The second quarter of 2016 is officially over and that can mean only one thing – it’s time for a quarterly net worth update! When I first started blogging I published all net worth changes on a monthly basis, but not too long ago I switched to a three-monthly update.
The main reason behind this change stems from the fact that I’m not trying to build as much wealth as possible, but rather try to achieve a steady and growing stream of passive income. Indeed, through regular free-of-work payments into my bank accounts I should reach financial independence some day. However, making awesome progress with dividends only and taking huge capital losses isn’t something I’m interested in – hence the quarterly net worth reviews.
Still, that doesn’t answer my choice for quarterly over monthly updates. When you’re exposed to the mood swings of the stock market you’ll see your portfolio vary wildly from day to day, which is rather tough psychologically – who likes losing €2,000 on paper, right? By reviewing my portfolio on a less frequent basis I take away the daily swings and thus the perception that my investments are volatile.
So, who is excited to see the effect of the Brexit vote in the UK on my portfolio and net worth?!
Oh, whoops! For all the hysteria in the financial section of news outlets there’s not much impact after all. Compared to the end of March my portfolio soared by 9,259 Euros, which is even better than last quarter – talk about a snowball starting to form. Of course, most of the increase comes from my excellent savings rate, but the uptrending stock market definitely put in some work too.
As the title of this post already revealed, the total gain during Q2 comes out at 11.57%, or just a tad higher than Q1. Moreover, I’m almost at the €90,000 threshold and closing in on the six figure mark. If I keep my insanely good savings habit up for the rest of the year there’s a high chance that I’ll make it to 100,000 Euros.
What exactly does it mean to have this much money stashed away in my financial independence piggy bank? Well, considering I make about €12 an hour after taxes, you could say I saved up 770 hours or over 100 days of work-free capital. And the best part? That money is now working hard all by itself to build my wealth even faster.
Dividend growth stocks
Since I’m a dividend growth investor first and foremost it should come as no surprise that dividend stocks make up the bulk of my portfolio. They lead the way in building my passive income to afford a future financially independent lifestyle. At the moment, however, I’m still re-investing my dividends to fuel the compounding effect of my stocks. On top of that I pour my monthly savings into new positions whenever I see an opportunity in the market. in Q2 I did so six times.
First, I increased my position in Qualcomm (NYSE:QCOM) from 9 to 36 shares. The US-based chip-maker seemed undervalued at the time, especially when you consider the company’s free cash flow and future prospects. Of course, the 10% dividend increase didn’t hurt either.
Second on the list was UK utility National Grid (LON:NG), a staple in many British investors’ portfolios because of the well-regulated environment the company operates in, the steady business prospects, and relatively high and safe yield. During a small moment of weakness in the stock’s price I decided to double my position to 200 shares.
Not too long after I bought into another British company, namely Vodafone (LON:VOD). Even though Vodafone has been struggling the past couple of years on the European mainland I believe the telecoms provider is showing the first signs of a recovery in earnings. That’s why I decided to triple my position to 600 shares.
Fourth and by far my biggest purchase during the past couple of weeks is Belgian mono-holding Solvac NV (EBR:SOLV). Fellow blogger Ambertreeleaves pointed out to me that it was far more beneficial to purchase Solvac than its underlying company Solvay (EBR:SOLB), which I had been following for a while now, simply because the holding trades at a discount compared to the business. Consequently I initiated a position of 25 shares of the internationally diversified chemicals group to start off with.
My fifth purchase happened right after I saw most banking and insurance stocks plunged over a couple of days, mainly because of Brexit rumours and higher than average weather damage in mainland Europe. As a result, I purchased another 7 shares of re-insurer Munich RE (ETR:MUV2) right near the bottom. Even though the business is under some stress right now, mainly due to the low-interest rate environment, I don’t see trouble in the long-term.
Another insurance business that saw its stock price tumble excessively over the past couple of weeks is Belgium-based Ageas NV (EBR:AGS). As the sixth purchase of the past quarter I bought into the stock twice, once before the Brexit and once right afterwards for what I consider a very compelling starting position of 70 shares.
You can find the gains in absolute and relative numbers for each company in the table below. The cost basis for each position includes the price of the shares, a 0.27% stock market tax and brokerage fees.
|Ticker||Company||Shares||Cost basis||Mkt. value||Gain|
|BLT||BHP Billiton plc||110||1,908.56||1,231.62||-35.47%|
|DE||Deere & Company||7||452.61||510.91||+12.88%|
|HOME||Home Invest Belgium||30||2,682.00||3,000.00||+11.86%|
|JNJ||Johnson & Johnson||20||1,769.41||2,184.92||+23.48%|
|NG||National Grid plc||200||2,637.67||2,621.03||-0.63%|
|PG||Procter & Gamble||23||1,594.66||1,753.89||+9.98%|
|RB||Reckitt Benckiser plc||10||630.34||875.98||+38.97%|
|ROG||Roche Holding AG||5||1,233.71||1,181.78||-4.21%|
|RDSB||Royal Dutch Shell||110||2,956.64||2,743.40||-7.21%|
|S32||South 32 Ltd.||48||20.04||49.89||+148.95%|
|KO||The Coca Cola Company||17||540.05||694.03||+28.51%|
|VZ||Verizon Communications Inc.||20||785.07||1,005.82||+28.12%|
I’ve said it before and I’ll say it again, the ETFs below have been doing exactly what they were designed to do. By tracking the MSCI World, emerging markets and Europe indices rigorously, these exchange-traded funds have experienced respectable growth in the past few months, especially the MSCI World ETF. If you’re a new investor looking for a long-term set-it and forget-it approach, I can’t recommend index funds enough.
|Ticker||ETF||Cost basis||Mkt. value||Gain|
|IWDA||iShares Core MSCI World||6,217.44||7,273.56||+16.98%|
|IEMA||iShares MSCI Emerging Markets||1,214.59||1,238.22||+1.95%|
|IMAE||iShares MSCI Europe||3,561.94||3,582.48||+0.58%|
The last part of my portfolio constist of a tax-efficient pension fund and good ol’ boring savings accounts. As you can see my emergency fund is relatively empty, but that’s just because I used some of the cash in there to fuel this quarter’s stock purchases. Over the coming months I’ll slowly replenish it. On top of that my pension fund continues to receive automtic payments to hit the €950 upper limit for 2016.
|Name||Cost basis||Current value||Gain|
|Pension fund||2,329.98||2,353.68||+1.02% and 30% tax break|
Another great net worth update in the books – that’s what I like to see! As a result, I’m still convinced that living below your means, saving as much as possible and investing those savings in high quality dividend growth stocks remains a good way to reach financial independence or early retirement. That’s why I plan to give it my all in the second half of 2016.
I sincerely hope you all had a good Q2 too, but judging by the first reports on the blogs I follow every single one of you seems to be crushing it. Your success shows me financial independence can be done and it motivates me to no end to keep pushing the boundaries month after month.
Thank you for reading and for your support.
PS: I’ve been absent because of a bad cycling crash where I had difficulty typing with my left hand. Over the coming weeks things should start to pick up again.