With another month behind us, it’s high time we take a look at the performance of my portfolio of stocks, exchange-traded funds and cash holdings. Their size directly determines my progress towards financial freedom, so it makes sense to keep close tabs on them. After all, a high net worth equals more flexibility and freedom in life.
At the beginning of the year my portfolio enjoyed a strong upward momentum, mostly due to the European Central Bank’s quantitative easing policy and a higher than usual savings rate, but over the past few months the growth stagnated significantly. Even though I kept saving and investing the same amount of money every month like clockwork, the markets slowly crept lower each month.
For October I’m glad to anounce that the downward spiral seems to be broken! Compared to last month my portfolio gained a sizeable €1,997, which is a little more than I managed to save during the same timeframe. My patience is finally rewarded and I’m potentially on track again to meet my 2015 financial independence goals.
As you can see , the increase compared to last October is quite significant at almost an entire year’s worth of net salaried income. I’m still baffled by how fast I managed to build my net worth, even with the recent slowdown. Let’s hope I can maintain this progress.
Nevertheless, a 3.05% increase this month is a welcome change from past net worth updates. I’m also happy to say that the additional savings amount to over 160 hours of work-free capital in the bank. That’s almost an entire month I have to spend less at the office to become finanically independent!
Like in past net worth updates you’ll find a detailed description of my dividend growth stocks, exchange-traded funds and cash below. I also highlight their performance since the time of purchase. Foreign securities were converted to Euros using the last-known exchange rate.
Dividend growth stocks
Even though the total value of my dividend portfolio isn’t all that important, I still like to keep an eye on it. Indeed, a dividend growth investor is less concerned with the value of his holdings than with the strength of the underlying businesses and the future dividends they can throw off. As a result, I focus here mainly on a balance between sector diversification and yield-on-cost.
Even though I don’t necessarily compare my dividend stocks to a specific index, it’s still impressive to see that the performance of these individual stocks has been very similar to that of my exchange-traded funds below.
To me this shows that stocks’ day-to-day price is often impacted more by the broader market than their inherent, underlying value and business fundamentals. On top of that, I’m strengthened in the believe that I’m building a well-diversified portfolio of quality dividend champions.
Because I’d like to continue doing so I have added American manufacterer Caterpillar Inc. (NYSE:CAT) to my portfolio. Even though it’s short-term prospects are hurting due to the rather awful commodities market we’re experiencing, the company is in good shape to come out ahead in the future. Besides, it could potentially further grow its dividend without eating up all of its profits.
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||1,712.10||-10.29%|
|DE||Deere & Company||7||452.61||467.06||+3.19%|
|HOME||Home Invest Belgium||30||2,682.00||2,646.00||-1.34%|
|JNJ||Johnson & Johnson||20||1,769.41||1,693.82||-4.27%|
|NG||National Grid plc||100||1,332.11||1,251.01||-6.09%|
|PG||Procter & Gamble||23||1,594.66||1,497.26||-6.11%|
|RB||Reckitt Benckiser plc||10||630.34||833.01||+32.15%|
|ROG||Roche Holding AG||5||1,233.71||1,171.15||-5.07%|
|RDSB||Royal Dutch Shell||60||1,745.65||1,472.40||-15.65%|
|S32||South 32 Ltd.||48||20.04||46.60||+132.54%|
|KO||The Coca Cola Company||17||540.05||624.07||+15.56%|
|VZ||Verizon Communications Inc.||20||785.07||780.90||-0.53%|
For the passive portion of my portfolio I’m invested in three exchange-traded funds that cover the largest companies worldwide, the majority of European large-caps and the emerging markets. Passive management doesn’t mean they’re without risk, however, as evidenced by the 10% tumble they made compared to previous months.
Overall their performance is still great and I’m planning on adding to the World fund over the coming months as a way to rebalance things.
|Ticker||ETF||Cost basis||Mkt. value||Gain|
|IWDA||iShares Core MSCI World||5,214.95||6,036.24||+15.75%|
|IEMA||iShares MSCI Emerging Markets||1,214.59||1,226.88||+1.01%|
|IMAE||iShares MSCI Europe||3,561.94||3,816.56||+7.15%|
Next to the stock market’s upward and downard bursts, this category remains relatively stable. As usual I added another €77.5 towards the yearly maximum of €930 in my personal pension fund, while my emergency fund and savings accounts mostly remain untouched.
Over the past two months, however, I’ve dipped into my emergency fund to average down on a few holdings, such as Anheuser-Busch InBev (EBR:ABI or NYSE:BUD), Total SA (EPA:FP), Münchener Rückversicherungs-Gesellschaft (ETR:MUV2), Home Invest Belgium (EBR:HOMI) and BHP Billiton (LON:BLT). I’ll top up the fund when my paycheck hits at the end of the month since I prefer to keep a rather large amount of cash on the side.
|Name||Cost basis||Current value||Gain|
|Pension fund||1,627.50||1,736.28||+6.68% and 30% tax break|
At the moment I’m close to reaching my goal of €70,000 in net worth by the end of the year, but that could change very quickly if the markets decide otherwise of course. On the personal front I’ll have to make sure to save as much as possible, but judging by my past savings rates that won’t be a problem.
Nevertheless, all my deployed capital is just a means to an end, with the end goal still being a nice chunk of passive income through yearly growing dividends. And as you guys read a couple of days ago I broke through my €500 dividend goal for 2015 already – score!
Furthermore, when looking at the chart above you can see that the impact of my savings rate on my overall net worth is slowly diminishing. This means that my previously saved income and the stock market together now have a larger day-to-day impact on my future wealth than I could possibly achieve on my own.
I could go off on a tangent about how to hedge against currency exchange rates or how to deal with declining markets, but by far the most important message to take away here is that once you save up enough money that money starts to live a life of its own, slowly but certainly building itself over time, albeit with the odd stumble along the way.
And that’s why I love putting these kind of reports together – thank you for reading!