ETF Investments with negative growth in May 2019

Posted by

It’s amazing how time flies, but here’s the May update on my ETF investments with EasyEquities.

If you want to follow the full story you can check out the previous posts:

Negative growth for May 2019

This month has been quite a terrible month for all the indexes I track, especially after last months calculation of an average 28% growth! I’m now looking at a -22% “growth” (shrinkage really).

As always, I have calculated the gross amount of money that I have invested over time and I’ve used Excel to calculate daily compounded interest at a 5% “bank rate” and then at my actual growth rate. So this -22% is actually over the duration of my investment which started in December 2018. Included in the investment are all dividends (after tax) which I immediately reinvest as I receive them. I don’t look at fees or taxes as that just complicates matters.

The calculations

EasyEquities May balance

Up to now I have invested R6,050 and my investments are currently worth R5,888.91 which means that I have lost R161.09. This is not too bad in a rand value but in terms of a percentage it’s terrible! And imagine if my investments were 100 x larger, the rand value would be seriously depressing!

EasyEquities EFT dividends paid

There have been no new dividends received since the last update and the total dividends up to now are R7.61.

Clearly nothing to write home about but hopefully with time these will grow to amounts worth getting excited about.

Finally, the actual calculations showing the amounts invested and the daily compounded interest since starting the investment. Note the blue/grey block is a standard 5% that I could earn with my current bank and the lighter grey is the current -22% that I am earning.

EasyEquities portfolio - growth for May 2019
EasyEquities portfolio – growth for May 2019

So to reiterate, the -22% is the average performance since starting the investment. In reality some months are good and some are bad whereas my calculations are just looking at an average growth over the duration of my investment.

So why the terrible performance?

It’s easy to spot the day that the investments all dropped. It started on 6 May 2019 (2 days before elections) and just kept dropping until after elections. This points to political instability in the markets. However, it’s not just the South African markets that have dropped over the past few weeks, looking at the shares I hold (see image further below) you’ll see that the Satrix World ETF has also dropped a bit.

So, as expected, political events have an effect on markets. It’s normal.

Easy Equities May Graph

What is my current strategy?

As per the April update, I have changed my investments to match these percentages. (I realign each time I invest more money so right now the investments don’t exactly match my goal)

  • 30% Local Equities – CoreShares Equally Weighted Top 40
  • 10% Local Equities – Satrix Top 40
  • 10% Local Property – Satrix Property ETF
  • 40% Offshore Equities – Satrix Worldwide
  • 10% Offshore Property – Sygnia Global Property ETF

EasyEquities investment portfolio

My current strategy is to keep going as I’m doing until I have R10,000 invested at which point I will stop, think and decide if I need to make changes. I may open a TFSA on the Easy Equities platform, I may open a US Dollar based investment or I may simply continue as I am doing. Other than this investment (and others I have), I’m focusing hard on paying off my home loan. So I often reassess my overall financial situation.

I’m just continually reading and seeing what other have to say about various index funds, strategies and investments and I’ll take my time to make an informed decision.

Is it worth keeping the investment?

But considering the poor performance at the moment, is it worth to keep investing in ETF’s and in the specific ones I’ve chosen?

YES

It’s pretty simple but passive investing such as ETF’s are really great for the long term (20+ years). They’re low cost and will just do their thing over time. The indexes will grow over time and political events, world tragedies and general upheaval will simply cause bumps along the way of your investment growth. However, the best strategy is to simply keep investing and not to worry about the month-to-month changes.

It isn’t necessarily a smooth ride and there is absolutely no way to predict anything, but generally over a long period of time the value increases.

This is a long-term strategy and definitely not speculative or a “quick win”.

Satrix Top 40 Performance
Satrix Top 40 Performance

In closing

This is my first DIY investment and I’m happy to continue as I am. Sure it may be down right now but I’m going to be tracking it very closely until the end of the year and am looking forward to see where it’s headed.

I’m in it for the long haul and so should you be!

4 comments

Leave a Reply to Brendan Cancel reply