If you are like me you are new to investing and just starting out. Where do you start? A great question and I was lucky to know someone who was a seasoned investor and able to nudge me along in the right direction. The first thing my friend suggested was that I develop an investment strategy. What did I want to accomplish and what was the timeframe I was working with.
The first question was fairly easy – I wanted to replace my current wages with the passive income. The second one was already answered for me – 5 years. I didn’t have too many work years left for me. Father Time tends to catch up with all of us. Another factor in my strategy was that I wanted to avoid high-risk investments. I couldn’t eliminate ALL risks but I could avoid the high ones that have devastating financial results.
The other thing that I did was to learn whatever I could about investing and the different aspects of investing. I needed to learn which investing method would help me reach my goals. To this end I searched for online communities where I could just lurk and learn about investing. One of the ones I found was Investing For Beginners on Facebook. Although every group is going to have their share of annoying posters and useless posts & comments, you can still find some useful information.
I learned that Day Trading was not for me. Too risky. Proponents of Day Trading will tell you that you have to take big risks for the big payoffs. But to me that is too much like gambling at the casinos and I don’t do that. Value investing is not going to get me to where I want to be. Yes, I may win big but I also can lose all of my investment, which I may not have enough time to start from scratch again and recover. That left me with Dividend Investing.
Dividend Investing is where you invest in stocks that pay high & consistent dividends. Well, that was surely the way to go for me. Again, I spoke with my friend. He steered me to 2 online services that would help me determine which stocks to potentially invest in. They were Seeking Alpha and Finviz. So, I started to develop my detailed strategy of how I was going to invest my money.
- The primary step was to set aside 5% of my income toward investing.
- I then searched for stocks to invest in. My criteria was to select those that paid better than 5% and that had continuous and consistent dividend growth.
- I also wanted to remain within the REIT sector.
This was a good start.