Recent buy – Two Funds

How dispersed is you dividend income over the twelve months in the year? Well, for some reason, I would like to have a relatively steady flow and I hope that with enough saving, investing and dividend growth that stream of dividends will eventually cover my expenses. As you might now, my goals for 2017 include having dividend income above 100 for 5 months. Recently, I have looked at various options in order to achieve this. Then I had multiple scenario’s by which I can achieve this. In the end, I went for the one that required the least amount of fresh capital. This scenario required adding to my positions in the  iShares UK Dividend (TER:0.4%) and the Global X SuperDividend (TER:0.45%). So, I added to both positions last week. Both funds were already part of my portfolio, so the total number of positions did not increase. Essentially, I have crushed my goal of having dividend income above 100 for 5 months now. And I already hear you say, what kind of a goal for 2017 was that if you already achieve it by mid February? Well, the trick is that I bought both funds with leverage ie I borrowed the amount. In my monthly charts, I show you my dividend income after subtracting interest costs. So, now the game changes slightly to reducing the debt in my portfolio as opposed to buying more dividend paying funds such that I can lower the interest charges. If I do not reduce my portfolio debt quickly enough, I will not achieve the five months above 100. And while I started the year strong with my January savings rate, I know that February will be terrible from a savings point of view due to some large expenses. I need to make up for that in the months to come and reduce the leverage in my portfolio.

Happy investing and happy saving everybody!

Disclaimer: None of the content of this site is to be considered investment advice. Every reader has to form their own opinion about which investments are right for them and take full responsibility for their own actions.

4 thoughts on “Recent buy – Two Funds

  1. Hi DIB,
    What’s the interest rate on the loan (margin?) you used for the purchases? I’d be interested to see the total return on investment once you’ve paid the loan off and how much you gained from it. Congrats on adding to your portfolio though!
    Best wishes,


    • Hi DL,
      thank you for your comment. I pay a bit more than 7% interest on the margin loan. This is quite high but I expect to pay it down quickly. Also, I don’t see it as leverage on these two particular investments. I really look at it from a portfolio context. Right now, I have borrowed 14% against my portfolio value of 100%. Because of this portfolio approach I find it slightly difficult to calculate one total return number. Do you have any suggestion how I could do that?
      Thank you for stopping by.
      – DIB


      • Hi DIB,
        You could for example, compare the total cost of the loan vs the total return of investment of the investments bought by the loan. E.g. a $10,000 loan plus total of $1,000 in interest charges vs the market value of that $10,000 purchase which might be $12,000. The total return might then be $12,000 from a ‘cost’ of $11,000.


      • Hi DL,
        thank you for the way how to do this. I will try to make this calculation when the loan is paid off. At that time, I will most likely still own the two funds for future periods so it will just be one snapshot in time and the long term will show whether the purchase of these two funds was a good one.


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