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Oct 2016 Income Report – $528.90

Here comes another month of my monthly online income report where I share my journey in making side income online.

To be honest I was a bit reluctant to write about it as things didn't move as well to what I expected to be. But after reading the income report from livingafreelifetoday, it got me a little motivated to put this post up.

And since this is an income report where we talk about money hence isn't I ought to share it with great enthusiasm? Of course it does.

So let's begin...

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I have driven more than half a million traffic to my websites throughout the past few months.

Side-project #1 - Pageviews: 563,894 & Unique Visitors: 203,370

This blog - Pageviews: 66,518 & Unique Visitors: 27,742

I also exceeded my Adsense's target of $300 for my side-project #1, which amounted to a record month high of $420 for both websites on Oct:

Taken A Day Before Nov / 2016

​And also thanks to the readers' support on BigFatPurse Digital Value Investing Course - I earned another $262.55 (Thanks president-elect Trump for the appreciating USD too).

After deducting related expenses that works out to $528.90 for Oct, to view the breakdown head over here.

NOTE: I'm showing you all these is not to brag but just to show you I'm not full of crap.

Not only that my hands-off value stocks portfolio has also performed exceptionally well with near 2 years (Jan 2017 to reach 2nd year) annualised returns of 8.47% - of course, I'm comparing it against STI ETF negative returns of 2 - 3%.

Sim Lian has delisted

It moved closely to how I thought it would two years ago - low effort, higher returns and lower risks. Yes not typo, lower risks!

Oh wait...

Isn't finance 101 said risks and returns have positive correlation such that higher returns are come with taking higher risks?

...Well, Malcolm Baker, Brendan Bradley, and Jeffrey Wurgler would disagree with you.

Modern Portfolio Theory holds that if stocks returns are higher than market returns, it must be the result of taking higher risks. Therefore, high risks = high returns.

Risks being defined as volatility.

However, in ​their studies of market risks vs volatility, it tells us a different story.

Their research showed that stocks with lower volatility (Bottom Quintile) produced higher returns than stocks in the higher volatility (Top Quintile) portfolio. This defied the notion of high returns come from taking higher risks. 

Instead, high risks = low returns or low risks = high returns.

In their own words:

"Regardless of whether we define risk as volatility or beta or whether we consider all stocks or only large caps, low risk consistently outperformed high risk over the period. Panel A shows that a dollar invested in the lowest-volatility portfolio in January 1968 increased to $59.55" -- Benchmarks as Limits to Arbitrage:Understanding the Low-Volatility Anomaly, page 2.

By systematically building a portfolio of low valuation stocks to achieve market out-performance with lower market risks is an approach I thought I had it before many others.

Though I'd love to take full credit in being the first few to construct such a portfolio based solely on investing in a basket of stocks comprised low price to fundamental ratio. Unfortunately or fortunately I'm actually quite late.

​Such an investing approach has entered into the investing lexicon maybe a decade ago. It was not as new as I thought to be - they called it: Factor Investing or Smart Beta.

What Is Smart Beta?

"Smart beta refers to an investment style where the manager passively follows an index designed to take advantage of perceived systematic biases or inefficiencies in the market. It therefore costs less than active management, since there is less day-to-day decision-making for the manager, but since it will, at the very least, have higher trading costs than traditional passive management (which minimises those costs), it is a pricier option." -- ft.com

What Is Factor Investing?

"Factor investing is the investment process that aims to harvest these risk premia through exposure to factors. We currently identify six equity risk premia factors: Value, Low Size, Low Volatility, High Yield, Quality and Momentum."

-- Foundations of Factor Investing

​My portfolio returns are nothing to be surprised of after all when we look through the lens of Factor Investing or Smart Beta.

Simply because my basket of stocks are exposed heavily to Value factor and Size factor, two of which are known in the investing literature to produce market beating performance even after adjusted for risks. 

Why I Would Not Put Anymore Money Into Stock Market

A question that I sometime received from readers and friends whether or when will I invest more money into stocks. In the past I would allocate my capital quite aggressively into stocks to make the compounding works better, but not anymore now.

​The thing is that the returns I got from stock market were too little to make anything impactful to my life. How far can I go financially with 5 - 8% CAGR for the next 10 years?

If you are twenty-something, chances are you don't have 100k - $200K (sorry maybe you have, but I don't) to compound your capital with. With small capital not even making 10 - 15% average returns would change your life in a significant way.

Hence, it would not be a wise thing for me to put my time and money in making such returns. Instead, I would be better off doing things that can give me 100% - 300% or even 1,000% returns.

And such returns do not exist in any financial assets without taking excessive risks  - share investing is what you do to get richer, not the thing to do to get rich. It does not move the needle if your capital is small.

The more practical approach to achieve financial independence (the word rich seems to have a negative connotation, lol) is still through job promotion, business or maybe consulting. Certainly not in the stock market.

​I'm biased of course the smarter way is still through creating an online business. It is ironic that on one hand I see traditional businesses struggle to make profits, dealing with high rental and labour cost problems, while the others achieve profit margin as high to 80 - 90%. Not to mention that you need very minimum capital to start with. Although the hours and efforts required can be quite massive.

Not so good.

Alright enough of the funfair, let's get back to the above where I said earlier I was a bit reluctant to put up this post. 

What you see on the above would not sustain for the current month and the next. My traffic for side-project #1 has plunged right from the beginning of Nov and prior to that I did not manage to build a community and/or sufficient audience base to sustain the traffic when the interest died down. 

I have contemplated ​for many days and tested many things like Facebook advertising and etc. at my wit's end. But eventually I have reached the conclusion that putting anymore effort to the project would not be the best use of my times and resources, I got to think in term of ROI and opportunity cost. Hence, after the first week of Nov I stopped working on the project completely.

Not too bad actually although the project was not a success I've managed to pick up a lot of things than before especially on the use of Facebook like the type of content and images would work best and how to use groups and pages and etc to pull in traffic. I also have first hand experience on the flow of information from Reddit to Facebook group - Pretty amazing stuff.

Maybe someday I'll write a case study on the things I learned and my expectation vs actuality and how would I do it differently if I were to start again.

This blog

Monthly traffic remains stable largely due to Google searches. Although I've been inactive on the bog it still maintained a healthy 300 - 500 traffic daily. As for income, affiliate sale has slowed down but that was to be expected for a typical new product's cycle. 

Adsense's income should continue to remain at $60 - $70 / Month, just took a look at my Adsense's earnings it showed $69 at the time of writing. Maybe I can reach $90 by month end?

So for ​Nov and Dec I will see a drop in income and negative earnings as I begin my side-project #2 and #3.

What's Next​: Side-Project #3

Earlier this month I started my side-project #2 but it will likely turn out to be unprofitable as it was based on the research I did during the second quarter of the year in which my research was largely based on the site potential traffic.

There was no concentrate revenue model. It might be able to generate $50+ Adsense's revenue monthly by leveraging on the traffic in which it would unlikely to give a good rewards to efforts ratio - so I decided to drop it. It will be factored into my income report at month end. 

A problem I have with both GV and side-project #1 is that I didn't start off with monetization plans in mind, instead I adopted a build an audience first and see how it goes approach and eventually settled with Adsense, which pays really little. I could have made a lot more if my side-project #1 was steered towards say drop shipping at the initial stage. 

​This time round right off the bat I will build sites straight for monetization purpose.

​My side-project #3 will be:

1. Find high Ads competitive ​local services in Google search.

2. Weak ​competitions in Google search result page.

3. Build sites and rank it to top 3 search result.

4. Contact local services who are already paying for Ads and rent the sites to them for leads generation.

5. Generate the first few hundred dollar as quick as possible, and build round 2 - 3 or more similar websites.

If it is successful breaking my first $1,000 / month passively in the first Qtr of 2017 should be a cakewalk:

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Ivan - November 19, 2016

Hi,

Happy to see you have realised financial freedom is not built on some stock purchases. It is a holistic process.

What you could probably consider is to think bigger. $1,000/m passive income sounds good but it still gets you nowhere, you need to have an exponential breakthrough.

Keep it up… 🙂

Reply
    GiraffeValue - November 21, 2016

    Hey Ivan

    Thanks for dropping by, you are right it is a holistic process (income -> saving -> investing). $1,000/Mth is just a conservative figure for the start in case things don’t work out as I expected.

    My current goal is to hit $20,000 per month before I turned 31, and I kinda figured out a few ways to get there.

    One step at a time, 1K at a time. No rush.

    Reply
My Sweet Retirement - November 20, 2016

Nice to see how much your website traffic has grown and also your stocks are performing quite well.

Reply
Tony - November 21, 2016

Hi,
I agree with your comments on the stock market and how difficult it is to earn a substantial income when you don’t have $1-200k to compound your capital. I find it refreshing to read someone who is as open and honest about what they are doing so they can help others as you are.

I find your blog very interesting having not long been in the blog business myself. I firmly believe there is plenty of money to be made by blogging as long as you are helping others find exactly what they need, and am starting in a similar way to you, blog first and monetize later, although I do have a couple of affiliate links on my site.

Your bounce rate seems a little high, maybe you should take a look here as it may be able to help you reduce it[deleted]
Good luck for the future.
Tony

Reply
    GiraffeValue - November 21, 2016

    Hey Tony,

    Thanks for writing in. Apology, I’ve removed your links as it contains affiliate link to site that I don’t feel trustworthy 🙁

    I agreed there are plenty of money to be made on blogging, certain niches can even make a windfall. Generally, the idea of delivering value and building an audience first before thinking of monetisation is correct.

    My bounce rate used to be very low i.e <50% for this blog, it could be audience were expecting to read an investing article but turned out not.

    Reply
Evan - December 21, 2016

Bowen, keep hammering away at it! Persistence really pays off in the long run and you branded your website really well. Once you figure out the marketing everythig else will follow and it looks like you’re well on your way.

Evan

Reply

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