@Trader121 I understand why you want dividends (I myself also really like them) as they really provide an emotional bump, but in the end, itās all about total return and if dividends arenāt really tax favoured it theoretically is better to go through a route of not receiving them yourself (or letting the fund receive them and reinvest them).
Although to counter this one could say that a person might invest more and more consistently when they see they are receiving increasing dividends which might even counter some of the negative effects from the strategy as more motivation is there to invest in general. I would once again here refer to the analogy with the loan interest stuff.
I would say yes unless you need the income from your portfolio then high dividend not that useful, high dividend growth however are a good choice I think, like I would sooner put Ā£100 in Starbucks/MSFT/MA than in a 6/7% dividend yield with low div growth and low share price growth.
unlike stocks, even distributing ETFs do not pay a fixed amount or percentage of dividends. It depends on the underlying shares and their distributions at any given time.
@Trader121 I am a random guy on internet, you should neither trust nor listen to any specific investment advise I might give.
If you are 1 month into your investing, you definitely do not have the knowledge to pick individual stocks. (My sincerest apologies, if this sounded condescending) Best advice I can give you is to first invest in yourself. 2-3 books costing may be Ā£50 about fundamentals should not be considered much if you think about using these skills over many years.
If you have money now and want to start investing right away, pick a few generalised ETFs and branch into your choices over time as you learn more.
There is a thread about book recommendations for beginners in this forum, and I have my recommendations over there as well.
Thanks for your answer. I got a question tho. I know one month into investing is not much. But, letās say I have read 100 blogs during this month, researched lots of info and read a couple of books. It is right to say that you canāt compare my situation with the experience of one guy with 5 years into investingā¦ But in 1 month you may have time enough to start picking some important low risk stocks which are worth to hold and keep applying DCA to them. And even others more volatile as well. Donāt you agree?
Iād certainly start with ETFs, Iām 4 months in or so and I didnāt get ETFs till a bit later on and wish I did earlier in conjunction with a very small position in individual stocks.
If you wish to go for individual stocks I would go very small initially on them to get used to the emotional side.
Think of it this way:-
-Youāve done a detailed assessment of a company that you believe in for the long term and done all the research etc etc
-The company has a few red days, youāre down 5% say
-How will you react? You probably wonāt know how youāll react yet
-Hence, small positions to start with to get used to the emotional side as that is one of the hardest things for a lot of people. Including myself at the start
Best of luck with it all and Iām sure if you put in the effort and be active in the forum etc itāll work out for you; if the emotions stay away
EDIT:- I also recommend the Moneyweek videos on YouTube. Itās just a geezer standing in front a white board with no fancy graphics but extremely informative
I donāt do a lot of ETFs myself but to best of my knowledge Morningstar is a good website for ETFs that tend to always have recommendations but do your due diligence donāt just copy paste their list/recommendations.
@Trader121 Hereās my take as a newbie to the online platform type of investing in stocks, although I have in the past invested stock outside the UK while living abroad and lost it all including money that I borrowed. 17 years later am now back in the stock market after repaying all my debt to give it another try.
I currently hold 67 (my own designed ETF without the charges) individual companies mostly UK stocks some with oversees exposure ā UK country of my residence where am able to see and understand whatās going on. Although am now exploring ETFās that will diversify me to the wider markets.
Majority of my stocks are from Industries that I have worked for/ currently working for ā whereby am able to understand what is going on outside the carefully crafted balance sheet, P&L and income statements and all the analyst bullshit.
Please do not take anything that I have written as an advice, my only advice is to only invest per stock or per ETF money that you can afford to loose- I learnt the hard way!!
There are other types of investments like buying properties (not REITS) whereby even if the value drops, you can still hand it over to your kids or charity
For this stock, If I prefer to just buy S&P 500 ETF. Less hasles and the fee is very small. Also you do not need to spend time to balance and rebalance it.
