“The world is full of foolish gamblers and they will not do as well as the patient investors.” Charlie Munger
During the first half of the year, the S&P 500 experienced a remarkable gain of 15.05%. This impressive performance was reflected in the Vanguard S&P 500 UCITS ETF (VUSD), which achieved a return of 15.13%. Meanwhile, the Vanguard FTSE All-World UCITS ETF (VWRD) also posted a solid gain of 11.04%. However, this stellar market performance has a downside for investors looking to buy into the market. With prices higher, the same amount of money will purchase fewer units compared to last year.
The exceptional performance of the S&P 500 this year can be largely attributed to the technology sector. Nvidia (NVDA), a leading technology company, has registered an outstanding return of over 150%. Furthermore, the communications sector, exemplified by Meta Platforms (META), has also contributed to the market’s strength, delivering a notable return of 44%.
I Still Prefer ETFs
Understandably, some investors may look at these individual stock returns and feel regret for not investing directly in them. However, it’s important to recognize that ETFs offer a more diversified approach, spreading risk across a broader range of companies. While individual stocks can deliver extraordinary gains, they also carry the potential for significant losses. By investing in ETFs, investors can benefit from market exposure while mitigating the risks associated with concentrated holdings in a few stocks.
Despite the quality of a company, I favour ETFs over individual stocks because predicting the future is impossible. While a company may excel currently, there is no assurance of its long-term survival or outperformance in the market.
My USD Dividend this quarter
VWRD and VUSD both provided me with solid dividend income in June. VWRD paid a generous USD0.7889 per share dividend, while VUSD offered a more modest USD0.2583 per share dividend. As a result, I received a total of more than USD 3800 in dividend income this quarter, which is a significant contribution to my overall investment returns.
Looking ahead, I am confident that I can continue to generate substantial dividend income from my USD-denominated portfolio. I believe that VWRD is an excellent investment for this purpose, as it provides exposure to a broad range of global stocks and has a history of paying consistent dividends. I am aiming to receive at least USD 20000 in dividend income annually from my USD-denominated portfolio in the near future, and I am confident that I can achieve this goal by continuing to invest in VWRD and VUSD.
While the S&P 500 has consistently outperformed the FTSE All-World index in recent years, I still prefer VWRD for its diversification and better dividend yield. The S&P 500 is heavily concentrated in U.S. stocks, which makes it more vulnerable to economic downturns in the United States. VWRD, on the other hand, provides exposure to stocks from all over the world, which helps to reduce risk. Additionally, VWRD has a higher dividend yield than the S&P 500, which provides me with a steady stream of income.
Overall, I am very pleased with my investment in VWRD and VUSD. These ETFs have provided me with excellent dividend income and have helped me to build a diversified portfolio of global stocks. I am confident that I will continue to benefit from these investments in the years to come.
My USD portfolio performance
Over the past year, my USD portfolio yielded a 19.39% return, falling short of the remarkable 24% return of the S&P 500. However, my portfolio surpassed the FTSE All-World Index’s 19.17% return.
As an average investor, I am content with achieving the average market return. I recognize that by investing in broad indexes, I stand to exceed the performance of 80% of actively managed funds and even 80% of self-proclaimed financial experts.
Conclusion
I approach investing with a long-term perspective, recognizing that short-term market volatility is a natural occurrence in the stock market. Instead of letting fluctuations in the market influence my mood or investment decisions, I have adopted a disciplined approach that allows me to remain focused on my long-term goals.
One of the key habits I have developed is investing a fixed amount of money into the market on a monthly basis, regardless of the market direction. This regular investment practice helps me to consistently contribute to my portfolio and take advantage of dollar-cost averaging, which involves buying more shares when prices are lower and fewer shares when prices are higher.
By maintaining a long-term mindset, avoiding emotional reactions to market volatility, and implementing disciplined investing habits, I am able to stay focused on my financial goals and make investment decisions that align with my long-term strategy.
