Sunday, November 1, 2020

Financial Independence For The Visually Impaired: Part Four

 It is now just over one year since I created a portfolio of stocks to try to generate some income. Allowing me to make a step towards financial independence.

Back in January I had invested just over $200 and was looking at quite a good year ahead. My general income from advertising,

A stack of U.S. Bank notes and coins

amazon affiliate links and my small side hustles like selling "Spider plants"  were ticking over and it looked like I could amass a reasonable amount over this yeTar.

That was of course before the Corona Virus and the lock downs came along. My income disappeared  over night.  I did manage to scrape together about $100 over the Summer and into September. Mostly some cash given to me to buy something for my birthday in September. I used that ti buy some Financial Exchange Traded Fund stock (XLF)  that stock was a good price in September, just $24, it pays a quarterly dividend next in December, then March, June and September.

Banks and other financial services are a little bruised and battered this year but I think this ETF will hold up. Being an ETF too, means that I am in less danger than buying an individual bank like J P Morgan or Bank of America.

XLF also has a nice perk, I get to hold some Berkshire Hathaway stock in there. The company controlled by Warren Buffwtt and Charlie Monger. Each stock of the company is selling at over a quarter of a million dollars at the present time or less powerful non voting shares change hands at around $200 regularly.

The accounts main weakness was that I bought a large initial number of oil pipeline stocks at the end of 2019. Prices and dividends looked good then. Now with the slump in oil prices all year and cuts in dividends income dropped. The portfolio is now worth just over $352, with a unrealized loss of $22.15.

Unrealized loss means that I still own stock that I purchased at a high price. If I sell now the loss would be realized. Unrealized losses vary as the underlying stock price rises and falls.

My projected dividend income for the next year has grown to $15.83. This is mostly just re-invested into the paying stock so my positions have grown slightly over the year already. 

Bar grap of portfolio showing total value between January 1 2020 and October 31 2020  Amazon affiliate link

As you can see there has been a steady increase in the portfolio value following a decline from February to March.

Most years any portfolio will grow in this way.  The upward trend from left to right is commonly called "The Snow Ball Effect". This is because it appears to grow like a rolling snowball, packing on layers of snow as it rolls along the ground. Eventually given time the low slope can rise to become a near vertical climb.

If you have been watching the news lately in the United States and listened to stock market news you might think the near 7% drop in some stock indices in the last week of October was a disaster. But looking at this graph you can see it has had little effect in the long term. The portfolio even with little extra cash inputs outside of dividends grew over the last ten months. Proof that a long term view is much easier on the mind than panicking at every news headline about crashing markets.

I hope that you have found this update useful. I will continue investing my Amazon affiliate income into this account over the next few months. I would be grateful for your support in doing so. Many of you have already supported this effort, thank you.

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