Something I got wrong.

Ten weeks ago I wrote that I had not made a big financial mistake yet.

I said that made me nervous.

It should have. Because I had already made one. I just had not named it yet.

When I built the portfolio in April, I had eight positions to allocate capital across.

I split it without a framework.

The US ETF (Albilad 9406) got the largest allocation, SAR 10,780 across 770 units, because I felt most confident about US equity exposure and wanted global diversification. Fine so far. But after that, the logic dissolved.

Aramco got SAR6,731. Jarir SAR3,638. The Albilad Saudi ETF (9412) SAR3,306. Al Rajhi Bank SAR2,741. Alinma Sukuk SAR2,300. SNB SAR2,165. STC SAR1,803.

Look at those last five numbers. They hover between SAR1,800 and SAR2,750, close enough to feel like a deliberate spread, spread enough to feel like diversification.

It was neither. It was organised indecision.

I was not allocating by conviction, yield, or risk-weighting. I was allocating to avoid the discomfort of making unequal choices. Each position got a number that felt roughly proportionate to what seemed "safe" at the time.

That is not portfolio construction. It is psychology wearing the costume of strategy.

When five positions paid across April, May, and June, SAR 359.14 in total, the per-position income breakdown showed the problem clearly.

Aramco: SAR87.54 received on SAR6,731 invested. Annualised yield on cost: 5.2%.

Jarir: SAR117.50 (two quarters) on SAR3,638. Annualised yield on cost: 5.8%.

SNB: SAR59.80 on SAR2,165. Annualised yield on cost: 5.5%.

STC: SAR22.55 (one quarter) on SAR1,803. Annualised yield on cost: 5.0%.

Al Rajhi: SAR71.75 on SAR2,741. Annualised yield on cost: 3.7%. 

Jarir is the highest-yielding income position in the portfolio at 5.8%, and it received one of the smaller capital allocations. SNB is yielding 5.5% on cost and received a below-average allocation. Al Rajhi, the position with the lowest dividend yield of the five income payers at 3.7%, received proportionally more capital than either of them.

I was not optimising for the outcome I said I was optimising for. 

And the largest allocation, the US ETF at 34.5% of the portfolio, has produced zero dividend income so far. It serves a different purpose: capital growth and geographic diversification. That is a legitimate reason to hold it. But it means the income-generating part of the portfolio is smaller than the headline number suggests.

Of the SAR33,463 deployed, only SAR16,242 is in positions that have paid dividends. The other 51.4% is in ETFs that either distribute periodically or reinvest internally.

I am not selling anything. Every position is held for a reason that has not changed.

What I changed is the reinvestment framework going forward.

Monthly surplus top-ups and dividend reinvestment will now be allocated by yield on cost, not by position size. The goal is to grow the income-producing capacity of the portfolio faster than the capital-growth side.

Jarir gets the next reinvestment tranche. Aramco second. SNB third. STC fourth.

Al Rajhi remains a core holding, the bank's 5-year dividend growth rate is 32%, but it goes lower in the reinvestment queue until the yield on cost catches up with the other positions.

The three ETFs grow through the monthly standing order surplus, not through dividend reinvestment. They serve a different purpose and should be funded differently. This is a small change that will compound meaningfully over five years.

The portfolio is up 8.2% in six weeks. The dividends arrived. The system is working.

But it was not working as well as it could have been, because the allocation logic was driven by what felt comfortable rather than by what the strategy required.

That is the kind of mistake that is easy to rationalize, "I was diversifying," "I was being cautious", rather than name clearly.

I have named it. I have fixed the forward framework. The positions stay. The method changes.

There will be other mistakes. I will write about them when they happen.

Next issue: Month 4 — the full scoreboard. Real numbers. Nothing rounded up.

— The Quiet Compounder

Find, reach, and close your perfect deals — without juggling five tools or hiring more reps.

Apollo gives you everything you need to build real pipeline, fast. From inbound to outbound, first touch to close.

All in Apollo.

Sign up for free