I would welcome you to my blog, but you’ve probably already spent a little time here. This section is focused entirely on those who have yet to start investing. The wonderful world of investments may seem rather daunting to anyone who hasn’t researched available brokers, as well as well-documented strategies to safely invest your money.
So, why should you invest?
There are plenty of options available to save your money and grow a small pot over time, so what’s the big deal with investing? Investing is all about diversifying your assets into a liquified market. Keeping cash isn’t great when you take into account inflation and other factors that lower the purchasing power over time.
Using a savings account with a 2% interest rate is a better option, but you’re tied to this rate, which can decrease as well as increase. If you find yourself in a time where interest rates are slashed, you could see yourself losing out on any compounding boosts. Investing is a little different when done safely and with plenty of research, which leads to better returns.
Do you have to spend a lot of time getting started with investing in the stock market? Not at all. You can get started with nothing more than your smartphone, a brokerage app, and just 10 minutes of your time. After opening up an account and setting up a deposit schedule, you can purchase shares in countless companies and exchange-traded funds (ETF) to create a portfolio that pays you regularly.
What is dividend investing?
What is dividend investing all about? It’s a strategy that focuses on building a portfolio of stock holdings that pay shareholders on a regular basis. It’s the perfect way to make your money work for you and retire early.
Investing basically sees you purchase a portion of a company. If you buy a share in Apple, you own a small percentage of the same company that makes iPhone and MacBooks. The best part about investing in companies like Apple is the dividend payment that’s made to shareholders.
By owning the share, you’ll receive a small payment usually monthly, quarterly or annually. This is possible by taking a portion of the company’s profits and dividing it by the total number of shares held by investors. The more shares you own, the higher your returns will be per year. Once you reach a certain point, you’ll be able to live off the return on your portfolio.
There are some drawbacks to investing, however. Stocks don’t always go up in price. Dividend payments can also be cut, which can affect your estimated annual returns. Then there’s the minute possibility that a company you invest in could go bankrupt. Finally, it’s better suited for long-term planning, rather than short-term goals.
I’m just a random guy on the internet and I’m not a licensed financial adviser. Before spending money on the markets, I highly encourage you to get some certified advice. I do, however, have plenty of resources on my blog to help you research the possibilities to help push you through the door. Then there’s my awesome dividend portfolio tracker.
Take a look at some of my resources below and once you’ve become comfortable with trading stocks, I can show you all about financial independence retire early (FIRE).
Learning the basics
- How to choose safe dividend stocks
- How much should you invest each month?
- What to look for in dividend stocks
- How do you calculate a dividend yield?
- What is the dividend payout ratio?
- How to invest with a budget of just £100
- Markets about to crash? Here’s what I’d do.
- What are ‘dividend aristocrats’?
- Paying tax on your dividends (UK)