And so it began…
I took a leap of faith in November 2017 with an investment of ~$2,500 in an S&P/ASX 200 (INDEXASX: XJO) share. As a novice investor, it was a relatively nervous experience. And naturally so when you are doing something for the first time.
I instinctively questioned myself… should I trade? Have I done enough research? Am I making a good choice? Should I be investing in something else? These are all natural feelings and behaviours, with the good old grey matter doing its thing. These type of thoughts keep us on our toes and I am of the belief that this contributes to developing a significant level of interest in the future growth of an investment.
Here’s The 1st Share I Bought
My first trade was in shares of a Listed Investment Company or ‘LIC’. Often you will see this referred to as ‘LIC’ and there are several different options available on the market.
So why did I elect to purchase Whitefield Limited Fully Paid Ord (ASX: WHF) shares? Being a new investor, and researching through various articles, podcasts and other forums, I felt investing in a LIC would be a relatively safe option for a first-time investment.
In simple terms, a LIC is a company that invests your money into a portfolio which they believe will beat the market. The investment objective of Whitefield is “to generate portfolio returns that are higher than the S&P/ASX 200 Industrials Accumulation Index’’. In order to achieve this outcome, Whitefield has its own team of investment managers who monitor the market on a daily basis.
A Generous Dividend
The company offers a 4.2% dividend yield, which is 100% or fully ‘franked’. The dividend has increased year on year since inception and shares currently priced at ~$4.70 per share.
I jumped in and purchased at $4.79 which looking back some may say is a bit of a rookie error. Just alone in the last 12 months, Whitefield has traded as low as $4.10 per share along with a high of $4.84 which suggests that I bought it at a premium price. I was offered the opportunity to participate in the 2018 Share Purchase Plan where I was able to pick up shares at ~$4.30 and decided to take up a purchase of $1,000 worth of new shares. At the time I felt this was a good opportunity to even out my original investment.
What Now?
I have continued to hold Whitefield and selected the option to automatically reinvest my dividends with the dividend reinvestment plan (DRP) price normally offered at a discount along with no requirement to pay a brokerage fee. This is a strategy I particularly like since my portfolio is in its early stages and feel it is a sensible way to grow holdings at zero extra cost.
As a new investor who is learning each and every day, I monitor my portfolio on a regular basis. Markets are currently very volatile, however, with the holdings Whitefield has invested in, as well as their presence on the market since 1923, enable me to maintain a suitable level of confidence in the growth of my position for the future. From a risk perspective, I feel LICs offer investors a great option for diversification and therefore see my portfolio holding this type of investment into the foreseeable future.
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Disclosure: At the time of writing, Robert owns shares of Whitefield Limited.
