Share Portfolio Update
In this second share portfolio update, I will provide a summary of my progress to reaching the goal of a $1 million dollar share portfolio. I have increased my investment account through wages earned during the month. Building on the portfolio from January 2021, I have invested a larger amount of $5,000 from both savings and wages into the portfolio. Low outlays have enabled me to grow the portfolio rather than immediately spend the funds upfront. That being said, investing in the share market can be achieved with a much lower outlay. I have explained these factors to consider when investing in the share market in a seperate blog.
Next month I have higher expenses so it’s a good opportunity to pay myself first and also save some funds in case of emergency. As a result of investing this month, the portfolio value is almost at the $15,000 mark! This was a goal that I had set for June so I am pleased that I am on track to reach it in March 2021.
Return on Investment
The return on investment has seen some large fluctuations this month going from a high of 9.50% down to a -3.92%. This fluctuation in return has occurred all within the space of a month. The return is now sitting at the lowest it’s been at -3.92%. The share portfolio is heavily geared to the technology industry and growth stocks. This sector has not performed well in the recent period directly impacting the return of the investment.
Shares
The shares that I invested in this month included Red Bubble Ltd (RBL) and Zip Co Ltd (Z1P). These shares have the opportunity for growth within the Buy Now Pay Later financial technology sector and online market space. Investing in these shares allows me to increase my exposure to the technology and growth shares. The downside of investing in this asset class is that it can be quite volatile in the short term. Therefore, I would like to make it a priority to invest in some well-established companies and ETFs. This will hedge the risk and achieve a more stable consistent return going forward.
P2P Lending
The Plenti P2P account has $1,000 invested that I may decide to roll over for another month. The funds may be better off in the share market but I enjoy the security and access to emergency funds. I place a value on having some cash on hand rather than have it all invested limit access to short-term liquidity.
Looking Ahead
Next month, I hope to continue to increase the base of the portfolio to $18,000 and get a step closer to the $20,000 mark. The share market does seem to be trading high with the Australia S&P/ASX 200 Stock Market Index hovering close to the all-time high of 7199.79 achieved back in February of 2020. Therefore, I am hesitant to jump in and invest any further surplus funds. That being said I still want to use the dollar-cost averaging and regular investment to consolidate the good habits and discipline I have adopted so far.
The current performance of the portfolio is disheartening as it is tracking poorly. Due to the recent downturn, I could have been tempted to sell and cut my losses. These thoughts however are not conducive to a long-term mindset. Therefore, I will need to carefully consider the type of investment that I believe will perform well in the long term. Market fluctuations in the short term should not impact my decision to sell. A more important factor should be whether the company has a solid financial position and growth prospects to perform well over the long term.
The data informs me that I have high exposure to market volatility. This is a risk that I have adopted in the pursuit of higher returns. I will need to consider diversifying and rebalancing the portfolio. This will provide me with greater stability going forward. ETFs are an attractive option for me as they have recently dipped in price and they would provide a more stable return. However, the decision will ultimately be based upon whether the ETF’s will fit in with my overall investment goals. Looking forward, this is something that I will consider for the next pay packet for the months ahead.
