Let’s say I was just starting out with dividend growth investing in 2018, with $50,000 of capital (hypothetically speaking). It’s a unique time to start because the stock market is at all time highs. For this very reason, especially when starting out with larger capital investments (such as $50,000 or more), I would be incredibly focused on risk management and dollar cost averaging over time.
Importantly, today’s video builds on others in the same series. If you have not yet seen my videos on how to invest $1,000, $5,000, $10,000, and $25,000, you may want to check those out first (links to those videos below). Since I don’t want to repeat myself, as I know your time is valuable, today’s video offers net new perspectives for one investing $50,000. (Of course, my video has a dividend focus, as that’s my personal strategy.)
When investing $25,000 or less, I more or less would just go for it. I would want my dividend income to start building immediately. However, $50,000 is a serious amount of money. It’s a high enough sum that I would introduce some serious multi-year averaging. Today’s video discusses:
* The current state of the stock market. We are near all time highs. The market will correct at some point, in my opinion. As such, I would avoid a lump sum investment with this amount of money. Rather, I would average in over two or three years.
* That being said, my averaging schedule would depend on how much future capital I have to invest. If I have an incremental $1 million coming my way, for example, I would deploy my $50,000 faster. If I have $5,000/year to invest in the future, by contrast, I would average my $50,000 over a longer time period.
* Learn why dividend investing is the strategy of choice, especially in a late stage bull market. Buy low and sell high is going to be very difficult in this market. Investing for income (especially when averaging in) could work quite well.
* Learn why it’s going to require rock solid discipline to start investing $50,000 in 2018. One will need to be ready for the correction, and potentially short term “loss” of capital. That said, corrections are often the best time for dividend investors to acquire positions. (I personally love corrections since starting yield goes up as share prices go down.)
* See how great companies tend to raise and grow their dividends despite overall stock market performance. As long as business fundamentals are solid, dividends can increase each year. For this reason, it’s a lot of fun to buy dividend stocks during bear market sales.
If you enjoyed today’s video, I have a multitude of related videos that I’m sure will add value!
Here’s my video on investing one’s first $1,000 in dividend paying stocks:
Want to learn how to invest $5,000 in the stock market? Here you go:
How about $10,000? This video is one of my most popular ones:
Finally, here is how I would hypothetically invest $25,000 in dividend stocks, if I were starting all over again:
In 2018, I’m really focused on investing in core positions that are also exhibit value. Procter & Gamble and Kimberly Clark are two of my favorites this year. Learn more in this video:
With interest rates increasing, utilities are under a lot of pressure. This creates a nice buying opportunity, in my opinion. Learn more about my position in Southern Company in 2018 and beyond:
I am also finding value right now in REITs, especially Realty Income. Learn more in this video:
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Disclosure: I am long Procter & Gamble (PG), Kimberly-Clark (KMB), Realty Income (O), and Southern Company (SO). I own all four of these stocks in my dividend stock portfolio.
Disclaimer: I’m not a licensed investment advisor, and today’s video is just for entertainment and fun. This video is NOT investment advice. Also, I’m not a tax advisor and today’s video is NOT tax advice. Please talk to your licensed investment advisor before making any financial decisions.
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