How to invest in dividend stocks?
First of all if you can invest 250 dollars per month then I will show you a way to make your money work for you. You can be assured that the your money will make money from day one because this a system of dividends. how to invest in dividend stocks with little money? Well the whole internet is filled with information on what is a dividend? What is high dividend etc. but there is no one telling you how to invest in dividend stocks. How to protect your money from crash? how to invest in dividend stocks with little money? How to regularly receive income from first month of investment? How to make money make money? Let your money work for you because this simple guide will give you quick start.
Most of all key to invest successfully with little money is to invest regularly. Repeating the instruction one more time because you have register it. Regular small investments go long way than investing big amounts at one time. In order to invest and receive your dividends, plan on investing at regularly; every 2 weeks or 4 weeks will be your choice and most noteworthy your money situation. Minimum investment to start as of March 2017 is 250 dollars per investment.
I struggled for 20 years to come up with a strategy to invest in high dividend paying stocks. Finally I found the one that is actually working. As a result of long research, I created a Mutual fund of funds that could provide safety, Income and simple way to invest costing very little in investment fees.
Step 1: Understand the basics on investing in stocks
- Dividend is paid for owing a stock or ETF
- Stock is listed for one company hence investment in one stock is risky even though it pays dividend
- Dividend paying ETF is a safe choice because it invests in many stocks that pay dividend
- You can not trust single ETF or single stock because you will never exactly know what is happening inside the company or ETF
- You have to be cautious all the time because your investment could significantly lose value under bear(falling) market conditions
- There is not much logic for rising or falling of stock price. It will purely depend upon current market condition
- Stock/ETF price will change everyday. It is always volatile and you may not be able to understand why it is changing everyday. It does change and that is the reality
- If you regularly buy every 2 weeks or 4 weeks you will have opportunity to buy lower or you may buy at higher price.
- Dividends will be taxed based on your holding period
- Your money is always yours so you can sell the holding anytime and get your current market value that will be different than what you paid for.
Step 2: How to invest in dividend stocks with Power of averaging
- Stock price and Stock dividends are different things
- When you buy you pay the price of stocks. Dividends are paid at company decided rate so your purchase price does not impact dividend.
- Let’s say you begin your purchasing cycle with 250 dollars each 4 weeks then you will buy stocks at different price each 4 weeks. For example purchase price 10, 11, 9, 8, 7, 9 , 10 etc.
Following Table illustrates the investment of 250 dollars at regular periods
Purchase PriceShares you will getAmount InvestedTotal Shares in your accountDividend @ 1 dollar per year
|Month||Price of Share||Number of Shared Purchased||Amount invested per month||Total holding at the End of Month||Dividend received in your account|
|Current Price||Your Holding||Current Value||Dividend Received|
- If you carefully study this table you might think that you invested 1750 dollars over a period of 7 months but account value is on 1757. So you total gain is only 7 dollars. Here is the key to this investment, you have already received dividend dollars of 63.58 dollars. So you have actually made 63.58 + 7 = 70 dollars on your investment
- Do you see the magic in this investment? Your money is working from day one. There is many occasions where you bought less shares for higher price and there are many occasions where you bought more shares at lower price as shown in 5th month.
- If you continue this process for few years eventually you will start making so much money that you don’t have to fund your account from your pocket, the dividend generated will be enough to pay the next month’s installments
Step 3: Understand and Manage Risk
- No single stock to ETF is ever safe. No matter what the world tells you about. You should not trust the stock market because it can over extend in any direction it wants. We confuse stock market with values, earnings etc but in real life market is demand and supply. I have a complete book written on this demand supply dynamics available for sale on world’s most popular and trusted Amazon Six Pack Financial Yoga
- Prices will go up and down all the time
- To Manage risk
- Investing at regular intervals will be great idea.
- Invest in ETF that pay high dividends
- Invest in many ETF that pay high dividends
Step 4: Understand and Manage Risk
- No single stock to ETF is ever safe. No matter what the world tells you any single investment is not enough safety
- In uptrending market everything goes up and keeps going up. It does not stop going up.
- In downtrending market everything goes down and keeps going down. It does not stop going down.
- Trends last long term that is why it’s called trend
- Trends do change over a period of time. It goes from up to downtrend and from down to uptrend. There will be few months where the trend will be flat called sideways. But be assured market will keep moving. That’s the nature of market.
Step 5: Pick the Best and Invest in all of them with MOTIF
- MOTIF is collection of 30 stocks that you can buy for just 250 dollars with minimum investment. So your 250 dollars will purchase all 30 stocks with equal amount divided in all 30 stocks. Imagine what that does to you. It distributes your risk among all these ETFs. These pre selected ETFs are further investing in many individual stocks. So your each dollar is diversified into multiple investments making it crash proof for you.
- You have ability to pick top dividend paying ETF and invest in all of them at the same time.
- You need account created in website www.motifinvesting.com
- If you are newbie on how to invest in dividend stocks?
Follow the steps below to create your new investment account
- Click getting Started
- Follow the instructions to create and update your account
- Link your bank account to transfer money into your trading account
- Keep your login user and password as safe place and do not share with anyone.
Step 6: Invest in basket of ETF’s
- Let it be small investment of 250 dollars or big investment of 2000 dollars. You need to spread the risk across many stocks and ETF basket
- Invest in multiple assets in your Motif Account as listed below or any similar once.
- How to buy dividend stocks online: Click on following Invest button to purchase this basket of High Dividend paying ETFs.(basket) of Highest Paying Dividend Stocks 2017 ( bookmark this page and see everyday)
Observe three data points on this chart.
RTN: Return since creation. This will be change in price of ETF from the first day it was created.
Daily Change: Price Change of ETF Today(This is live feed).
Div Yield: Important point to note is how much percentage dividend yield return this will generate over a period of 1 year. This return is irrespective of RTN generated since creation.
Click on INVEST button to see all the holdings in the Basket of ETF. You will be able to purchase this as a basket so no need to worry about buying individual ETF. Your risk is distributed among many top ETF holdings.
- Just do it. 250 dollars is small investment to start learning about these methods. Sooner you start learning and investing sooner you will be enjoying the benefits of these investment
- First click invest on blue button and purchase the basket for 250 dollars because that is the minimum. Once the first purchase is completed you need to automate your investment every two weeks or four weeks
Step 7: Automate your investment cycle
- You could choose to automatic investment plan in MOTIF. Login to your www.motifinvestment.com account and click the blue circle. This is a subscription plan. You need to pay minimum 4.95 to have automatic investment
- Here the automatic investment plans available to you
- Pick the BLUE Starter plan. If you would like to receive THREE months of FREE then send me your email address so I can refer you through my personal account. But you need to receive the referral before you open your account. If you request it later, they will not give your THREE months for BLUE free. After the free period they will charge your credit card 4.95 per month. But your purchase of MOTIF will be free every two weeks that is about 9.95 each time you purchase. Since your investment value is small it is profitable to you use BLUE plan and only pay 4.95 per month. It is worth it.
- Once your BLUE account is setup, follow the following steps to enable BLUE automatic investment for your MOTIF of high dividend paying stocks.
Go to Account -> Dashboard
Click on your current holding of MOTIF (basket of dividend paying ETF)
Look for following buttons
Click on BLUE (white button with circle) to see following option. Select your frequency and amount to invest and SAVE changes.
- Set automatic transfer of 250 dollars from your bank account into Motif Investment and then set up Blue automatic investment into Dividend ETF.
Step 8: Regularly check the dividend deposited into account
- Right after your first month of investment you should start checking the dividend posted into your accounts
- To check dividend deposited in your account follow the following steps
From main menu click Activity -> Transaction
- You will see something similar to following transaction listed each month. This is actual money deposited into your account each month. You will see small amounts at the beginning because most of the holdings will be in fractional amounts. Once your investment goes above certain amount, bigger dividend amounts will be posted. Here you go, your money is making money for you.
Step 9: Handling the up and down cycle
- During up market cycle you will be buying these shares expensive each time
- During down cycle you will be buying these shares as lower and cheaper cycles.
- These up and down cycles are unpredictable. Long holding period of more than two to three years is necessary to see true power of this strategy
- If the financial market completely breaks down then nothing will work. All asset classes including home, real estate, stocks, bonds and whatever else in the world is will break down. So work with your financial advisor or have plan to exit the game if we are seeing 2008 kind of crisis situation
- Do not invest large sum of money at one time. Always spready investment over a period of time.
Step 10: Mindset of Rich Investor
- Your wealth is direct reflection of your Mind
- You have to learn how the investor mind works
- Delayed gratification is primary trait of investors like Buffett
- Nothing will work as fast as you wish
- Have a long term dividend investment plan
This was my attempt to simplify mostly asked question by people like you who would like to know how to invest in dividend stocks? There are few questions around how to buy dividend stocks without a broker? That is still topic of research for me. I hope you being with simple Motif investing of 250 dollars for each month and evaluate your own experience. Dividend investing strategy is proved itself for many generations. There will be a day in your life when dividends generated are enough to buy to next high dividend stocks list free. No money going out from your pocket. That is the goal worth pursuing.