To ensure a period of rest — more than deserved! — Really cool, the worry about retirement should start as soon as possible. In this scenario, you probably only know about private pension, right? But have you ever heard about dividend retirement as a viable alternative? Because this option is recommended for those who already invest and want to take advantage of it to improve their receipts in the future. And since it is never too early to think about this subject, take the opportunity to understand how it is possible to retire with dividends now:
How is it possible to retire with dividends?
This type of retirement works as follows: the investor buys shares that pay dividends according to specific policies and, with the reinvestment of these receipts, he has the possibility of having a comfortable retirement in the long term. The logic behind this is quite simple: in the long run, a large amount of investment is added so that, at a given moment, he earns enough to guarantee a comfortable retirement. This type of strategy is especially beneficial for those who do not have large amounts of money at once for investment, as dividends are what feed their own value.
For this strategy to work, however, discipline is the most important factor, since it will be necessary to reinvest dividends in a very pragmatic way. Otherwise, the results will unfortunately not be effective. It is also necessary to make and monitor your cash flow to know exactly when dividends are received from different companies.
And how to identify stocks with good dividends?
Despite being considered a relatively safe tactic, the truth is that there is no investment with completely zero risk, especially in the stock market. Therefore, it is necessary to know how to identify stocks with good dividends, which goes far beyond just their value. To make this identification, in addition to analyzing how much the company pays itself, it is also necessary to:
Take into account the company’s history
Attention: having a history of being a good payer does not mean that the company will necessarily continue at this pace, but it is already a good indication that it is likely to honor its commitments. Therefore, a company that offers the best return is not always the safest, at least initially, to receive investments.
Know the company’s dividend policy
It is also necessary to know the company’s dividend policy so that you fully understand how your payments occur. Some companies pay dividends monthly, while others make payments bimonthly, semi-annually, or even annually. Having this knowledge is important for you to maintain a relevant cash flow, in order to help you identify the right time to reinvest.
Know the company’s status
Knowing the financial situation of the company and its health is also important, since, if it is experiencing major financial problems, it may need to change its dividend policy, lowering the values or even entering the statistics of defaulters.
In this case is it also recommended to diversify?
As in the investment world in general, in retirement with dividends it is also essential to adopt an investment diversification posture. This basically means two things: that not all your money should be invested in this modality and also that you have to buy shares in different companies. That way, risks tend to be pulverized and more easily absorbed if something happens along the way.
To retire with dividends, you need to choose and buy the right stocks and have the discipline to reinvest the amounts received. The choice of stocks, in turn, requires an analysis of the company and a good level of diversification. See how in short it doesn’t even seem so complicated? And if you choose to consult with professionals in the field, you will be even more sure that the process is simple and profitable.
Now let us know if you still have any questions about it! How about taking the opportunity to learn what it takes to retire at 50?
Our Consulting: John Labunski