I still get very excited about my stock portfolio and dividend investing. I can't help it. The long-term potential is GREAT! But when I start talking about it, there's always someone who wants to talk about buying and selling stocks for a quick profit.
They believe their money making method is better than mine, and I believe mine is better than theirs.
Who wins?
It doesn't really matter. Yet, I am writing a post about the comparisons.
For me, I will choose dividend investments. I'm risk-adverse, afterall. If I invest in a healthy company that pays a decent dividend, I start making money within 3 months without any other effort. And, a really healthy company will increase the dividend annually, if not more often. This leads to more money over time. If I set up automatic dividend reinvestment, then my payout increases even more.
However, with buying and selling stocks, I would have to vigilantly watch the market looking for a low point and waiting for a high point to sell. How long would it take me to gain the 3-7% yield that I get with the first year of dividend investments? What about the 10-20% yield that the dividends would afford me over time?
The passivity of dividend growth investing is the greatest pull for me. I can invest a set amount today, and leave it alone for years, and what pays $1 this year may pay me $50/year in 20 years.
To get the same increasing payout from trading stocks... I would have to always buy and sell in greater and greater amounts. Continually put my capital at risk.
With both strategies, you could, however, choose to periodically check your investments to determine if you should sell them (because the yield is not increasing at the best rate for dividends or because you've gained enough profit with trading).
They believe their money making method is better than mine, and I believe mine is better than theirs.
Who wins?
It doesn't really matter. Yet, I am writing a post about the comparisons.
For me, I will choose dividend investments. I'm risk-adverse, afterall. If I invest in a healthy company that pays a decent dividend, I start making money within 3 months without any other effort. And, a really healthy company will increase the dividend annually, if not more often. This leads to more money over time. If I set up automatic dividend reinvestment, then my payout increases even more.
However, with buying and selling stocks, I would have to vigilantly watch the market looking for a low point and waiting for a high point to sell. How long would it take me to gain the 3-7% yield that I get with the first year of dividend investments? What about the 10-20% yield that the dividends would afford me over time?
The passivity of dividend growth investing is the greatest pull for me. I can invest a set amount today, and leave it alone for years, and what pays $1 this year may pay me $50/year in 20 years.
To get the same increasing payout from trading stocks... I would have to always buy and sell in greater and greater amounts. Continually put my capital at risk.
With both strategies, you could, however, choose to periodically check your investments to determine if you should sell them (because the yield is not increasing at the best rate for dividends or because you've gained enough profit with trading).
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