Introducing the Millionaire Marathon Portfolio
This has been a long time coming. I’ve recently started to take a more active role in my investing activities, and I want to share my portfolio with my readers for several reasons.
Firstly, by writing down the rationale behind my investments it will (hopefully) help to improve my due diligence process and lead to better investment outcomes.
Second, I want to keep track of my investments and make sure that I’m adding value and not just replicating the market performance.
Third, I want to share my ideas with readers and hopefully inspire a few more people to start taking their financial future into their own hands. (Disclaimer: I do not offer financial advice of any kind – this blog is for illustrative purposes only.)
So before we get started, here’s a little bit about my investing journey and what I’m trying to achieve with the Millionaire Marathon Portfolio.
My investing journey
I started investing when I was a 15-year-old lad, having convinced my dad to lend me some of his savings. Luckily, I didn’t lose all the money straight away – which I could easily have done given that I had very little idea what I was doing back then.
I achieved some modest successes – even doubling my money on a cash shell over a relatively short space of time. But in the early days I had little grasp of the technical aspects of investing and what really constituted a ‘good’ company.
What I gained from my early investing experiences, however, was a ‘lightbulb’ moment where I realised that you could make money without having to do a great deal. This realisation eventually led me to a career in financial journalism, where I initially specialised in covering smaller company stocks.
Having started my career just prior to the global financial crisis, I had something of a baptism of fire as the financial world seemed to implode all around me. But looking back, I now feel lucky to have lived and worked through that period, as it taught me two very important lessons:
- markets don’t go up in a straight line; and
- bear markets can throw up some amazing bargains
During the first decade or so of my working life, I still dabbled in individual shares now and then, but the bulk of my money was (and still is) invested in investment trusts. Given the pressures of work – not to mention the issue of compliance (the company I worked for in the early days was regulated) – I took the view that it was better for me to adopt a less hands-on approach to my investing.
So I was happy to invest and build a stream of dividend income from what are essentially collective investment vehicles listed on the stock market. This is an entirely justifiable approach and I would recommend investment trusts to anyone looking to invest without having to research the individual stocks themselves.
But lately, as my resources grew, so did the itch to take a more active role in my investing activities. For me, investing is an intellectual pursuit as well as a means to reach financial independence. I enjoy the process of hunting for investment bargains and learning about interesting companies. Some people don’t – in which case I’d suggest you consider investment trusts, as I suggested earlier. But for those of you that do, I hope this blog will be a source of inspiration and ideas.
The MM Portfolio – goals and investing style
As I said earlier, I hope to beat the market – by which I mean the FTSE All-Share, the UK benchmark – in capital return terms, but I also want to generate an above-average dividend yield to create passive income in order to boost my financial independence goals.
In order to do this, I will focus primarily on the smaller end of the market – i.e. stocks with a market capitalisation of less than £500 million. However, I have no compunction against investing in blue chips should the right opportunities arise; it’s just that I see my edge as being in the smaller companies, and therefore that’s where I’ll be focusing my efforts.
As I’ll be focusing on companies with dividend yields towards the higher end of the spectrum – i.e. >4% – I’ll mostly be looking at ‘value’ stocks as opposed to ‘growth’ stocks. By value stocks, I mean those companies that can be bought at a relatively modest multiple of earnings of a discount to net asset value (NAV).
I don’t want to start delving into the merits of value investing versus growth investing here – that’s a topic for another blog – but suffice to say that growth stocks have outperformed now for a very long period of time and value stocks are due a renaissance. Clearly, however, the definition of value is subjective, and some growth stocks can be good value while some value stocks can also become growth stocks.
You’ll learn more about my investing style and how I evaluate individual stocks as I build the portfolio and produce write-ups on the portfolio constituents. For now, though, watch this space…
Portfolio coming soon…