We are not perfect, will Mrs. CF is of course (yup, I’m in need of brownie points), but I’m certainly not. Ignoring (many) mistakes on a personal level, which mostly don’t involve financial issues, financial mistakes were definitely made too. How did I screw up, why and what are the lessons learned? Here are my investment mistakes!

My Investment Mistakes

We were having a chat in the FIRENL slack group (which is surprisingly addictive and popular; all in Dutch) about investment mistakes. It was good to read that I was not the only one, but it made me realize I had my fair share of financial screwups. Most of them due to being arrogant and misinformed. Most of them also because of a short term vision. But also some because they don’t match my psychological profile. Let’s have a laugh (& cry) here shall we?!

My investment mistakes

My investment mistakes

Sprinters

Back in 2009, when we had moved abroad, I still had some money in a savings account. Because we didn’t need this money at the time, I decided to play around with this money on the stockmarket. This was mistake 1. I bought and sold some shares, which worked out okay but did not make much money. I got arrogant thinking that when I could make a little bit of money, I could also make more! This was arrogant mistake 2. I started trading with leveraged products (ING Sprinters). At the beginning I lost some, won some, lost more, won a little, and lost a lot!

Total damage: ~€9.000. I didn’t return to the stockmarket for about 6 years!

Moral of the story, don’t daytrade and definitely not with leveraged products. The chances of losing money are a lot bigger than making money in the longer term. Buy-and-hold rules! See also the graph below, and I was way worse!

High Dividend Yield

At the beginning of developing our dividend portfolio (2015-2016), I still needed to learn a lot. Based on the above I had somewhat learned to look at a longer period to invest (and not use leverage). But what I didn’t learn yet was to remain critical and not chase dividend yield. I had already seen several stories about dividend growth and it’s longer term return on investment “miracles”. So somewhat wisely I did pick the majority of our shares with a chowder rule of >12%, low(er) PE ratios and acceptable payout ratios.

However, when companies pay a very juicy +7% I did get tempted…….. and I got burned. The companies I bought were often cyclical in nature but well established. However, their business models were under attack due to changing market conditions, their debts were high and their earnings per share under pressure. The yields, as appealing as they seemed, were not sustainable. I’m talking here about NewAlta (NAL), Liquor Stores (LIQ) and Corus Media (CJR.B). So, I took my (our?) losses and moved on to other actual dividend growth shares.

Total damage: ~€5.000

Moral of the story, do not chase yield. It will lead to financial losses in 9 out of 10 times. Look for the companies that grow, have a solid business model and have lower payout ratios (so they can continue to keep paying your dividends).

My investment mistakes

My investment mistakes: I’m a loser sometimes! Pun intended 🙂

Options Trading

During a FIRE meetup in Antwerp I was introduced to options trading. The supplementing investment strategy that I found interesting was writing put options and collecting the premiums. Owning some dividend shares during a bull market, this seems like a good idea for some extra yield.

Wisely I started small to get a feel for how this option trading works. You can still find some of the option trading update posts under the “options trading” category in the side bar. However, I made and lost some money on the options again. Sometimes due to share price fluctuations but mostly due to the desire for (high) yield. I started to take more risks to recover losses I made. After a substantial market correction for some shares (which today have actually recovered!), I ended up losing my shirt.

Don’t get me wrong, you can make very good money with trading options, but you have to be consistent and stay calm under pressure. My psychology simply does not allow for that. I keep staring at that screen with red numbers and don’t feel well. I also don’t like the pressure of the unknowns that affect these option prices and movements in time. It’s not an investment method that works with who I am and how I work mentally. I simply felt very uncomfortable with this investment method. So I did what financially was not a smart decision, but psychologically was the best; I sold everything and moved on.

Total damage: ~€4.000

Moral of the story, do try different investment methods to find what works for you. But start small and as soon as you see that you get carried away, stop! Limit your losses and move on to an investment type that works better with your psychological profile. It will ultimately make you a better investor and a happier person.

Conclusions

I’m one of those people that has to try different things, to fail, get up and move on. I could have avoided many costly investment mistakes if I would just be true to myself and would have listened to others. I’ve been too arrogant and thought that I could chase yield and get away with it.

In contrast, Mrs CF is far more sensible and has not made any of these investment mistakes. She was the one that liked the real estate and initiated the first two property purchases, which have only made us money to date.

That being said, these personal lessons learned have gotten us to a mixed portfolio consisting of real estate, dividends shares and index funds. It might not be the best yielding investment portfolio, but I’m now comfortable with these investment, their price fluctuations and risks. I’ve also finally learned to look for the longer term and stop chasing high, unrealistic, yield. Furthermore, I won’t make the same mistakes again either! I’m happy with where I (and we) am (are) today.

 

How about you? What mistakes have you made? What did you learn about yourself and how you invest?

 

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What I like about dividend investing is that once you have selected a few good companies, the rest is relatively easy. Yes, you need to keep an eye on your investments, and check how the companies are doing. But the money generally just keeps flowing in, how great is that! Here is the June 2018 Dividend Update (with catch-up from April and May)

June 2018 Dividend Update

The following stock(s) were reduced or disappeared from the portfolio:

  • 974 shares of AAR.UN (REIT): company was bought by an investment group and was delisted. Made a killing though! Nearly 80% profit 🙂
  • 150 shares of PJC.A (Consumables): company merged with the Metro group and was delisted. Albeit we were supposed to get MRU shares, we missed the exchange deadline (due to travels) and got the cash. Also a 30% profit.

We made no new purchases (since we were travelling and did not look at the account for almost 2,5 months!).

Keen on some Canadian shares? Try this awesome list to see which companies might be of interest. Oh, don’t forget to check out the community updates at the Dividend Diplomats and Easy Dividend!

April – June Dividends

All the dividend deposits received into the bank accounts (and correct for exchange rates) sum up to a total dividend income of €567,4 for April, €567,13 for May and €638,93 for June. Not bad!

Compared to last year (when we still had some Dutch share too) we changed by -23.6%, 34.9% and -34.3% for April to June respectively. Now that is what I call a rollercoaster!

However, when looking at the Canadian part of the portfolio (in CAD), we see the following changes: 18.2%, 34.6% and 13.9% increases. Now that is what I like to see, growing dividends! This is organic growth too, as we did not add to the accounts since 2016.

The stats for last month:

June 2018 Dividend Update - Dividend Income

June 2018 Dividend Update – Dividend Income

The graph below is showing the yearly dividend totals for 2015, 2016, 2017 and the YTD for 2018. Despite selling many shares in 2017, we might actually beat 2016’s total this year! That’s good.

June 2018 Dividend Update - Yearly Dividend

June 2018 Dividend Update – Yearly Dividend

Dividend Stock Overview

Our dividend portfolio now “only” contains 36 companies with a total of 8.124 shares. As noted in previous post(s) NTR is noted twice in this overview. This is due to the merger of POT and AGU (we each had one of these in our RRSP accounts). Since I’m lazy (and have the spreadsheets setup to provided an overview of both our accounts individually), this probably won’t change soon.

We generally try to keep the weight of individual companies within our portfolio below about 5%.

The portfolio looks like this:

June 2018 Dividend Update - Dividend Overview

June 2018 Dividend Update – Dividend Overview

Dividend Sector Breakdown

When you breakdown the previously shown dividend stock overview by sector, it looks as follows:

June 2018 Dividend Update - Sector Allocation

June 2018 Dividend Update – Sector Allocation

 

How did you do in June on the dividend side of things?

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The March 2018 Dividend Update is not as exciting as the one from February. We are getting close to being done with reshuffling the portfolio. From here on, there should only be a few small corrections. In the far future we may try to expand the dividend portfolio again, depends on stockmarket prices and cash-flow from our real estate..

March 2018 Dividend Update

The following stock(s) were reduced or disappeared from the portfolio:

  • 200 shares of CHW (Financial): sold some shares just before the big sell off due to poor performance results and no dividend growth.

We made the following new purchases:

  • 30 shares of CM (Financial): Diversification of investments into the Canadian banking sector with the CIBC bank, which we did not own yet.
  • 60 share in CAR.UN (REIT): the rise in interest rates made the whole REIT sector drop, which was a nice time to add new shares. This REIT adds more exposure to the residential sector.
  • 169 shares of AGU (REIT): see above.

Note, the REIT purchases are technically not dividend growth stocks (yet?!), but the monthly DRIP’s work very well too!

Keen on some Canadian shares? Try this awesome list to see which companies might be of interest. Oh, don’t forget to check out the community updates at the Dividend Diplomats and Easy Dividend!

March Dividends

All the dividend deposits received into the bank accounts (and correct for exchange rates) sum up to a total dividend income of €638.93. This is a decrease of 21.4% compared to last year. This is because we sold many RDSA/UNA shares last year to be able to do real estate investments, which made a big difference.

Unfortunately we saw another worsening of the EUR/CAD exchange rate in March too. In Canadian dollars the dividend actually grew by 11.1% from a year ago, which is really good!

One note, last month’s total was corrected downwards to €320.83, as one payment shifted into March. We therefore ended February with a small decline in total dividends received (in € anyways), instead of a small increase.

The stats for last month:

March 2018 Dividend Update - Dividend Income

March 2018 Dividend Update – Dividend Income

The graph below is showing the yearly dividend totals for 2015, 2016, 2017 and the YTD for 2018. We received €1.490.44 in dividends so far for 2018. Very happy with that result! And no, we are not going to get to 2017 in terms of dividend income.

March 2018 Dividend Update - Yearly Dividend

March 2018 Dividend Update – Yearly Dividend

Dividend Stock Overview

Our dividend portfolio now contains 38 companies with a total of 9.150 shares. As noted in previous post(s) NTR is noted twice in this overview. This is due to the merger of POT and AGU (we each had one of these in our RRSP accounts). Since I’m lazy (and have the spreadsheets setup to provided an overview of both our accounts individually), this probably won’t change soon.

We generally try to keep the weight of individual companies within our portfolio below about 5%.

The portfolio looks like this:

March 2018 Dividend Update - Dividend Overview

March 2018 Dividend Update – Dividend Overview

Dividend Sector Breakdown

When you breakdown the previously shown dividend stock overview by sector, it looks as follows:

March 2018 Dividend Update - Sector Allocation

March 2018 Dividend Update – Sector Allocation

 

How did you do in March on the dividend side of things?

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