LM portfolio as at 08/01/2021:
| Code | Sector | Date Bought | Cost | Value | Gain/Loss |
|---|---|---|---|---|---|
| LM026 | ETF | 14/10/2020 09/12/2020 |
£2160 | £2380 | 9.82% |
| LM027 | ETC | 09/11/2020 | £1060 | £970 | (8.32%) |
| LM028 | 'No specific industry' | 16/11/2020 | £1010 | £940 | (6.84%) |
| LM029 | ETC | 23/11/2020 | £1030 | £1110 | 8.34% |
| LM030 | ETC | 23/11/2020 | £1010 | £1180 | 16.67% |
| LM031 | Mining | 30/11/2020 | £1020 | £1250 | 22.65% |
| LM032 | Industrial Transportation | 07/12/2020 | £1040 | £1120 | 7.75% |
| LM033 | Health Care Equipment & Services | 04/01/2021 | £1050 | £1040 | (0.92%) |
The LISA Millionaire project started 2021 with a portfolio value of £17,330.39 and 7 open positions (coded LM026 to LM032).
Around 50% of the portfolio value was held in cash, eagerly awaiting investment.
To look at it positively, £14k in total has been paid into this LISA so the portfolio currently has a £3,330.39 return.
On the negative side, total LISA bonuses credited so far add up to £3500 so the fund is currently in the position of having lost nearly £200.
The next target that needs to be achieved to get back on schedule is to reach a value of £26,786 by 05/04/2021 (the end of the tax year).
By that point I will need to have paid in another £2000 and a bonus of £500 will be added once I do that. That means an extra £2500, which would get the fund to around £20k.
So all I need to do is grow the pot by another £6,786 in three months to reach the target.
34% in around 90 days.
Which isn't going to happen.
Or rather, it's not going to happen without taking some huge risks.
I could lump on one or two shares and cross my fingers hoping that they increase in value in the next few weeks. If I bought 8 grands worth of one share and it doubled then I’d be sorted.
Whilst that might seem like an option, imagine if it went wrong and I lost several thousand pounds - which is the most likely outcome from risking too much on one or two trades. It would put me back months, perhaps even years.
No, the safest plan is to continue as before. This means making investments with an initial stake of around £1,000 per idea. Then add to the position should it move into profit, a process known as "averaging up".
The exit plan will remain the same – a reasonably clear set of rules.
Firstly, investments will definitely be sold if they are losing 20%.
That’s a rule I got from one of the first ISA millionaires and if it worked for him then I’d be a fool not to take it on board. He’s got an ISA worth over £1,000,000 which is exactly what I’m trying to achieve. If he recommends a stop loss of 20% then I’ll happily take that advice.
However, other factors can come into play:
* If a share price drops below its 200 day simple moving average and stays there for three days I will liquidate the position.
* If a share price is languishing and I feel the funds could be used elsewhere then I may decide to cut it. Example – let’s say I’ve held Doldrum PLC for 6 months and it’s currently showing a 6% loss. There’s no available cash in the portfolio but several other likely candidates so I sell Doldrum and use the freed funds to make a new investment.
* A large fall in a share or a profit warning means it has to go. Don’t like profit warnings and I always feel they never come alone. The first profit warning is likely exactly that – the first.
* If I buy a share and it doesn’t move up then it was the wrong move. I’ll make a periodic check on the portfolio and ask myself “would I buy this share now?” If the answer is no, I’ll sell and free up cash.
And that's the plan going forward. There's some leeway in the rules and several "outs" built in to the process. I haven't covered my rules for buying shares and that isn't deliberate. In short, I can have several reasons to buy and anything can happen in the markets. Rightly or wrongly I have this idea in my head that I can buy any share and as long as I stick to my rules for cutting positions and make sure I keep the winning share positions open I will make money in the long term.
Of course, should that be true then I will gain more by choosing my share purchases carefully and that is obviously what I make sure to do.
New addition - LM033
One new share has been added on the first trading day of the year. No surprises, it was a new 52 week high. I was careful to make sure if was in a different sector to any of my other holdings for a little bit of diversification.
Speaking of which - I was going to add another unit to LM031 as it is rising very nicely (perhaps a little too quickly if I let my paranoia set in).
However, it is involved in a very similar market to LM029 so I have held off for now as by holding both I am already basically holding double the usual investment I would make. I just hadn't realised this at the time of buying LM031. So much for choosing carefully!