Following the very strong recovery from the Covid induced lows of March, the UK stock market has sharply drifted back over the last few weeks. The market backdrop remains complex. The coming weeks are full of events. Long term investors should avoid being overly focussed on short term events. It should be viewed as noise. But it is also important to understand that events take hold of investors psychology and move markets in the short term. Over the coming months, the known big events that will move markets are the US.
Presidential/Congressional Elections, the corona virus and the further economic lockdown it brings, Brexit negotiations and the US/China trade-currency tensions.
More than the outcomes of the events themselves, it is the uncertainty that comes with big events that causes markets to jitter. It is the not knowing who is going to win between Biden and Trump that has pushed markets lower. But once the results are out, I’m sure markets will rally no matter who wins. That doesn’t make sense but it is just how markets work. Markets hate uncertainty. They would rather have the certainty of bad outcome than the certainty of a good or bad outcome.
As for the month of October, the UK continued to be a fertile hunting ground for discounted shares. I have talked of Bargain Britain in the last two monthly stock purchase posts so will not repeat it here. But I would say that investors buying into select UK shares today will be very happy a few years down the line.
During the month of October, I bought the following shares using my monthly stock purchase programme:
- GSK – Bought 13 shares at £14.21 each.
- BP – Bought 74 shares at £2.05 each.
- HL – Bought 12 shares at £15.41 each.
- SDRC – Bought 10 shares at £19.15 each
- SCT – Bought 16 shares at £12.11 each.
These purchases have added £38 to my annual dividend income. Looking at my portfolio as a whole, it is expecting to throw off £3,988 in dividends over the next year. It is amazing that I receive close to £4,000 in dividend income just by owning shares in wonderful companies. Why is this important? Cause I don’t want to work until I die!
That’s why I started building passive income in late 2015. Now I earn a decent chunk of my expenses from dividends. I do not have to work actively for this money to flow in. The dividends roll into my account no matter what I do. I could watch TV all day. The money would roll in. I could sleep all day. The money would roll in. I could go on holiday. The money would roll in.
The goal is to have 100% of my expenses covered by my dividend income. Once that happens I can be financially free. I can be on furlough forever. I could live my best life. This is the best position to be in. It allows me to do what I want with my time. This is the best kind of freedom – time freedom.