Image source: Getty Images
Some investors feel that putting all available money to work in the stock market immediately is the best strategy. While this may work well for some, I feel that most are better off investing small amounts every month or quarter. Here’s an amazing size portfolio that can grow in less than ten years using this method.
Strategy details
The concept focuses on two main points. Another is a combined portfolio of both growth and equities. Alternatively, the money can be integrated into the portfolio through reinvestment and dividends or back into the market.
Each month, an investor can choose one or two attractive stocks to buy. In the long run, it’s good to have a mix of growth and equity stocks. Regular income from equity shares can help grow the pot, with cash then returned to the market. Potential share price gains from rising stocks also serve to increase the value of the portfolio, although these gains are not realized until the stock is sold.
By investing every month, it allows the investor to take advantage of opportunities as they are presented. For example, a hot new theme may develop, offering an option to buy stock in that area. Or the dividend may be increased for the company, making the yield more attractive and worth buying.
Based on an average dividend yield of 6% and a 10% share price decline, I think the overall portfolio can grow by 8% per year. Using this assumption, investing £350 a month would provide a pot worth £55.8k over nine years! Of course, this is not guaranteed. But it shows how quickly a portfolio can grow with the right strategy.
One thing to consider
An example of a dividend stock is a continuously increasing dividend per share Phoenix Group (LSE:PHNX). In fact, it currently has the highest yield of all FTSE 100 by 10.29%.
The stock price is up 4% over the past year, so this high performance was not driven by the stock’s decline. This ticks the sustainability box, as the portfolio is for the long term.
paid in dividends last term and annual yield of 26.65 %. This was a temporary price increase from last year of 26p. In fact, in the last five years it has been increased.
Phoenix acquires and manages life policies and other retirement fund products. Make money by investing policyholder premiums and generating management fees. Therefore, it has a stable source of income which comes in handy when it comes to paying dividends.
As a risk, some investors may be concerned about what is happening with SunLife’s Phoenix-owned business. It went on sale at the beginning of this year as it was not a major item, but in September the management said that it will no longer sell at this time. Such confusion does not boost investor confidence.
Source link
