Passive income, personal finance and fintech.
2017 was the year I changed my investment strategy and started blogging about it. In earlier years I experienced great volatility due to an extreme apatite for risk, but this was not the case for 2017. I now believe I've found an investment strategy that suits me well, and I'll be sure to follow the same path in 2018.
Last Friday one of my positions dropped 23% on one day. The stock in question is the REIT CBL, owner of several malls in the US. The decline was a real wake up call for me, and moving forward I must be more selective of my purchases as my appetite for risk has changed.
In pursuit of excessive returns I use gearing. In this post I will explain why I believe this is rational, and calculate the effect this can have on my portfolio. But keep in mind that the calculations are heavily influenced by the expected long term return of the market, which I base on historical returns.
In a previous post I wrote about what I could expect as the long term return of the market, which I found to be 7.5% per annum. In this post I will discuss what this implies for my portfolio return, and highlight some of the other variables that may alter the terminal value of my portfolio.
As I'm building this portfolio I do need to have some expectations for the future. Something to keep me motivated throughout the years of this journey. To some extent my portfolio will follow the market, and I've therefore established some estimates for the long term return in the market. And to do so I've looked to the past.