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Portfolio Update: Stock Purchases Using Tax Deduction

Portfolio update: stock purchases using tax deduction

Last Updated on May 12, 2020 by Mr. FightToFIRE

Thanks to a tax deduction on my newly bought apartment on plan, I received about 17,000 EUR. This allows me to give a nice update on my portfolio and milestones progress.

Not only the tax deduction is the reason of course. We entered a bearish market this week and it offered me an opportunity to enter at a lower price for quite some stocks.

Enter the bear

Bear market causing panic
A bear market is a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment. Image courtesy of https://www.nytimes.com/2019/01/17/business/bear-market-arbitrary-label-shiller.html

While the bear market is still very young, the decline has been phenomenal, to say the least. We saw a steep decline into bear territory on Thursday to then see a 180-turn back out of it.

On Thursday, the S&P 500 first closed down -9.51% for its worst day since Oct. 19, 1987, when the S&P lost 20.47%. It hit a new 52-wk low back to January 2019. This caused the S&P to be 26.9% below its intraday all-time high of 3,393.52 from February 19 just a couple of weeks ago.

New portfolio purchases: seizing the opportunity

The stock market going lower these last three weeks created opportunities to buy stocks and trackers at a cheaper valuation. While there was a bounce last week Friday they continued to drop this week with another charp move up at Friday’s close (when I already bought shares). In other words, the perfect opportunity to pick up some deals.

There was so much to choose from that I went into the margin and got for a few extra thousand euros worth of stock. Luckily the interest is relatively cheap at 2.9% per annum, so the benefit should outweigh the interest cost, especially as I foresee to be back in green within the year for both my portfolio and my cash level.

In the following table you can find my most recent purchases. Note that NVDA lists in Dollar but I converted itto euro using 1 USD = 0.900328 EUR.

NameDateActionNr of sharesValuation (EUR)amount (EUR)
NVIDIA CORP (NVDA)Mar 3, 2020BUY6247.591,485.54
ISHARES CORE EURO STOXX 50 (CSX5)Mar 3, 2020BUY7110.40772.80
ISHARES CORE S&P 500 (CSPX)Mar 3, 2020BUY3277.10831.30
ISHARES S&P SMALL CAP 600 (IUS3)Mar 3, 2020BUY2554.201,355.00
AEDIFICA (AED)Mar 3, 2020BUY8121.80974.40
KINEPOLIS (KIN)Mar 3, 2020BUY2548.451,211.25
ISHARES S&P SMALL CAP 600 (IUS3)Feb 4, 2020BUY1560.26903.90
ISHARES CORE MSCI PACIF X-JP (CPXJ)Feb 3, 2020BUY5138.00690.00
Sum8,224.19 EUR

A 7,500 EUR deposit brings the total deposit amount of my Lynx portfolio to 32,500 EUR. This also means that I have already reached 75% of my target deposit amount for this year.

A quick calculation shows that I invested 8,224.19 EUR while I only deposited 7,500 EUR. This means I’m 724.19 in red, i.e., I’m using a bit of margin. As I mentioned earlier, the plan is to pay this back within the year.

Dollar-Cost Averaging (DCA)

My first deposit in this bear market won’t be my last. It’s doubtful this is the end of the bear market. The novel Coronavirus is still infecting people daily and in the coming weeks and even months the effect of this virus will become more clear. This means the market will remain unstable. The best course of action right now is to keep investing periodically as the markets move lower. It’s impossible to time the market perfectly so Dollar (or Euro) cost averaging is the name of the game.

I’ll refrain from updating my portfolio page till we reach the end of Q1, but you can already look forward to a big difference compared to my 2019Q4 report.

Mr. FightToFIRE
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