Reached 70k!

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I’m excited! Today marks another milestone for me as my portfolio is showing for the first time ever, a number starting with the number 7. 70 161 euros to be exact.

This owes thanks to the recent revival of markets. Performance wise my portfolio has now reached about 0% YTD. Which, let’s be honest, is not good but a lot better than the about -12% I was looking at in mid February. Contributions to the portfolio YTD are around 5k. Here's my time-weighted return (TWR) chart YTD:

The breakdown of my current portfolio is as follows:

Savings account	7101
Passive funds, broad	22325
Passive funds, niches	7089
Actively managed funds	5310
Listed stocks	19286
Unlisted stocks	5250
Fixed income	100
Cash	3700
Total	70161

Now, onto making that first number '8'!

Beware when getting off the train! - February action plan review

Commuter train: Serampore by Saptarshi Sanyal on Flickr

Shit! I haven’t updated the blog in quite a while now. A review on my February action plan is quite overdue. In my previous post Mr Market is panicing: What to do? I was looking at the high volatility of the market and decided on two actions:

1. Sell and re-buy instruments for tax loss harvesting
2. Look at buy opportunities

Let’s see how I did on these two action points.

The good

My goal with selling and re-buying was to generate technical losses to minimize my taxes on dividends as since this year, a Finnish tax payer can deduct also capital losses from dividends (previously they were only deductible from capital gains).

I did manage to sell off positions for a total turnover of about 11 200 euros and a realized capital loss of about 1 200 euros. This means a future net tax savings of 1200 * 30% = 360 euros. This loss is deductible for the next 5 years so I’m certain I’ll be able to use in it’s entirety.

I also did some changes to investment instruments, e.g., changed my frontier market ETF from DX2Z to FM (from swap to physical replication and from 2% TER to 0.79% TER). I also got rid of my only bond holding which was Vanguard’s BSV. I didn’t see holding bonds as such a good idea anymore because of the low interest rates environment we’re currently experiencing.

The bad

But. I only made new purchases in the value of 6 600 euros. Oops! This means that I was holding about 4 600 euros more cash after than I had before commencing the February action plan.

This was a learning point in investor psychology. After seeing the low-low prices of the (temporary) bottom, it was not as easy to commit to repurchasing the same instruments back at a (little) higher price. Learning points:

1. Beware of getting off the train. The train may take off while you’re on the station. Commit to getting back on.
2. It doesn’t have to be sell-and-buy only, but you can also buy first and sell later. You can actually diversify your risks by mixing buy-and-sell and sell-and-buy 50-50.

The ugly

The previous also means that I didn’t succeed in my secondary goal of buying more. Mid-February would have been a nice dip to buy something more but that didn’t happen. I don’t believe in timing the market but acting on these kind of dips could and should be done. I’m sure I’ll be more ready next time.