MONTHLY JOURNEY TO FINANCIAL FREEDOM: 54th
- BecomingFI
- Aug 1, 2022
- 7 min read
The beginning of the month indicated that we would have another drop in the Brazilian stock market due to the same factors that put pressure on risky assets in the first half of the year: i) the possibility of a more abrupt monetary tightening in the United States, which intensified the fear of recession in the largest economy in the world; ii) the instabilities in China due to the lockdown policy; and, iii) the Brazilian tax risk with the approval of a proposal to increase social benefits at election time.
However, in the second half of July, the more positive news related to the Brazilian fiscal situation, with surprises in the country's revenue, calmed the mood. On the international side, the Fed's statement, insinuating that the pace of monetary tightening would not be at the speed that the market imagined, caused world stock markets to recover.
As a result, the main Brazilian indicator grew 4.69%, while the Brazilian dividend indicator grew only 1.98%. On the other hand, my portfolio increased by 6.30% (or 6.14% without profit), but it still loses in the accumulated history for the Brazilian dividend index.
But even with this high, I still managed to capture some opportunities to invest and trade some foreign assets to keep my focus on my passive income strategy.
Finally, as for my financial spreadsheet, I continued to make some updates, but this time I was more focused on the layout.
POSITIVE AND NEGATIVE HIGHLIGHTS OF THE PORTFOLIO
URNM was the positive highlight of my portfolio. While on the negative side, the highlight was KLBN11.
In fact, only three assets this month were negative (KLBN11, FLRY3 and ARVL).
AUGUST PURCHASES
With the drop in the first fortnight, the month of July was an excellent month for shopping.
Although I didn't write that I would buy MMM (I forgot to add it to my list), I bought 02 shares worth USD 126.70 each. As a result, I now have 7 shares at an average price of USD 134.01.
Still in the foreign market, I bought 25 shares of ARVL for US$ 1.43 each. With that, I now have USD 1,489.84 corresponding to 440 shares, still below my average of having USD 2,000.00 in shares.
On the domestic side, I bought 100 shares of SAPR11 at R$17.73 each, as I had previously said that I would buy it if it dropped below R$18.00. As a result, I now have 5,100 shares at an average price of R$20.10.
I had also written that I would buy 200 shares of AESB3 at R$ 10.21. I bought 200 shares worth R$10.28 each. As a result, I now have 11862 shares at an average price of R$11,17.
And finally, I bought 1400 from ITSA4 for R$9.17. I had said that I would buy only 300 shares at R$8.19. But I ended up buying 600 shares at R$8.06, and the rest was acquired because I exercised 800 options at R$10.01. Although the strike price was higher than the market price, it is below my maximum price, which was not a bad thing, but serves as a warning not to sell too many options (I had sold 8,000 options, of which 800 managed not to roll).
AUGUST SELLS
I took advantage of the rise in the second half of July to sell my position in NFLX (01 share at USD 220.23) and 30 shares in BHR at USD 5.11. With the value of the sale of BHR, I should have bought more PK, but the market continued to rise, so I chose not to buy and wait for a drop to buy more.
So, in July/2022, I made BRL 18,204.66 in contributions and BRL 2,029.72 in sales.
NEXT ACQUISITIONS/SELLS
If next month stock prices are below or stay the same as July-2022 close, I will possibly buy with the following companies:
In any case, I believe that, in the next month, I will possibly buy those companies that pay a dividend greater than 6% and that the current prices are far from the highest price of the last 52 weeks; or, even if the company is not within the 6% price ceiling, the stock is at the recent lows of the last 52 weeks and has the potential to generate dividends further down the road.
However, I will seek to continue with foreign assets that are more aligned with my investment strategy and that are still the best opportunities. So I think:
If the market continues to fall and because they are valued in my portfolio, I will sell more of my uranium ETFs (URA e URNM), because I bought in order to speculate.
If the market continues to fall, I will sell VOO to take advantage of other opportunities.
I will sell the VNQ, in case another asset is more devalued than it, but that has a greater potential to generate income than it. VNQ is not giving me much yield at current prices (3.56% at USD 92.75).
Exchange BHR for PK, since, based on the average of the last five years of dividends, the yield of the latter is higher than the former (10.60%, against 9.81%).
I will continue to buy MMM as its price drops to be more in line with my passive income strategy, and if PK rises in value and MMM continues at current levels, I will sell PK and take it.
I will avoid DIS, since despite being a good company, it does not have an attractive return on automatic prices.
I will continue to buy ARVL until the amount invested in it represents 1% of my portfolio
Regarding my Brazilian assets:
keep liquidating GRND3 shares little by little while the price keeps going up, but in the meantime, I will be following the next results. I must do this by selling puts.
I will continue to buy AESB3 if the price drops to less than R$ 10.21 or if it is the only contribution to make in the month.
I will continue to buy ITSA4 if the price remains at the closing levels or below R$8.66
I will continue to buy ABCB4 if the price drops below R$15.00
I will buy SAPR11 again if the price drops below R$18.00
I will continue to buy FLRY3 if the price drops below BRL 14.37
I will buy ENBR3 if the price drops below R$19.00
Based on the comments above, I've scheduled the following orders until they're cancelled:
- Sell order: 02 shares of URA at USD 22.61;
- Sell order: 01 URNM share at USD 72.21;
- Sell order: 01 VOO share at USD 402.44;
- Sell order: 01 VNQ share at USD 109.01;
- Sell order: 06 XHR shares at USD 20.99;
- Sell order: 12 BHR share at USD 5.96;
- Purchase order: 50 ARVL share at USD 1.33;
- Purchase order: 11 PK shares at USD 13.71;
- Purchase order: 01 MMM share at USD 124.91;
- Purchase order: 200 shares of FLRY3 at R$ 14.04;
- Purchase order: 200 shares of AESB3 at R$ 10.14;
- Purchase order: 200 ITSA4 shares at R$8.36;
- Purchase order: 100 ABCB4 shares at R$ 14.58;
- Purchase order: 100 SAPR11 shares at R$ 17.73;
- Purchase order: 200 ENBR3 shares at R$ 18,99;
- Sell order: 1900 shares from GRND3 (selling puts GRNDG105 at R$ 0.19;
PASSIVE INCOME
This month, I received BRL 1,537.33 in passive income. Almost all of this month's dividends came from ABCB4, whose company paid me R$1,258.3 in dividends corresponding to a yield on cost of 2.05% after tax. The rest came from ITSA4, VOO, URA, BHR and PK, as shown in the image below:
And, by mistake, I forgot to mention that I received BRL 5.33 in dividends from MMM last month, which I corrected now.
NEXT DIVIDENDS
With the end of July, I already received the amount of R$ 31,642.69 in passive income in the year 2022, which is higher than what I received last year
However, I still have to receive R$ 1,289.69 in dividends from the following companies: ITSA4, MDIA3, FFRAS3 and KLBN11.
EQUITY
I ended the month with a net worth of shares of R$ 1,092,089.33, a value higher than last month. In fixed income, I ended the month with a balance of R$ 118,004.25 due to a contribution from my active income
So, at the end of the month, I ended up with an equity of R$ 1,210,093.58
ALLOCATIONS
My portfolio no longer has 25 risky assets. My portfolio now has 24 assets, due to the sale of NFLIX. I continue to focus on keeping only those assets that generate passive income or have great potential to generate passive income.
I emphasize, however, that the only one that escapes this reasoning is the ARVL. I really like the concept they are bringing to the market, so I think about having 1% of it in my portfolio, which corresponds to R$ 10,000.00 or USD 2,000.00.
MY GOALS
My goal for this year is: i) to reach R$ 1,000,000.00 invested in shares; and, ii) receive R$ 45,000.00 in passive income.
Well then! At the end of the month, I ended up with a capital invested in shares of R$ 940,354.30.
And I also ended up with a passive income accumulated in the year of R$ 32,932.38 (graph below), including dividends that I will still receive, thus representing a return on cost of 3.33% (graph above).
It can be seen, therefore, that I am getting close to my goal of one million reais invested in variable income, behold, with the amount I have in fixed income (R$ 118,004.95), I would already reach the goal. But of course my goal is to have a million invested, so I need the stock market to continue helping me, that is, for the stock to fall in price so I can invest what I have in my fixed income.
However, despite the fixed income amount reaching one million, I cannot use it all, as I need to keep around R$36,000.00 as a reserve fund, which would leave me with R$ 82,000.00 to reinvest; however, a good part of this amount I will not be able to get rid of, as it is serving as a guarantee for sales of options I made. In fact, this amount already guarantees the purchase of any shares, in case I exercise it, but I don't want to, because I don't want to increase my average price on ITSA4.
And as for passive income, despite still being far from my goal of R$ 45,000.00, I see that my strategy is already having an effect, as I have already received more dividends than last year.
Keep going!!!!
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