Reviewing of Investment Plans

Plans are meant for us to follow. However plans may not be valid anymore as time moved forward or things happened unexpectedly when we are doing our plans. Thus, it is important to constantly review our plans and make changes to them as and when it is needed.

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After going through three months of adding companies into my portfolio, I came to realize two things which prompted me to do a review of my investment plans and change accordingly.

The initial plans was to invest on a regular basis, adding shares of companies to diversify and after having up to six companies invested, I will start to add more shares at the start of next year (since I started this portfolio in July, will have invested in six companies at the end of the year).

Problems With the Initial Plan

Plans often work very well in an ideal situation but the world we live in is not an ideal one.

Firstly, when I made the plans, investment commission was not taken into consideration. The broker I am using currently, E*Trade, charges a commission of $9.99 per transaction. The amount that I planned to invest monthly was only $500 and thus, the commission will take up around 2% of my total investment amount. If every month 2% is “lost”, the total cost adds up to a pretty big sum on a long term investment.

This problem arises only because the total investment amount every month is very small.

Secondly, this is just a personal thing, since I would have already done my research and know which companies I would like to invest in, why not just invest straight and collect the dividends from day one (or first quarter for that matter). Because I had insisted on investing $500 a month and having to wait for the next month before my next investment, I had already missed out one round of dividend payout from two of my shortlisted companies.

Moving Forward

I have made slight changes to my investment plans. Instead of adding new positions every month, I will consolidate my investments and add new positions once a year. Though I have not thought of when will I make the investment, but as of current thoughts, it should be in January for ease in comparing how well my portfolio is doing against the market indices. The other time I am considering is in July, the anniversary when the portfolio started.

As of the time when I am writing this post, I have already invested in the rest of the three shortlisted companies which I will be posting the rationale for investing in the companies shortly.

Do leave me comments below on whether I should make my investments at the start of the year or at the anniversary of this new portfolio.

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