Sunday 11 July 2021

It takes time to build your portfolio | Journey to $100,000

After doing a mid year portfolio review where the numbers were looking pretty good, the market somehow changed in the second week of July and my portfolio is seeing quite a bit of drop in gains. Of course, I check my portfolio value but in the short term, I know fluctuations is common and my main priority now is to build it up. Considering that it is still a relatively small portfolio due to the small amount of capital injection each month.

Read more: Mid Year Review of Portfolio | Hitting $50,000

But if I were to compare my portfolio to a year ago, in August 2020 (since I didn't reveal my portfolio value in July 2020) where I did update my portfolio value, it was at approximately $22,000. This means my portfolio value doubled in a year. Now looking back, that's quite amazing. $22,000 to current about $45,000 (not inclusive of crypto portfolio,just stocks), might seem small to some but I am happy about it. This also reinforces to me that building up my portfolio takes time.

I watch YouTube videos on Meet Kelvin and Andrei Jikh and Meet Kelvin buys stocks each time with 6 digits like $100,000 or more. He has a huge capital in which he reveals his portfolio recently and Andrei Jikh dollar cost average $1000 into cryptocurrencies everyday which he mentioned in a Millienial Money Video recently. Watching all of these do make me feel that the investments I am making are so tiny. As they always say, comparison kills the joy of achievement.

Capital amount injection matters in the early stage of building your portfolio

I understand that everyone has their own pace and as long as I am doing what I can and happy, why compare myself to others constantly. Going a little out of topic, earlier in the week, I came across this article by Investment Moat aka Kyith where it was, "Focusing on Saving More Versus Focusing on Investing: Are you Being Smart about It", it was a really insight article as always.

He talked about 2 individuals who each earned $45,000 a year, the 1st individual sets aside 10% of his salary or $4,500 to wealth building and the other, sets aside 20% of his salary or $9,000. The 1st individual, A, works hard in his investments and averages a return of 15% per year while B averages only 2% per year. After 10 years, they are roughly similar in the total amount.

After their portfolio reaches $300,000 their investing returns will matter more as a negative return will cut their portfolio value and it will be difficult to make it back and that's why working on your investing returns matter more than capital injection. And addition of $4500 by A and $9000 by B will provide a 1.5% and 3% increase in net worth. So in the later part after building a substantial amount of wealth, investing skills matters more rather than the contributions. You can go read more on his blog which is super loaded with amazing information.

One of the main points he highlighted was, "When the net worth or portfolio is small, funding more to wealth building makes a bigger impact than chasing great returns." and this really relates to my case right now where my portfolio is still not that substantial. So currently, I am focusing on building up by contributing monthly to it and putting whatever cash I have left into it (exclude emergency funds).

Plans for investing of ETF

As many of you might know, I have a FSMone ETF regular savings plan set up and I contribute about $700 to $800 per month to it. The biggest news now is that interactive brokers have removed their monthly maintenance fees.

Moving forward, I will be setting up an account with interactive brokers and build up my $800 for a few months before buying it into VWRA (Accumulating) because currently VT dividends are taxed at 30% and the estate tax. There are just more advantages to switching to VWRA or VWRL especially when I am investing for the long term. Also came across an article by Frugal Youth Invest which explains more on why Ireland Domiciled ETFs as your accumulated capital increases. Hope you guys enjoy this small update, wishing all of the best in your investing journey as we venture around and learn more in our life. Stay safe and well.

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  1. You would definitely reach S$ 100k, and the first would be the hardest. So do you have any target date in mind ?

    1. Hi Vince, for now, my target is to reach $100,000 before I turn 30 but no hard rules. Just work as I go along:)

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