The Road to Independence // Chapter Two
Welcome to the first of many TRTI posts, this will be a new series I’m starting. And it all starts here, with a fresh start to my portfolio. I can hear you asking: ‘If it’s a fresh start why is it called Chapter Two?’. Well, this is the second stage of my investing plan, I hope you are as excited as I am to find out more!
–Sold profitable DGI stocks for around $3000 gain.
–Will put most of the money into six carefully selected ETF’s available in The Netherlands.
–Single stock investing turned out to be a great money maker, but to active for my liking and with money being lost due to currency exchange costs.
–I will not be focusing on income anymore as I’d reinvest it anyway, most of the ETF’s will reinvest dividends automatically.
–Most remainging stocks will be sold when they turned a profit, I’m in no rush to sell good companies for bad prices.
Currently I’m a Dividend Growth Investing blogger, basicly I buy stocks that pay sustainable dividends to hopefully one day pay all my bills with the dividends from my investments. I’ve been doing so for close to two years and it worked wonders. Steady companies pay steady dividends and (mostly) have a steady run up in stock price. It should mostly be a passive investing strategy but I’m noticing more and more that it’s quite active for me personally. Investing is a hobby and thus I keep looking at individual stock prices, paying transaction fees, keeping score of all the dividends coming in. And there are also some negatives for me as a European based investor, most solid DGI stocks are American and it costs me money to transfer my Euro’s into Dollars.
The idea of making it even more passive and steady by using ETF’s has been in my mind now for quite some time. And a few weeks ago I started planning how my portfolio would look using my new thesis and it should look like this.
As you can see there is longer an endless list of individual stocks, just a few Dutch and Chinese companies. All my American and world exposure will be through ETF’s that note in Euro’s. They don’t all neccessarily pay dividends and they don’t need to in my case. I don’t need the income yet and I would just reinvest the paid dividends anyway, so why not automatically do it with an ETF that invests the dividends back into the ETF immediatly.
I’ve chosen a world index as main component of the portfolio, this as a steady fundamental base. Together with the US Dividend Aristocrat ETF it should be the most solid part of my future. To have some extra exposure to technology I’ve chosen a specific American Information Technology fund, and there is some Emerging Market exposure as well. To truely diversify I’ve decided to add a High Dividend fund, a Global Real Estate fund and last but not least a bond of a Dutch bank for 6,5% yield.
My income will drop significantly from what it is now solely using dividend stocks, but as stated above I don’t need the income yet so I prefer it being as passive and diversified as possible.
What I did with my dividend stocks.
As most of my portfolio was in the green I decided to sell a majority of my positions immediatly, and place a few limit orders on other stocks. It’s kind of heart breaking having to say goodbye to stocks that have been so good to me the past two years, but they don’t fit my new plan anymore.
The stocks that are in the red will remain in my portfolio as each and every stock I used to own was a company I trusted in for the long term. I’m not in such a hurry that I’ll be selling all my stocks no matter the price.
Slowly but surely I’ll be transfering small amounts of money into the ETF’s and distributing the cash on a monthly basis. I’m looking to spread the buys out so I’m not buying everything at the top of the cycle with all my cash, I want to phase in to these investments.
I’m very curious to your opinion about my new ideas, do you invest in ETF’s yourself, and if so, what ETF’s do you use and do you care to share your diversification with me? Let me know down below!