New Investment Strategy for my Foster Child Portfolio

2020 kicked off so quickly !! We have been very working on new projects for the blog but also personal life. To our own surprise we are already mid February. Last year we reflected on the growth of our foster child Anisha’s portfolio. Since the start of 2015, we have been disciplined growing money in a fund plan of Keytrade bank. At the end of 2014, I decided to become a godparent of a Cunina child and help the child to have a better education in life. In today’s blog post I will outline the new investing strategy that I will start to apply for our Foster Child Portfolio.

A Foster Child Portfolio – Why investing money for a foster child ?

As outlined in our Portfolio of our foster child, during the past twenty years I have traveled the world and seen more than 20 countries. One key insight that did touch my heart, was the poverty of kids in certain countries. In order to have a better life, it is SO important to have the right education to achieve a better lifestyle. I have seen kids living on the streets, kids who had been burnt in their faces to continue their lives as beggars, kids who were starving, etc…I have seen kids in life conditions that I will never forget in my life.

For that reason I have decided to support a child within Nepal through the organisation Cunina. Cunina shares the same dream as I do have. They believe that every child is unique, is talented and deserves a chance to develop these talents. I had the pleasure to meet Sophie Van Geel in July 2019 and the stories are incredible.  If you want to learn more about Cunina’s fantastic work, go to their website www.cunina.org or download the English brochure of Cunina.

My commitment to Anisha is to pay her education (30 Euro per month) until she graduates from university. In addition to the monthly payment for her education, I have started to invest in a fund plan. It can be the start of Anisha’s emergency fund, an airplane ticket to Belgium, …who knows. An emergency fund is critical to start a good life. It gives peace of mind, money to invest in additional education, a buffer to rely on in bad times. Read one of our latest blog post How to correctly size your emergency fund ? if you don’t know how to start with the foundation of every Financial strategy.

My Foster Child New Portfolio Strategy 

Until the end of 2019 I invested monthly 25 EURO in a KEYPLAN of the bank Keytrade Bank. KEYPLAN is our FIRST conservative investment strategy in our Portfolio Investment strategy.

Today this portfolio is worth 1942 Euro with a profit of 137 Euro. But this portfolio does not provide any dividends. You can read the funds that this portfolio invest in. This is my own selection.

Going forward, I will ONLY invest ONCE a YEAR 80 EURO in this KEYPLAN instead of 12 times 25 EURO = 300 EURO. I will invest 75 euro in three different investment months (March, May, June) in a Closed End Fund Eaton Vance Tax-Managed Buy-Write Opportunities Fund with the ticker ETV.

Eaton Vance Corp. (NYSE: EV) provides advanced investment strategies and wealth management solutions to forward-thinking investors around the world. Through principal investment affiliates Eaton Vance Management, Parametric, Atlanta Capital, Hexavest and Calvert, the Company offers a diversity of investment approaches, encompassing bottom-up and top-down fundamental active management, responsible investing, systematic investing and customized implementation of client-specified portfolio exposures. As of December 31, 2019, Eaton Vance had consolidated assets under management of $518.6 billion. For more information, visit eatonvance.com.

Shares of closed-end funds often trade at a discount from their net asset value. The market price of Fund shares may vary from net asset value based on factors affecting the supply and demand for shares, such as Fund distribution rates relative to similar investments, investors´ expectations for future distribution changes, the clarity of the Fund´s investment strategy and future return expectations, and investors´ confidence in the underlying markets in which the Fund invests. Fund shares are subject to investment risk, including possible loss of principal invested. No Fund is a complete investment program and you may lose money investing in a Fund. An investment in a Fund may not be appropriate for all investors. Before investing, prospective investors should consider carefully the Fund´s investment objective, risks, charges and expenses.

This CEF pays 8.72% dividend and pays today monthly 0,1108$/month. The goal is to invest three times 75 euro. That would mean at current share price 5 shares. After each share purchase we get a monthly dividend payout. You can find more dividend information on ETV on this website URL 

Achieving a MONTHLY Dividend Income for a Nepali child

So let’s do some simple math.  A person working in Nepal typically earns around 109,000 NPR per month. Salaries range from 14,700 NPR (lowest average) to 480,000 NPR (highest average, actual maximum salary is higher). This is the average monthly salary including housing, transport, and other benefits. Salaries vary drastically between different careers. 

Let’s start with the lowest average salary as Anisha’s family is from a poor farmers family. 14700 NPR is 128 Dollars per month. If we multiply 128 dollars x 12, we have a yearly income of 1536 Dollars.

How many shares of ETV do we need to cover a yearly salary in Nepal ? The shares cost today 15 $ and pay yearly 1.33$. So if we purchase 1000 shares of ETV, we have a yearly dividend income of 1330 $ without taxes. The US tax rate is 15%.

So if we add the tax rate, we need an investment of approximately of 17660. So let’s keep it simple. If we purchase 1200 shares of ETV, we will need an investment of 18.000$. This results in a dividend income of 1596$ per year or monthly dividend income of 130$.

This is more than the 5.000$ goal that I have as a current goal. But time will tell how we can invest more or not…

At the end of 2020, we would have at least our first 15 shares of ETV paying us monthly dividend income. That’s the first step in compounding her investment amount.

If we would invest the next 10 years only 225 euro per year, we would have invested 2250 euro and have a potential dividend income of 200 $ per year. Still not bad as an extra per year, don’t you think ? The goal is to increase the investment amount over time.

Final Note

So the year 2020 starts with a new strategy. Let’s grow our Foster Child Portfolio and let’s compound it over the next 10 years. If you are not investing your money yet, stop your excuses. Whether you invest for yourself, your kids or a relative, the goal is to grow your money !

I have a strong belief that EACH ONE OF YOU can change one other person’s life in the world. I see many people spending money on materialistic things …but does that make them any happier? Each person decides for himself their purpose in life and their objectives. One of my perspectives is that if you can change someone’s life towards a better life, this world would definitely be a better place.

That purpose in life means YOUR LIFE DID HAVE A SOCIAL IMPACT.  

This is the end of our blogpost.

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