This will be a fun post to write, I can already tell! Not only is it quite enjoyable to see my net worth grow as I continue to save and invest, but it’s also fun to explain what the journey towards financial independence is actually all about: building a sizeable freedom fund of high-quality assets. After all, I’m doing this so I have the option of to retire early one day, which is a long way down the road still.
As you all know, keeping your motivation up is what really matters if you want to stick it out until the end and become financially free one day. Between posts explaining my monthly savings rate and my dividend income, reading the sometimes staggering amount of comments on my net worth updates is what really motivates me to keep going. In good months you guys keep telling me the sky is the limit, while I can count on your continued support and encouraging words in bad months.
February, thankfully, is turning out to be a good month – at least financially! I was happy to add my first dividend payments of the year to January’s income, while being able to keep expenses relatively low. On top of that, the European Central Bank’s Quantitive Easing Programme pushed European stocks higher, while also having a downward effect on the Euro. As a result, many of my positions skyrocketed because of the free-floating currency exchange rate mechanism.
These combined forces resulted in a net worth increase of €2,814, a jump of about 5.3% compared to last month. That is a lot of money without me doing anything except not being a spendthrift – see, you literally don’t have to do anything – and being invested in high-quality dividend paying companies all over the world.
February’s result is great in terms of relative growth, but the absolute increase is what really made me happy. My net worth actually surged by the equivalent of 234 hours of work, or about 30 days of full-time slaving away at the office, considering that I earn about €12 an hour after taxes. Fantastic!
My portfolio is detailed below as it stands today. Keep in mind that all positions are denominated in Euros because that is my home currency. Stocks bought on foreign exchanges are converted to Euros using the last-known exchange rate through my handy dividend tracking spreadsheet.
Dividend growth stocks
Even though dividends are what it’s all about for me because you can easily build a passive income stream with them, I won’t lie that it isn’t fun to see the value of the companies that pitch in to that fresh income go up over time too. When you look at the individual positions below, it becomes clear quite quickly that is exactly what has been happening over the past couple of months – green numbers all around.
Because my broker no longer offers free transactions, the amount of new positions will now most likely be limited to just one per month as I try to keep transaction costs below 1% of the purchase value. As such, the only major difference in my dividend growth portfolio compared to last month comes from a purchase of 12 shares of Novartis (VTX:NOVN).
The Swiss healthcare giant has increased its dividend payment every year since its inception in 1996 without too much hassle. Because I expect the company to keep up that great track record as more and more people will rely on its services and products in the futute, I initiated a sizeable position of a little over 6% of my total portfolio’s size.
The cost basis for each position includes the price of the shares, a 0.25% stock market tax and brokerage fees.
|Ticker||Company||Shares||Cost basis||Mkt. value||Gain|
|BLT||BHP Billiton plc||48||928.94||1,016.91||+9.47%|
|DE||Deere & Company||7||452.61||553.36||+22.26%|
|JNJ||Johnson & Johnson||6||473.79||524.78||+10.76%|
|PG||Procter & Gamble||9||575.36||678.75||+17.97%|
|RB||Reckitt Benckiser plc||10||630.34||767.04||+21.69%|
|RDSB||Royal Dutch Shell||20||585.25||604.40||+3.27%|
|KO||The Coca Cola Company||17||540.05||626.72||+16.05%|
|VZ||Verizon Communications Inc.||20||785.07||865.85||+10.29%|
When I first started investing, exchange-traded and index funds were the only things I bought because they are an excellent way to test the turbulent and choppy waters of the stock market. So far they’ve tracked the market remarkably well, but because they’re denominated in Euros the actual value of my international holdings has shot up significantly over the past few weeks.
I’ll probably hold on to these funds for a long time, even though they accumulate dividends rather than distribute them. For many of you doing so may sound counter-intuitive, but it’s a good thing from a tax perspective as the Belgian federal government doesn’t charge us a capital gains tax.
|Ticker||ETF||Cost basis||Mkt. value||Gain|
|IWDA||iShares Core MSCI World||4,982.96||6,032.07||+21.05%|
|IEMA||iShares MSCI Emerging Markets||1,214.59||1,380.78||+13.68%|
|IMAE||iShares MSCI Europe||3,561.94||3,932.28||+10.40%|
Last month I predicted that my investments in the stock market would start to outweigh my other deposits and I wasn’t wrong. More of my hard-earned money is now tied up in individual dividend growth stocks, ETFs, and my pension fund than in the 100% safe savings account and emergency fund I’ve had for a couple of years now. It’ll be interesting to see if that shift has any impact on the volatility of my net worth over the course of the next months.
|Name||Cost basis||Current value||Gain|
|Pension fund||1,027.25||1,092.63||+6.36% and 30% tax break|
|Savings account||N/A||18,159.03||+3.15% guaranteed yearly|
Another great month! 2015 is off to a rocking start with a total increase of over €6,000 already – that’s about three months’ worth of paid salary. At this speed, I’ll definitely make my goal to increase my total porftolio value to €70,000 by the end of the year. If the stock markets don’t decline by then and I’m able to maintain a 70% savings rate, it’ll be smooth sailing from now on.
About one year ago I hadn’t even heard of financial freedom, let alone taken any steps to get there myself. Now I’m crushing milestone after milestone because of the advice, tips, and help our community members provide each other. No more rookie mistakes for me! As a result, I’m optimistic that financial independence is not just a far-off dream, but an inevitable reality for anyone willing to save and invest as much as possible.
I hope you feel the same way! Thank you for reading.