August 2019 Monthly Stock Purchase Programme – Volatility ABF VCT


What a crazy August we have just witnesses. Volatility once again reared its ugly head causing the market and many individual stocks, particularly those on the smaller end of the spectrum, to rise and fall seemingly at a whim.




The old concerns surrounding the US China trade war, Brexit and Federal Reserve interest rates seemed to bubble up again. All three aforementioned concerns have global knock on effects and it is no surprise hyperactive market participants fret at the release of every new tidbit of information.

 

The best thing to do at this time is not to panic. Instead one should be invested in high quality companies they have conviction in. By having conviction in a companies ability to weather the macroeconomic storm, one is less like to panic and sell out exactly when they should be doing the opposite – buying.

 

Whilst the majority of the people look at volatility as being negative (most people don’t like to see the share prices of the company they invest in fall), to the private investor volatility should be celebrated. Volatility brings about the opportunity of buying shares at a cheaper price than you would have done just a few days, weeks or months ago. Volatility enables us to potentially buy stocks at sale prices that we intent to hold for the long term.

 

During the months of August, my attention was drown to industrial stocks as these have been particularly hit recently. Investors are looking at the mixed economic picture globally and positioning themselves away from these type of stocks and moving into more defensively minded stocks. However, there are pockets of growth and opportunity in the industrial sector, and I am reassured by the steady progress of the companies I have shares in within this sector.

 

But whilst August saw volatility and falling share prices, the falls were not great enough for me to deploy large amounts of capital as I had done in the previous month. July was a busy month in which I bought shares of Associated British Foods, XP Power, Fevertree, Airea and Scapa (I still need to do a write up on the latter three).

 

August has been much more muted in terms of buying activity. In the month, I stuck to old friends in the form of Associated British Foods and Victrex.

  • ABF – Bought 7 shares at £23.45 each,
  • VCT – Bought 8 shares at £19.29 each.

 

I have written about these companies before so I will not dwell on them here (ABF write up, Victrex write up). All I will say is that these two companies are attractively priced and I will continue to buy them if prices stay at current levels.

 

What has changed though is my dividend income. The total annual dividends I can now expect from my portfolio is £3,569. That is £892 a quarter. £297 a month. £67 a week. £9.77 a day. This is a great position to be in. From having £0 in dividend income a few years ago to this, I can truly feel blesses. The next small milestone is to reach £10 a day in dividend income.

 

It is truly a wonderful feeling knowing my money is working hard for me. and it is pouring in from across the globe. If someone drinks a Pepsi in China, money comes in. If someone eats a Toblerone chocolate in Australia, money comes in. If someone transacts using a visa card in Malaysia, money comes in. If a company in Kenya uses Pastel, money comes in. If someone uses Sensodyne to brush their teeth in France, money comes in. If someone eats a tub of Ben & Jerrysice cream in the US, money comes in. If someone buys clothes from Primark , money comes in. You get the picture.




The greatest part of all this is that the money is purely passive. The money gushes into my account regardless of what I do. If I wanted to sleep all day, the money would pour into my account. If I spent my days playing video games, the money stream in. If I was to go on holiday, I would find money in my account upon my return. This is the power of passive income.

 

Passive income is something we should all have. It helps one diversify their income stream and provides the foundations to one becoming financially free.

 

I wish you all the best of luck in this journey of ensuring that one day our passive incomes cover all our expenses. On that day we can break the shackles and say we are financially free.

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