As New Zealand comes out of Lockdown 2.0 and with the impending election coming up this week, investor confidence is starting to come back – as evidenced below. But, in truth there may be a lot more going on than I stated. Hey, I am not a financial advisor for a reason! And there’s a reason I still have a day job.
With this recent uptick, we’re starting to look a whole lot better in terms of Unrealised Profit, but NZR is still dragging me way down… Oh well – it is what it is. I believe that either this company will make future gains (think 10+ years) or it will be bought out, in which case I should be able to recover some losses. However, this is all speculation at this stage. So don’t take my word on any of it.
After this recent round of dividends, I have enlisted, or signed up, or elected to take part in, the Dividend Reinvestment Programs for every holding I have. Now, this may go against the typical advice you see on YouTube when it comes to Dividend Investing, but I think I have a particularly good reason. Or reasons. Or ideas. Anyways!
My idea is that I would like to acquire more of what I already have. Freeing up my purchasing power for new shares and not adding to existing. I get to do this by forsaking the dividend payouts for a while, letting those shares earn more shares. It also helps that new shares in the Reinvesting Programs are often bought at 2.5% below trading value, so your dollar goes farther. It also means, no $30 purchase fee. Oh, and from what I have read, I believe you don’t get taxed because there are no capital gains… These three facts mean that you can forego your dividends to grow your existing portfolio.
It also helps that I believe most of these shares are on sale at the moment. In other words, they are trading at well below their value. So, I am using this time to ensure my dividend payouts in the future are just that much plumper.
I expect to be in these programs for at least the next 5 years. Shares buying shares – much like compound interest. The longer I leave it, the more it will grow by itself. I am lucky that I can afford to do this. And am not reliant on those dividends to support my lifestyle (yet).
Basically, it will come down to what you’re trying to achieve. For myself, I want a good base. The type of base that is going to take me at least 5 or more years to establish. But then after that, well, who knows. It’s not going to make me a millionaire, but it’s a step in the right direction, I think.
This was just a quick update to show you how my portfolio is performing. And to let you know about the change I made. That way you can see if it pays off, or if it was a stupid move. I am more than happy to answer any questions you may have. Or if you want to sound off in the comments, I am keen to hear what you think.
October 12th, 2020
Current Portfolio : $14,325.76
And now I must put this in for the legal reasons…
I am not a financial advisor. All advice is taken with this in mind. I do not benefit from you using the same platform I do, or by using a different one. I do not have any insider knowledge of any company listed. Everything I will talk about – from the tools to the news – will be as available to me as it is to you. Again: I am not a financial advisor and never will be.
