After I entered the job force at 18, I had money problems for quite a number of years. I earned a decent income, but I lived paycheck to paycheck and just felt like I would never get ahead financially. One day, determined to get ahead, I decided to record every purchase I made for a month to find out just where my money was going. I learned a hard lesson that day that small purchases here and there throughout the month really add up. I committed to a much smaller budget and began stashing savings away. Then, I researched the world of investing and made a few strategic ones with some of my savings. I am now doing much better financially, and I want to help others who need it, so I am starting a blog. Come back often for money management tips and tricks explained simply!
Are you in the process of building out your portfolio? If so, you are likely looking at a number of stocks or mutual funds to try and see what might be a good fit. While finding the right stocks for the long-term is obviously key, there's another specific feature of some stocks that you might want to keep an eye out for, and that's whether or not they pay a dividend. Dividend or income stock investing is a smart choice because it means you might get a payout now or in the short-term instead of having to wait many years into the future to actually cash out. Here are some reasons why income stock investing might appeal to you.
Helps Cover Any Fees
Regardless of whether you work with a broker on a one-on-one basis or you use a self-service option online, chances are there are at least some fees involved when it comes to buying and selling stocks in your portfolio. If you do a lot of trading, these fees can add up over time and limit your return. One of the benefits of dividend stocks is that they can essentially help reimburse you for your fees (and then some) by giving you a payout every year or every quarter. This ensures that all of the long-term growth of the stock will be yours to keep, increasing the success of your overall portfolio in the process.
It's Free Money to Reinvest
When you receive a dividend or payout from an income stock, you can choose to receive that money into a cash fund or to re-invest all dividends back into the stock. Over time, this could be an easy way to acquire additional shares of your favorite companies without putting up more of your own capital. You will essentially be re-investing the company's own money back into said company, and adding the results to your own bottom line. Thanks to compound interest and the passage of time, this could end up being a significant amount of money if you re-invest the dividend quarter after quarter, year after year.
Can Be Helpful As You Near Retirement
Maybe you're not ready to fully retire just yet but you're getting close. Paying yourself the dividend is a great way to start getting access to at least some money now while still maintaining all of your investments for the day when you do fully retire.
Contact an expert on income stock investing today for more information
Share24 July 2019
