That long-awaited moment is finally here and when I think about it, we procrastinated for two years. And yes, I want to use procrastination because I delayed the most logical step because I was to ‘lazy’ to do the necessary research.
To clarify a bit more about the situation, BVB stands for Bursa de Valori Bucuresti or translated the Bucharest Stock Exchange (like NYSE just for Romania).
Because Romania has a small stock market and we are classified as a “Frontier market”, it’s a bit complicated to buy stocks. It is not like NYSE where you can select any broker, invest 100USD, and then buy the stock, or part of it. The problem starts with selecting a broker and amassing the necessary capital then open the account and start investing. The second part of the problem is what stocks to choose as we are not that diversified and the impact on your portfolio can be bigger in case of a crash (like 2008). The safest bet would have been some ETF’s…and we have…one.
The good news is that we are qualified to pass into the “emergent market”, starting this September or October and a big number of companies are expected to join the market. I based our investment in BVB on this piece of information because I expect that current stocks to increase in price. Also, I am waiting for a new electric company to list on the market: Hydroelectrica – hydro energy.
Step 1: Find a broker. Having to invest in a small market, you have not that many choices in brokers and I identified only 3 viable for my situation. But from this 3, one of them wants a big investment capital to start your account, a sum I am not ready to trow in. So I approached the two other brokers, clarified all their conditions, taxes, and my investment plan.
Step 2: Find Capital. There was an interesting part of the story. One of the brokers had really nice commissions (very low) but wanted a big sum to start the investment. For the other, the commissions were good and required only a small investment capital. But I had an idea, I contacted the first broker, asked for an investment plan, and reduced the investment sum pretty much (to 20% of the required initial investment). So the problem of capital sorted almost by itself. Part of the funds came from a withdrawal from our crypto portfolio (which is doing so well at the moment) and the monthly ‘investment money’ (a little bit more than that)
Step 3: Select Stocks. Every portfolio should consider the perspective of the stocks they contain. A good distribution is important in case of economic crisis happens. When we did our allocation, we chose good dividend-paying companies so that’s how we managed to own a bank (ha, the smallest part of it, but it’s ours). And on a more serious note we invested all the rest in energy companies and in the ETF. Better have a larger diversification than missing a good allocation.
Step 4: Investment Plan. Making a purchasing plan was pretty simple as we wanted a good allocation in the stocks we chose (and allocated more % to the ones that pay dividends in the following period). This way we can reinvest the money from dividends in more stocks. Also as discussed with the broker we will do monthly allocations until we reach the initial investment capital. With each purchasing, we plan to reduce the medium cost of each stock, but also considering the well being of the companies they represent.
Step 5: Profit? We are not going to take out the money soon. So the investment plan is on 5-10 years and we hope that the income will come from dividends.
If the market will continue it’s bull movement we will invest based on the company profile and news of expanding. Or just simply make a fair allocation in all our stocks.
Thank you for reading this!
Disclaimer: I am not a financial consultant, all the information you find here are my decisions, I taken in that moment, on my own analysis. I am open to any type of discussion about money. If you want to replicate my portfolio take into consideration that it is your money.