How to Start Dividend Investing When You Have Little Cash

How to Start Dividend Investing When You Have Little CashIf you want to build long-term wealth, investing is one of the best options. To really super-charge your efforts, though, dividend investing can be a great option. With dividend investing, you have the chance to reinvest what you receive in payouts, essentially getting more shares for free. On top of that, later on, your dividends have the potential to become a significant source of income for you.

Dividend investing now can help you build your portfolio faster, and then when you are ready to retire, you can use dividends as income. Not only that, but dividends often receive favored tax status. As of this writing, in both the Canada and the United States, dividend investing comes with tax breaks. Any time you can see tax breaks for your investments, it’s a chance for you to grow your wealth even more efficiently.

But, even if you know that there are benefits to dividend investing, how can you take advantage of these opportunities? Many people think that they need a lot of money to make dividend investing work for them. After all, if a company is paying out 25 cents a share, you aren’t going to see a sizable payout unless you have the capital to buy a large amount of shares.

The good news is that it doesn’t have to be that way. Dividend investing can be done, even if you don’t have a lot of money. Thanks to dollar cost averaging and dividend reinvestment plans, it’s possible for you to start investing now, no matter how much (or how little) money you have.

Start With a Dividend Index Fund

When you have a small amount of cash, you aren’t likely to be able to buy a lot of shares of solid dividend stocks. This is where indexing can help you. Investing in an index fund gives you instant diversity, there are usually low costs, and you can take advantage of a general trend for the market as a whole to rise over time, in spite of short-term losses due to volatility.

A dividend index fund is one that follows a variety of dividend paying investments. You can choose from high-yield funds, aristocrat funds, or funds filled with dividend stocks from different countries. Most online discount brokerages offer access to dividend index funds. Not only that, but you can usually buy fractional shares if you set up an automatic investment plan.

The ability to buy a portion of a share of a dividend fund is very helpful to the beginning dividend investor of limited means. You can set up a plan that deducts $100 from your account each month and uses to purchase as many shares as possible at the current market price. So, if a share of the dividend investment fund costs $75, your $100 can buy you 1.25 shares. The next month, your $100 buys however many shares it can, and you keep growing your portfolio.

Dividend index fund shares, purchased using an automatic investment plan, is one of the best ways to start dividend investing when you don’t have money.

Automatically Reinvest Your Dividends

A dividend index fund will result in regular payouts of dividends to your account. One of the best things you can do is give your discount broker’s automatic investment plan the ability to automatically reinvest your dividends. Whatever dividends you receive will go toward buying more fractional shares of your fund.

As you continue to use dollar cost averaging to buy shares, and as your automatic reinvestment adds more shares over time, your dividend payouts will get bigger. And, as your payouts get bigger, you will be able to buy more shares with your dividend reinvestment. You can see how the cycle feeds on itself and continues to grow your portfolio.

Over time, as your income increases, you can put more money toward buying dividend investments. You can sell some of your fund shares to purchase individual equities, or diversify into REITs. As you progress, it’s possible to change up your strategy, slowing continuing to build your portfolio and your nest egg.

The most important thing is that you start as early as you can so that you have time on your side. With the accessibility of investments, and with the different options you have now, it’s easier than ever to start investing in dividends, even if you don’t have a lot of money.

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4 Tips for Downsizing Your House and Your Life

I’m getting ready to move across the country. We’re going to start out in an apartment that is 250 square feet smaller than our current home. However, we will also be without the under-house crawl space we’ve had for storage. So this new state of affairs has been interesting as we get ready to downsize.

However, it’s not just the house we’re hoping to downsize in this move. We’ve also got a few life issues we’d like to downsize as well. There’s a lot of clutter in our lives and in our home, and we’re hoping to get rid of it.

1. Decide What Really Matters

The first step to any type of downsizing is to decide what really matters. Figure out what items are most important to you, and figure out why. You want to keep only things that fulfill you, and that truly enhance your life. The same is true of activities and commitments in other areas of your life. If it’s mindless tedium, downsize from your life.

2. Get Rid of Things You Haven’t Used/Looked At in a Year

This is one of the best ways to downsize items in your house. If it’s been sitting in a box for the last five years, and it’s not a family heirloom, chances are that you don’t need — and probably don’t even want — it. Get rid of it. The same method can be used for clothes, dishes, and just about anything else. If you aren’t interested enough to need it during the year, you can get rid of it. It’s a quick way to eliminate a great deal of clutter.

3. Spend Your Time According to Your Values

Once you know what really matters to you, it’s possible to decide to spend your time according to your values. Figure out your deep-seated values, and then make it a point to downsize meetings and activities that don’t reflect those values. It’s possible to let your life get so cluttered up with meetings and obligations that you forget what you value in life, and pretty soon you’re moving from place to place without truly accomplishing anything, or feeling good about what you do.

Cut out the time obligations that don’t mesh with your values, and make it a point to focus on the activities that really resonate with you on a personal level.

4. Remind Yourself of The Benefits of Downsizing

One of the best things you can do is remind yourself of the benefits of downsizing. When you are having trouble sending something to the thrift store, or throwing out an old piece of junk, remind yourself of the benefits you are about to enjoy. The same is true of downsizing your life. When you feel bad about saying no, remind yourself of the benefits you are about to have.

These benefits might include more space in your home, less money spent on keeping your stuff in good condition or storing it, and more time to do the things that matter most to you.

I’m excited for a new start in a smaller area. I think it will enhance my life.

What do you think? How do you go about downsizing?