In this blog post I will talking about some basic investing that you can do for 2020 and beyond. This post will be a two part post, only because there is so much to talk about that I can not cover it all in one post. This advice will hold true today as it will tomorrow. If you are a more seasoned investor, I would recommend skipping this section. If you are just starting out, look no further you have arrived at the correct place.
Investing, that one word scares so many people. But investing does not have to be scary at all, actually if done correctly investing can be very fun and rewarding experience. There is no insider or top secret knowledge needed to invest. All you need is a brokerage account and you are ready to invest.
So what do you need to invest? Well there are just three things that one would need to become an investor.
1.) A brokerage account
2.) Some money
3.) And some basic investing knowledge
That is it, it is that simple. Of course most people get wide eyed and scared when it comes to step number 3. In my opinion this is the fun part, you get to do some research into companies you would like to invest in and learn something new a long the way. After all life is all about learning and growing as you get older. With age comes great wisdom and knowledge, don’t let this one step stop you from having financial freedom.
Where to start?
Your starting point would be to get some tools under your belt. To understand what you will need to use and how to use it, and how it all works. I recommend reading my post on just this very topic. It will walk you through some very basic financial tools that you will need to get started.
As mentioned above the very first step is to open a brokerage account. I would recommend starting with Webull or Robinhood they are easy to use and they give you one free stock for just signing up. To sign up just go to their website click on register, follow their process and boom you now have a brokerage account.
Next you will need some money. Not a lot if you just starting out, a small amount in this case will go a long way. I would recommend starting out with $100 and just play around to get the feel for the market and how investing works in general. Or if you are someone from r/wallstreetbets and just like to piss away money then you do you. But for some more savvy investors you can invest a little more depending on your personal risk tolerance.
Now the fun part begins. Step #3 the research part. Now this can get over whelming for a lot of people. But we will walk through this together one step at a time.
So this part is actually a lot easier than most people make it out to be. Before we go any further, I think for any successful investor it is important that you understand the lingo of the finance world. Now this is not really a must, but it will make your life a lot easier in the long run. Understanding what EBITDA is and how it impacts financials could be critical in making a smart investing decision in the long run. One great source that I used while learning all of this besides Google is Investopedia. This is undoubtedly one of the greatest sources for investing and investing knowledge I have ever seen.
Another great resource, that I absolutely love is Dividend.com, if you want to become a dividend investor and need to do any amount of research this website is a god send. They have really helped pick some amazing stocks, that otherwise I would have never heard of if it wasn’t for them.
Stock and Mutual Fund Picks
Now that we have some tools and are armed with some knowledge about investing, lets go ahead and talk some investing in 2020 and beyond.
Now depending on what your financial goals for the future are, that are many ways to go about doing this part. I am just going to talk about some stocks and mutual funds that I like and why I like them. I always encourage people to do their own research and come to their own conclusions about everything I talk about it. This is soul based on my research and opinion.
In my opinion unless the stock has huge growth potential, there is no reason to own a stock that does not pay some dividend. Normally you get paid a dividend for every share you own in a company before the Ex-Dividend date. Now the reason I look for dividend stock is because I then take that dividend and reinvest it. Some people will often refer to this as DRIP (dividend reinvestment plan). This is one of my favorite investing methods, not only will this be good in 2020 but beyond 2020 as well since the more dividend paying stocks you own the more you will earn.
With all that being said lets get to some of my top 5 dividend stock picks:
My Top Dividend Stock Picks
Full disclaimer I currently own some of the stocks listed below or plan on owning one or more in the future. All the investing advice I give is the same advice I myself would follow.
1. Microsoft (MSFT)
2. Ironmountain (IRM)
3. Johns and Johnson (JNJ)
4. Southern Company (SO)
5. Visa (V)
For those that want to go a safer route and get some mutual funds. Which are traditionally safer than owning a single stock here is my top 5 list of some great mutual funds that you can’t go wrong on.
1. Vanguard S&P 500 ETF: As its name suggests, the Vanguard S&P 500 tracks the S&P 500 index. It has $520 billion in assets, as of Dec. 2019, making it one of the largest funds on the market. This ETF began trading in 2010, and it’s backed by Vanguard, one of the powerhouses of the fund industry.
2. Schwab Balanced Fund (SWOBX): Balanced funds can be an ideal way for beginners to start investing because they are a diversified blend (a balance) of stocks, bonds and cash.
3. Jensen Quality Growth Fund (JENSX): JENSX is a growth-focused fund oriented toward advancing sectors, such as technology and health care. Rough says it sets itself apart from other growth funds by focusing on companies that may not be the traditional high-flyers in the market.
4. T. Rowe Price Capital Appreciation Fund (PRWCX): PRWCX is a no-load fund that invests in common stocks. Ronald Rough, director of portfolio management at Financial Services Advisory in Rockville, Maryland, says it’s a great choice for more conservative investors who still want to participate in the equity markets
5. Schwab Total Stock Market Index Fund (SWTSX): SWTSX has a composition that’s very similar to SWPPX, but the focus is slightly different. Rather than seeking to match the performance of the S&P 500, SWTSX attempts to match the performance of the market in its entirety.
Regular payment of dividends essentially takes money out of the company’s working capital. Instead, the company may have generated higher returns by reinvesting the dividend money in its business, leading to the appreciation of stock prices. Dividend payment also hits the benefits of compounding. Anyone looking to invest for regular dividend income should keep these limitations and effects in mind, before going for investing in dividend-paying mutual funds or stocks.
Disclaimer: The author was not holding any of the mentioned funds at the time this article was written.
So this is it for part one of this post, follow the blog for part 2.