Financially Free By Forty: Portfolio Update

My main focus as a Dividend Growth Investor is the amount of Income I receive on a monthly basis. My long term goal is to receive a yield that will surpass the cost of my expenses each month. My annual overheads are currently under £10,000 per year, and my investments average over a 4% return. By using those numbers, I would require £250,000 in my portfolio to cover all bills and spending money.

I want to keep track of the value of my portfolio each month as I go through this process. It's been motivating to see the growth of my pot since I started DGI. Recording this data has helped by raising my awareness of individual stocks and the market as a whole. I now find myself eager to invest so I can report back on the progress I've made.

I achieved one of my goals for 2014 by having a portfolio worth more than £12,000 in July. I want to continue with the momentum I've gained so far and aim for £17,500 by the end of the year. I will report what my portfolio was worth at the end of the previous month so you can see how I'm progressing towards this goal.

My portfolio value went up in October. The increase was down to the profit made from selling Pearson PLC, the purchases of IG Group Holdings, Morrisons (Wm) and Standard Chartered, and a little bit of Dividend Income.

At the end of September my Freedom Pot was worth £15,427.08. When the market closed at the end of October my portfolio was worth £17,169.00 which is a £1,741.92 increase (11.3%). This is a substantial improvement, but I did invest in three companies so I would have expected a larger increase overall. The total cost of the three investments was £3,374.03. If I take away the sale of Pearson (£1,394.72) and my dividends for the month (£19.92) from that outlay, I'm left with £1,959.39. That would suggest that my Freedom Pot has decreased overall by £217.47.

The Recent FTSE 100 Decline

On the 1st September the FTSE 100 was on 6,825.31p, on the 1st October it had dropped to 6,557.52p and on the 3rd November it closed on 6,488p. The FTSE 100 hasn't had a fruitful time recently, and at one point during October it went as low as 6072.70p which is it's 52 week low.

It's encouraging to see my portfolio is not an isolated case. UK Stocks in general have hit a rough patch, but it's not all doom and gloom. During this period I made the most of the opportunity and aggressively purchased shares in quality companies where I felt value was present.

Selling Tracker Funds to raise capital

At the start of October, I made the decision to sell my shares in the tracker funds I had. The sale freed up £2,509.90 capital to invest in the companies above, which I felt would outperform the FTSE All-share in 1-10 years. The sale made me a £260 profit on cost, which at the time was whittling away by the day! I haven't used all of the money yet but I plan on making the most of the low prices on offer whilst I can.

I'm now £331 from my V2 portfolio goal (£17,500) with two months to go. My wage for November is traditionally low, but December tends to be a good month. I have some reserve left over from selling funds, and a couple of months of solid dividends to come.

Portfolio Goal Version 3!

I don't want to count the sale of the tracker funds towards my goal, as I would be nowhere near this mark without it. I haven't increased my investments by £2,509, I've just transferred the sum to another location. To that end, I've decided to bump my end of year Portfolio Goal up to £20,000. This would put me £2,831 off my portfolio goal with two months to go. I usually contribute around £1000 per month towards buying shares, which will be easy for December, but difficult for November. This Goal is going to be a big ask for me! I remain upbeat and I'll give it my best.

Thank you for reading!

How was October for you? Has your portfolio taken a hit this month? Are you still on track for your end of year Goals?

Portfolio Update - October 2014