Money and Finance
So just today, I've received an email from a reader i shall refer to as Reader A.
He asked and I quote:
Hi TI! Good blog! I enjoy reading it. However I have one question, I have also been investing in the ABF SG Bond and am looking forward to the dividends for October 2014. However, if I calculate based on the rate of $0.023/ share that would mean for the year of 2013 I would have received $23. Is that correct?
I replied in the affirmative and he was very agitated to realise he would have earned just $23 or so for the entire year. He asked why is this so, when other financial bloggers are posting dividends of a few hundreds to thousand per month.
I gave a lengthy reply and would also like to share this common misconception I feel many young investors have.
When they invest, naturally they want a substantial amount of dividends. I fear that they also have the misconception that by investing $1000 - $2000, they expect a monthly return of a few hundreds/thousand.
If that was true, there would be many many rich Singaporeans all over the world. No one will be complaining of rising costs.
Investing is a good thing, but should not be assumed as a way of receiving "passive income" and thus no need to work etc etc as mentioned in my previous blogpost.
Reader A has invested $1k++ in ABF SG Bond. And only that.
1. Firstly, this is a bond ETF. Bonds are low risk and also low payout. Stocks carry a higher risk with a slightly higher payout. Therefore $23 for a $1000+ investment is a decent payout if you understand this.
2. Investors that post dividends of $200++ to $2000++ per month has invested at least a few hundred thousand at the minimum over the years to receive a substantial payout. I highly doubt you'll find any investor who invested $1k only and are receiving dividends of $200. Highly unlikely.
Reader A had too much expectations without understanding how his investments were working. And I fear, is this a common misconception amongst others as well?
It takes time to build up a decent amount of dividends per month, with a wide range of stocks necessary. Why? Because different stocks, bonds and REITs pay out at different month. Therefore you cannot buy just 1 stock, invest hundreds of thousands into that 1 stock and expect a stream of dividends every month.
I hope this post helps to clear some queries.
Signing off,
Teenage Investor
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- Dividend Update - January 2012
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I was thinking for a while to reinvest dividends automatically or not. I used to reinvest dividends automatically. Then I decided not to reinvest it automatically since I plan to sell stocks at some point and so I didn't want to have short term sale...
Money and Finance
Having too much expectations on your Dividends
So just today, I've received an email from a reader i shall refer to as Reader A.
He asked and I quote:
Hi TI! Good blog! I enjoy reading it. However I have one question, I have also been investing in the ABF SG Bond and am looking forward to the dividends for October 2014. However, if I calculate based on the rate of $0.023/ share that would mean for the year of 2013 I would have received $23. Is that correct?
I replied in the affirmative and he was very agitated to realise he would have earned just $23 or so for the entire year. He asked why is this so, when other financial bloggers are posting dividends of a few hundreds to thousand per month.
I gave a lengthy reply and would also like to share this common misconception I feel many young investors have.
When they invest, naturally they want a substantial amount of dividends. I fear that they also have the misconception that by investing $1000 - $2000, they expect a monthly return of a few hundreds/thousand.
If that was true, there would be many many rich Singaporeans all over the world. No one will be complaining of rising costs.
Investing is a good thing, but should not be assumed as a way of receiving "passive income" and thus no need to work etc etc as mentioned in my previous blogpost.
Reader A has invested $1k++ in ABF SG Bond. And only that.
1. Firstly, this is a bond ETF. Bonds are low risk and also low payout. Stocks carry a higher risk with a slightly higher payout. Therefore $23 for a $1000+ investment is a decent payout if you understand this.
2. Investors that post dividends of $200++ to $2000++ per month has invested at least a few hundred thousand at the minimum over the years to receive a substantial payout. I highly doubt you'll find any investor who invested $1k only and are receiving dividends of $200. Highly unlikely.
Reader A had too much expectations without understanding how his investments were working. And I fear, is this a common misconception amongst others as well?
It takes time to build up a decent amount of dividends per month, with a wide range of stocks necessary. Why? Because different stocks, bonds and REITs pay out at different month. Therefore you cannot buy just 1 stock, invest hundreds of thousands into that 1 stock and expect a stream of dividends every month.
I hope this post helps to clear some queries.
Signing off,
Teenage Investor
- Dividend Update - December 2012
December was a great month for dividends. I was nearly able to double September's payout in my FI portfolio which was my previous high month, but December set a new personal record with $314.48 received. The majority of companies that I own payout...
- Dividend Update - January 2012
January was a poor month that only saw 2 dividends get paid out. And only one, EOG Resources, for my brokerage account the other, JP Morgan, in my Roth. So it’s a slow start for me in trying to reach my lofty goal of $1,000 in dividends, especially...
- How To Invest In Shares [part 2]
Hi, welcome to Part 2 of How to Invest In Shares :) Hopefully, Part 1 was relatively beneficial with around 200+ views so far. Well, today I would be touching more on the returns of Investing! Why do we want to invest in shares? Because historically,...
- June Progress
June was a busy month. Kids were out of school for summer. I discontinued working on one of my projects, so it decreased my cash inflow. I wrote why I did it here. I did not buy as many stocks as I planned. I added a new stock to my portfolio - PG....
- Dividend Reinvesting Or Not?
I was thinking for a while to reinvest dividends automatically or not. I used to reinvest dividends automatically. Then I decided not to reinvest it automatically since I plan to sell stocks at some point and so I didn't want to have short term sale...