Debt reduction, it’s not easy.

A lot of people are writing about debt reduction as an easy way of getting the monthly costs down. Which in theory it is.The math is pretty straightforward and if you make a simple spreadsheet the reduction of debt and all it’s benefits become pretty clear. It’s a no brainer really. So you start with a lot of renewed optimism and energy and the first few months fly by. But them the promised big dent in the costs doesn’t happen as fast as you would like , you hang in there but the lure of your wish list , bucket list or some other short term gratification is looming. You start questioning if it’s worth it.

Congrats ! You just arrived at the hard part, sticking with it regardless. This is hard, and it’s not happening at the end it’s when you just got started , and it’s going too happen again. Psychologically all these small steps and keeping the enthusiasm alive is the most difficult part. Because it’s becoming boring. The numbers don’t change magically , the time and effort stay the same no matter how hard you look and your spreadsheet.

But sticking with it really pays off, make a game out of it. Every time you want too spend money on something you don’t really need , step back think again and….

take that amount and pay off some more debt. You get too adjust your spreadsheet and the numbers change. Excitement has returned ! All kidding aside, debt reduction is more of a mind game than a numbers game. Most hard things take a long time , remember your original goal and reason for doing it!

By all means paying off large sums of money is never easy, it is however one of the best decisions you can make in your life. It reduces your financial vulnerability , reduces your monthly cash flow needs, and reduces stress. All very cool benefits. Just hang in there !

December 2018 – Dividend

Final month of 2018. And the final monthly dividend report for this year. The Stockmarket has tanked last few months which leads too all sorts of speculation and doubt, for my strategy it’s not important. For I am still in the building up part of the process. Time in the market is far more important than timing the market.

The dividend this month is less then December 2017, because I sold Shell in the summer. So we are down 67%. Green costs money ;). This will be corrected next year because the money went into other dividend paying company’s. Overall the dividend in 2018 is up 27% compared with 2017. Which is pretty good. It’s motivating.

We will see what 2019 will bring.

The numbers:

DateStockCurrencyAmount
20-12-2018Vanguard dividend appreciation ETFEUR1,51
18-12-2018Icahn Enterprises LPEUR1,53
14-12-2018DowDupont EUR3,33
14-12-2018Coca-ColaEUR5,13
13-12-2018Microsoft EUR8,07
05-12-2018UnileverEUR3,87
TotalEUR23,44

Options – What’s are options ?

Options, a very nifty and useful financial instrument which can be traded on all sorts of exchanges. In this new series I will start from the beginning and will explain what options are and how we can use them in our portfolio’s. Ok let’s start.

An options is the right too buy or sell a product for a set period of time for a predetermined price. Most people’s only experience with an option is when they take out an option on a house. For a fixed period the buyer has the right to buy the house at the agreed upon price without the seller having the option selling the house to someone else. Most of the time this is done for the buyer figuring out finances and seeing if the house is structurally sound. These conditions enable the buyer that if one of these non binding conditions apply they don’t have too buy the house. (This is the way it’s done in the Netherlands , maybe this will differ per country. But you get the idea, I hope)

With this option comes a risk, if there is no non binding reason for the buyer getting out of the deal, they either have to buy the house or pay a 10% fine, which means 10% off the agreed upon price. So there is also an upside for the seller. He/she knows they either sell the house or get 10% in such a case.

The risk for the seller is this, in the meantime they can loose possible other buyers and when the markets are hot they might miss out on the rising prices in the period the option on their house is valid. And if the deal falls trough they can start all over again finding new buyers.

An option is comprised of a set of attributes, an end date , an underlying product (stock, house, commodities , etc) an a fixed price at which the underlying product can be bought or sold.

Trading options can be done on all sorts of (financial) markets, but most well known are stock options. Which will be the main focus of this series.

You have 2 types of options. One gives the right too buy stocks , named call options. The reverse, a right too sell stocks is called a put option. Let’s look at them with a simple example.

Call option :

An option is being noted (mostly) as, AH C20.00 21DEC2018, which is Ahold Delhaize, Call 20 Euro , 21 December 2018.

The first part is the name of the underlying stock, in this case Ahold Delhaize. Followed by the price at which the option can be exercised, 20 Euro’s in this instance. Last but not least the end date of the option. The date on which the option expires, and becomes worthless.

Also worth mentioning, 1 option will give you the rights on 100 stocks , so in this case you can buy 100 stocks Ahold at a price of 20 euro’s each, before the option expires on 21 December of 2018. A total of 2000 Euros worth of risk. Options generally end on the third Friday of each month.

Put Option :

Essentially the same principle, just another right, one too sell instead of buying. It’s presented in the same way, AH P20.00 21DEC2018, Ahold Delhaize Put, 20 Euro, 21 December 2018. This is again a right for 100 stocks, Ahold in this case again, a sell right for 20 Euro each.

Well so far we have learnt a Call gives a buy right, a put a sell right. But when there are buyers there must be sellers. Together they make the market. Buying an option will cost you a premium. As expressed in the option price you see when looking up an option on the exchange.

You can look at the option price as an insurance premium, you will pay every month on your car insurance. The insurance company is the seller of the option (insuring your car against the risk of damaging it). And you are the buyer. You cover unexpected damages and events and in return you pay a monthly fee (the premium). The insurance company now takes the risk that if you have an accident they will have to pay for the damages. You are insured against these risks for a certain amount of time (mostly a year).

The premium or price of an option is changing a lot faster then the premium of your car insurance. But the same principle applies. A seller makes a risk analysis with selling the option and gives a price too the buyer. The option buyer insures the fact he can buy or sell the underlying stocks at the price of 20 Euros, until the expiration date. The seller has too buy or sell them too the buyer at this price.

The option price is determined by the price of the underlying stock, the distance too the strike price of the option (the 20 Euro’s) and the time left in the option, i.e the number of days , hours minutes until the option becomes worthless. Other factors are interest rates, dividend payments and overall sentiment in the market.

Where do people use these options , or insurances for ? Well, that will be the next item in the series. For now just let the characteristics of options sink in.

Portfolio news – Winter 2018

Time for another portfolio news. Since the last additions I have been going out of the fossil energy industry and reinvested the funds into technology and the ETF’s. I had still had Shell, sold ONEOK before that and now it was time to remove Shell from the portfolio. It’s a nice dividend income and for all their commercials and PR towards clean energy I haven’t really seen anything apart from sponsorships. No real moves as of yet. In name an Energy company, in practice still a old style oil giant. I realize I am still an investor by the way of the ETF, so I am not completely clean at the moment. But this is the first step.

Also out is General Electric, one of my longest holdings in the portfolio, and one I neglected acting on earlier which resulted in a loss, another testament towards simply buying an ETF and holding that instead of following separate companies. But I am still having fun doing the research, so for now I will keep adding some handpicked stocks to my portfolio.

As for technology , more ASML, Apple and Microsoft have been bought. Next on the list is Philips. Getting larger in healthcare which will remain a growing market, it’s been lagging a bit lately and now starts making up a bit. So I will start out with writing put options and seeing how things develop.

The ETF’s have seen the biggest growth in my portfolio, simply because it’s easy and cheap. Which comes a long way in having a nice return in the future. Low costs and simplicity is key. Its also remarkably stable. My handpicked portfolio goes up and down a lot more, which makes sense because it only contains a few positions versus hundreds combined in an ETF.

So my testcase is more and more in favor of the ETF’s , which I will be allocating more money towards in 2019.

November 2018 – Dividend

Its the end of November and time for another albeit short dividend report. Let’s see, as usual November is a slow month in the dividend department. This year even more so as I sold ONEOK this year which paid dividend in November, which leaves Apple as the sole dividend paying position in my portfolio. So a 13% drop in dividend income compared to last year. Next month the last dividend update and a final report on 2018.

The very short list :

DateStockCurrencyAmount
15-11-2018AppleEUR9,69
TotalEUR9,69

October 2018 – Dividend

October 2018 is almost over , time flies and so it’s time for another dividend update. A new increase, comparing with October 2017 due too the expansion of the portfolio. The exchange rate impact is something I am used to by now and the small increases in dividend payout minimize the inconvenience in the result. It’s a figure too low for me to consider hedging the currency issue.

Percentage wise the increase is pretty large, 67%. At some point as the portfolio increases this will level out more and produce a more normal percentage. For now it looks fun. With another 2 months to go this year I’m curious we’re we end up. For now the numbers :

DateStockCurrencyAmount
24-10-2018Cisco systemsEUR8,03
25-10-2018General ElectricEUR2,30
15-10-2018W.P. Carey EUR8,91
10-10-2018Vanguard FTSE All-world UCITS ETFEUR39,63
1-10-2018Coca ColaEUR5,09
1-10-2018Vanguard Dividend Appreciation ETFEUR1,30
TotalEUR65,26

Portfolio news – Summer 2018

Finally after all the buying of ETF’s too balance the portfolio out in a better way, it’s now time too add a few handpicked stocks to the portfolio. Buying ETF’s isn’t anything really interesting too talk about. Hence not many portfolio updates over the last few months.

Now that everything is balanced out a bit more, I have added a few stocks to the portfolio. Europe is pretty much still lagging behind because of all the political themes , Brexit, Italian budget concerns and trade wars. Timing for me is like magic and I am not a licensed magician. So I just went down my what to buy when I have the money list and came up with a few good ones. The new positions are :

BMW

BMW is in a tight corner, diesel gate , trade wars, currency problems and the omission of a decent electric vehicle have made a considerable dent in the image of not only BMW but the whole German car industry. There is not a lot of music in the stocks , and there hasn’t been for some time.

On the other hand, every car the ensemble , sell with a pretty decent profit. Enough too get their heads around building a decent electric vehicle too get into competition with the established electric car makers. It’s a bit of a waiting game lately with all the political and economical turmoil at the moment. Surely in the short term they will hurt a bit. But with the brand still having a status symbol status and quality cars they have all the potential for being just that in the future. And in the meantime they will still be paying out dividends.

Reasons enough for me too buy BMW, just not the car itself.

Starbucks

Wish list item for a while now. Now with the funds available I finally added Starbucks to my portfolio.
Since 2010 they are paying a steady stream of dividend and their goal is growing the dividend stream.

Starbuck’s stock price has been under pressure for most of the year and is now finally seeing some upward potential. So buying in the summer has been a unexpected bonus. The position of the company is still very solid with nice growth numbers in Europe , The US part is falling behind a bit , but that’s a work in progress in getting things sorted again.

All in all one I had my eye on for some time and finally made an entry in the portfolio.

Nike

Last but not least, Nike. A lot of hustle and bustle around Kaepernick and sales figures. After having their main rival Adidas in the portfolio which had reached a very nice profit margin where the dividend percentage didn’t make sense anymore I simple sold it and banked the profit. Now it’s time to own Nike. The other power in sports and leisure branding.

And same as Adidas , not for any numbers and other boring date. Just looked at the brand and seeing lots of people still growing up with Nike as a brand people wanting too own stuff from, especially sneakers , but also other stuff. Everybody has that one pair of sneakers they wanted and saved up for. And not being able getting the other pair. In later life , they still buy these models. And every generation has them. Same with Adidas.

They still have a large following , limited edition runs, collabs and a lot of sub cultures have in some way shape or form incorporated Nike in their style.

They keep up marketing wise and make bold statements. Which still resonate with young and older crowds. And I don’t see that changing anytime soon.

July 2018 – Dividend

A new dividend update, the compounding kicks in. This month it’s a 104% increase compared with July last year. Mostly from the growing portfolio and some small dividend increases, largely offset by currency rates which are still a bit negative relative too last year. All in all nice progress in this ever evolving experiment.

The numbers :

DateStockCurrencyAmount
27-07-2018Walt Disney CompanyEUR0,72
26-07-2018Cisco SystemsEUR7,97
25-07-2018General Electric CompanyEUR2,28
17-07-2018W.P. Carey IncEUR8,79
05-07-2018Vanguard FTSE all world UCITS ETFEUR39,23
04-07-2018Vanguard dividend appreciation ETFEUR1,47
03-07-2018Coca-Cola CompanyEUR5,04
TotalEUR65,50

May 2018 – Dividend

A bit faster than the last dividend report. May is over again and the numbers are in. Bit lower compared to last year due too dividends being payed just outside of May in some occasions. In percentage -44% but in simple money still a nice number and a good confirmation of my strategy.
Now that the balance between handpicked and the ETF parts in the portfolio is almost complete I will go back and do some picking again. Lets’s see how that goes.

The overview:

DateStockCurrencyAmount
30-05-2018Bayer AGEUR14.00
30-05-2018Unibail-RodamcoEUR5,40
18-05-2018K+G AG EUR14.00
18-05-2018Porsche Automobil Holding EUR17,60
17-05-2018Apple IncEUR6,24
14-05-2018NSIEUR13,44
10-05-2018Amsterdam CommoditiesEUR42.00
09-05-2018ASML HoldingEUR5,60
TotalEUR118,28

Portfolio news – Januari, Februari and March 2018 changes

It’s been a few months since the last portfolio update. It’s been mainly just adding to the ETF’s I selected because there is still a imbalance between my hand picked stocks and the ETF’s. But I am on track towards getting the balance right.

So I am focussing my attention more on picking some new stocks and adding to existing positions. I added to my positions in Munich Re, ASM International and Amsterdam commodities. Jungheinrich is a new addition, it’s active in logistical systems and warehousing. Technical company and with the growing need for smart warehousing it’s a good company to be invested in, in a growing market for now. Until we finally realize we don’t need all that stuff in our lives. It’s also paying a nice dividend. So for now it’s in the portfolio.

I sold ONEOK , one of the US leading natural gas suppliers. It has served the portfolio well with a nice increase in share price and a healthy stream of dividends. I made a solid profit on it and the reason for the sell is part of a broader idea in my investing away from fossil fuels and into other forms of energy. It’s still in the ETF’s and I am still invested in old world energy but it’s time to reduce it and get it to zero.

It’s a bit hard getting in with the real promising company’s as a lot of them are not listed on any stock exchange just yet, which is unfortunate. Well there’s Tesla, but that’s not really my cup of tea investing wise. But I am keeping an eye out and trying getting as much information as I can.

One of the company’s I am checking out is Umicore, which is big in recycling and material research and development. I have some work left to do so I when I’m finished I’ll share my findings.