Over the last 8 days, the hubs and I have seen the biggest jump to date in our share portfolio. We received $130 in dividends from Vanguard alone, which we have automatically reinvested into our portfolio and $350 in overall growth. THREE HUNDRED AND FIFTY DOLLARS IN 8 DAYS! What is this kind of sorcery?
If we break it down, there’s two reasons for this:
- I invested in exchange traded funds and companies I truly believe in – not based on a ‘tip’, not based on some article, but pure research and excitement about a particular area in the market; and
- Compounding, baby!
If you’re just joining the FFT party – first of all, holla! And second of all, here’s a few helpful reminders on what those fancy finance acronyms actually mean. Not the meanings you see in the fine print with convoluted definitions, but the real meaning to every day Aussie gals like you and me –
I tend to go on a lot about my favourite of them all, exchange-traded funds (also known as an ETFs). An ETF is like a bucket of shares from lots of different companies. If one of your companies doesn’t perform well, you have shares from all of the other companies in your bucket to hedge that loss. If your bucket only has one type of company share in it, and that share loses value, your whole bucket loses value. ETFs are great for buying low-cost, diversified shares with access to many of the world’s best performing companies. And as you’ll see from my share portfolio below, I invest in four different types of ETFs!
Diversification put simply, means you don’t have all of your eggs in the same basket. It’s important to diversify to reduce any loss from the movements in the market. If you invest in a diversified fund, it means you will likely have some high risk shares, some medium risk shares and some low risk shares. The high risk shares will tend to give you a greater return, but will also have the greatest chance of falling, whereas the lowest risk shares will have a lower and slower return but over time will hedge any loss from the riskier shares.
Your greatest weapon as an investor will always be compounding. It is the most powerful way to build the value of your portfolio and investment without lifting a finger. When you purchase shares, you are given the option to cash out the dividends each quarter or have them automatically reinvested into your portfolio. My answer? We have always reinvested back into our portfolio. This means that the next dividend payment will be higher because the value of the overall portfolio will have increased by the amount of the re-invested dividend and any gains in the market. It’s like your ING – when you earn interest on your account each month, you’re better to leave that interest in the account so that the interest earned the following month is compounded, right? This is the same thing.
So here it is, the secrets to my share investment tool belt:
Vanguard Australia ETF (VAS)
This ETF bucket includes shares from the top 300 companies listed on the Australian Stock Exchange (ASX).
“VAS has the lowest management fee of comparable ETFs at 0.14% pa, which means it only costs you $1.40 per year for every $1,000 you invest (www.etfbloke.com)”
I bought it for $67.50 per share, it’s now worth $79.80 per share. BOOM!
Vanguard International ETF (VGS)
This ETF bucket includes shares from some of the world’s largest companies such as Apple, Google, Facebook, Amazon etc.
“This particular ETF is a good investment option because it provides exposure to essentially the whole global share market with holdings in North America, Europe and Asia (www.fool.com.au).”
I bought it for $64 per share, it’s now worth $70.30 per share.
NASDAQ100 ETF (NDQ)
This ETF bucket includes shares from the top 100 technology companies in the NASDAQ, similar to Vanguard international, but each has a bigger percentage in the overall fund.
“At the end of June 2018 11.4% of the ETF was devoted to Apple, 10.3% to Amazon, 9.5% to Microsoft, 9.1% to Google and 5.8% to Facebook (www.fool.com.au).”
I bought it for $15.70 per share, it’s now worth $17.30 per share
ISHS Global Health ETF (IXJ)
This ETF bucket includes shares from the top 118 health, pharmaceutical and biotechnology companies from around the world – such as Johnson & Johnson, Pfizer, Merck & Co Inc and Novartis.
I bought it for $70 per share, and it’s still worth $70 per share (only bought 2 weeks ago).
Ansell Limited (ANN)
Ansell is an individual company responsible for selling latex goods and equipment to the health sector.
I bought it for $22.80 per share, and it’s now worth $28.10 per share.
Ramsay Healthcare (RHC)
Ramsay is the top performing, private health company in Australia, before Healthscope and Genesis etc. It has been a behemoth over the last decade with consistent growth year on year. Recently the price fell and I took it as my opportunity to dive straight in!
I bought it for $54.10 per share, and it’s now worth $57 per share (only bought 2 weeks ago).
Fearless Female Traders
[Disclaimer: The information in this blog is the opinion of the author only and does not take into account your personal and financial situation. If you have specific questions relating to your own Tax, you should always seek professional advice]