investment – Page 3 – FIRE v London

I sold my rental property last year, after owning it over 20 years. It’s a lovely property, worth around £1m, right in the heart of London – near the middle of the map below. I used to live in it, I travel past it regularly, I know its neighbourhood well. The Modern Flat has genuinely been part of my life – in a way I can’t say for most assets I own.

*Central London – roughly corresponding to the Circle Line area*

As most readers would I think agree, I am a pretty numerate, analytical person. Yet looking back on the sale of the Modern Flat, in my decision to sell I made two stupid mistakes. I got two of the big numbers wrong. Not just a bit wrong, but properly, materially wrong.

There are lessons here about investing, about selling, and about property vs stocks/shares. Let’s take a look.

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Supposedly Albert Einstein called compounding the 8th wonder of the world. Certainly the wonder of compound annual growth rates is something I feel quite viscerally, the more so with each month that I track my portfolio. But I’ve been struck recently by a radical improvement in my portfolio’s dividend income, far in excess of the portfolio’s return, that has occurred thanks to the margin loans I’m using. For anybody curious about margin loans, this blog post shines a light on what’s happening.

While my portfolio has grown 14%…..

As a quick visit to my Monthly Returns page can see, my portfolio has returned around 20% over the last twelve months (to September 2024 inclusive). This is a good, but not exceptional period over the 10+ years I’ve been tracking my portfolio – which has returned just over 9% p.a. since inception over 10 years ago.

As it happens, despite the underlying returns of around 20% my own portfolio (and I’m excluding Mrs FvL’s in this analysis) has only grown in size by 14% over this twelve month period, thanks to some significant withdrawals to pay tax bills, make ‘off balance sheet’ investments, and such like.