søndag 25. oktober 2015

Lessons from Millionaire Teacher

In Millionaire Teacher, Andrew Hallam recommends a portfolio of ETFs (national and international total stock index) and short-term government bonds. For a 30-year old he recommends 30% bonds; for a 40-year old 40% etc. 

Given that shares tend to do better than bonds over time, and given that I still have a long way to go until retirement, I am not sure a youngish investor would need any bonds at all, at least not such a huge portion. I will therefore, at least initially, invest only a small amount in bonds, perhaps 5% of my portfolio, to evaluate how they perform over time against ETFs and dividend shares.

I will keep looking for other bonds, but for now the one on my radar is iShares Euro Government Bond 7-10yr UCITS ETF (IBGM), which can be bought on the Amsterdam stock exchange.

My main focus will be ETFs and dividend stocks.
I am considering the following ETFs for about 70% of my portfolio. I have selected these ETFs based mainly on charges, liquidity, yield, performance and current discount/premium. http://etfdb.com/ is great for screening ETFs.

VAN FTSE EU ETF EUR (VEUR) seeks to provide long-term growth of capital by tracking the performance a market-capitalisation-weighted index of common stocks of large- and mid-cap companies in sixteen European countries.

U.S. Large-Cap ETF (SCHX) seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Total Stock Market Index. The annual charge is only 0.04% and it's currently trading at a 0.61% discount.

The Vanguard High Dividend Yield ETF (VYM) seeks to track the performance of the FTSE® High Dividend Yield Index. The current yield is 3.13% and it's currently trading at a 0.43% discount. The annual charge is 0.1%.

I will also keep adding to QQQ whenever the price seems right.



About 20% of my portfolio should consist of dividend stocks.
I am considering four shares at the moment, in no particular order.

Realty Income Corp (O) is a REIT (Real Estate Investment Trust). Current yield is 4.58%, dividend is paid monthly and dividend has grown for 19 years.

AT&T (T) offers a 5,57% yield, just posted a good result and has a record of increasing dividend for 30 years.

TAG Immobilien AG (TEG) is a German real-estate owner and developer, which means no currency issues. However, the stock is listed on the Xetra exchange, so DeGiro charges €4 + 0.04% (up to a maximum of €60).


Greet REIT plc (GRN) is an Irish REIT which offers many of the same advantages as the German REIT with a cheaper charge of €2 + 0.04%. 



EPR Properties (EPR) is a US REIT. Yield is 6.41%. Dividend growth is only 4 years. The share price seems to be on the way up.



The remaining 5% will consist of other shares, preferably paying dividend.

I will also take the EUR-USD exchange rate into account. Days when the dollar is relatively strong are good for selling US equities and buying eurozone equities. A weak dollar is a good opportunity for buying US equities.

In January, I intend to do a €100 challenge to see how much I can grow €100 in one year. That should be fun! Please let me know if you would like to join me.

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