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Dividend Investing
Why use this strategy
I love the idea of generating passive income without selling the Stock. I consider dividends the only true passive way to earn income, and best of all... you never lose your principal investment. To take it a step further..investing in ETFs that pay a Dividend helps me avoid huge swigs in the Market or a particular sector. If you have at least 10 years left to invest and don't have a current need to use your dividends to pay the bills, I recommend reinvesting your dividends back into the stock. Reinvesting your dividends will be very powerful over a period of time. I've personally been amazed about how much my portfolio grew in just 4 years while using a Dividend Investing strategy.
The right Investment strategy
Avoid Financial limitations
You may be in a situation in which you don't have the Financial means to save for retirement. You could be closing in on retirement age (67) without any savings or retirement savings. Maybe your employer doesn't offer a 401K or pension. You may have spent the last 25 years in a career who's salary structure didn't allow you to contribute to social security. You can use the Dividend Investing strategy to help you fast track savings to be used after you stop working. At the least it can give you some comfort you wont be total depend on others to make ends meet. People are living longer these days, which means it's very likely you won't be able to live comfortable with the same salary as maybe you could 10 years ago. There are lots of things to take into account when considering the right Investment strategy, this should be a well thought out plan. I would like to think Financial independence would be at the top your list, Dividend Investing is an excellent choice to supplement your retirement income. Not to mention, the peace of mind knowing if done correct can cover all your expenses after you stop working.
Are Dividend stocks worth it
The Impact of a bad investment
For may reasons I've already highlight, Dividend Investing can be a Financial game-changer. The key is determining if it's right for you. For instance, if you're a young person in your 20s or 30s, you may want to adopt a Growth Investing strategy, as you potentially have many years left in the Market. As a younger investor, you have plenty of time to make up losses created by Market volatility. The Dividend Investment strategy is most effective as a long-term strategy (10 years or more before retirement) as this allow more time to see the Portfolio compounding effect.
The bottom line
Investing only in companies that pay a dividend makes alot of sense to me. Remember it's not for every Investor, your Investment profile and Time Horizon must be contributing factors. Always do your own research before you invest in anything, don't Invest in a company just because some else said it was a good stock... this is the fastest way to lose money.
Disclosure
The information provided on this website is for general informational purposes only and does not constitute financial advice, investment advice, trading advice, or any other type of advice. All content, materials, and resources made available are solely for educational purposes and should not be relied upon for making financial decisions. Read full disclaimer here.
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