. So for example (just using made-up numbers), say that over the years I paid $100,000 out of pocket for all of the original 3000 shares in my portfolio. Now those original 3000 shares are worth $125,000. But I also keep track of the portfolio with reinvestments, so now I actually own 3250 shares of my various companies, with a total market value of $135,000. So I've got some broad metrics with and without reinvestment.
And more to your point, if my portfolio is generating, on average, say, $500 in dividends each month, and I am contributing $1000 of new money each month, then my monthly "KenBob Number" would be 33 percent ($500 / $1500). This number should naturally climb over the years as your portfolio builds and the snowball effect takes hold. So in a sense, it could be a measure of the maturity of the portfolio. But only if the investment of new money is very consistent over the years. If you had to raise cash for a major unexpected event and you had to stop investing new money for a while, your KenBob Number would shoot up to 100 percent.