The US presidential election was over 3 months ago. That time I’ve published the article of What Trump Means for Your Investments, where I’ve checked the market reactions of the first week. Now, after more than a quarter of a year it might worth to take a look where we are.
Wow, it’s already December! This year seems to be passing by in no time. Winter is officially here, although I can’t remember when the last time I saw some proper snow was. Still I invite you for a winter theme game (if you don’t wanna join, you can still watch from your warm room). I’m going to roll a snowball. A dividend snowball! I start with something small, but on its way down the mountain it’s gonna be bigger and bigger like no one wants to stand on its way! Check out how I’m planning to do it!
One of the biggest achievement of mankind was when people have changed from gathering to growing food. Later on cultures in the valleys of rivers like the Nile, Euphrates, Ganges and Yangtze started to flourish.
This has happened more than ten thousand years ago, and history has proven that great civilizations can only emerge from strong economies.
The discovery that you can grow your own crops, domesticate livestock had such a big significance that it only can be compared with the start of using of tools, the invention of wheel, or the free WiFi 🙂
One of the easiest forms of investing is via purchasing an ETF (Exchange Traded Fund). This investment form has first been introduced in 1993 and by today it became extremely popular. In 2015 there were over 4,000 different types of ETFs, therefore the choice is endless.
An ETF can suit almost all kind of investment needs from simple index ETFs (e.g. VTI, which represents the total US stock market) through sector ETFs (e.g. VFH, which represents the US financial sector) to some really wide spread investment vehicles (e.g. GIVE, which holds both US and global stocks, just as bonds, all focusing on environmental friendly and sustainable themes).
It’s been a week since we know that the next president of the US will be Donald Trump. Once thing I can promise: this is never gonna be a blog about politics. Also this post will be totally politically neutral. First of all it’s easy for me to be neutral as I live in Europe. Secondly everyone must respect the decision of the American people; at the end of the day the guy got almost as many votes from them as Hillary 🙂 But let’s stick to the topic of finance and let’s see what kind of conclusions we can make from this week!
Today’s post will be about emotions and how you should put them aside when making investment decisions. Investment is about numbers, percentages, ratios and other, factual things. There should be no place for emotions here. At the same time we continuously meet with emotional impacts that can affect our investment decisions. They can come from many sources: analyst up- or downgrades, the new super investing opportunity we hear from our neighbor, headlines of financial news, or the result of the presidential elections. These impacts can make you buy or sell assets, while such decisions should not be based on them. Let’s demonstrate this with an example:
Another month, another step closer to financial independence. In October our investment rate was according to the plan, adding nearly EUR 2,000 to our portfolio via share purchases. We’re in the middle of the Q3 reporting season and the results so far quite mixed with both positive and negative surprises. Overall the S&P 500 closed slightly lower this month, but due to the stronger dollar our portfolio had some small gains in euro. Let’s see the details!
Now we have some idea about investing in the stock market. What about bonds, the other typical type of investment? What are the different types of bonds? How do they work? How can we make money with them and also: how can we lose money? In the followings I will explain some basics about the magical world of bonds.
One great way to invest in many different stocks at the same time is via an ETF. If you buy a Vanguard S&P500 ETF (VOO), your returns will be almost the same as you bought the shares of all the S&P500 companies according to their index weight. All this with one purchase, one time transaction costs and as low as a yearly 0.05% fee. As a bonus, it currently has a 2% dividend yield. Nevertheless if you are looking for ETFs that solely hold dividend paying shares, here are 4 great ones to consider including in your early retirement portfolio:
In the previous post I have explained my investment principles, now let’s see how we can implement them in practice. Following two main principles, I want to keep it simple and of course I want to diversify my assets. I am focusing on 3+1 main asset categories: stocks, bonds, real estate and cash. Also within these assets I want to further diversify in order to spread the risk. Let’s see how!