Blog recommendation: http://www.25000dividends.com/

Check it out here:

http://www.25000dividends.com/

Basically, it is a record of this guy’s quest to do sufficient investing in dividend stocks to obtain a livable income of $25,000 a year.

I myself am very interested in getting into investing, and I look for inspiration on the topic wherever I can find it. As has been already explicated at length in A Random Walk Down Wall Street and The Intelligent Investor (see the summaries and reviews on Goodreads here and here) investing for-profit has far more to do with the regularity of your contributions than being able to pick the winners and losers. Dollar-cost averaging has been shown repeatedly to offer equivalent or superior returns to the vastly more sophisticated stock-picking strategies employed by actively-managed funds. By investing the same quantity of money religiously each month, you automatically buy less when a security is high, and automatically buy more of it when a security is low. I am not sure if 25000dividends is using dollar-cost averaging, but he does appear to be investing regularly regardless of share price.

As of this writing, he is up to around $12,000 a year in dividend payouts – all for doing nothing more than cracking a smile and drawing breath.

My personal strategy (when I finally get a job, build up a 6-month emergency fund, and pay down my debts) will be to max out my 401(k) contributions, and the invest further beyond that. Based on the recommendations of the previous books, my portfolio will likely consist of:

30% Bonds (some type of bond index fund)

45% US stocks (a stock index fund, probably Vanguard 500)

10% Foreign stocks (again, Vanguard has these)

10% Real-estate (Vanguard REIT)

5% Precious metals (Vanguard Precious Metals)

One thing I am not sure of is whether or not P2P lending fits into my portfolio, or even what kind of asset it is. Is it a subset of bonds, or stocks? Or is it truly a unique new asset class, reserving of its own new category in the portfolio? Unfortunately, I just don’t know enough about economic analysis to decide if P2P lending fits into the small investor’s portfolio or not, or if it is simply a vehicle for short-term savings.

I am undecided on how much money I would like to retire on. I think $25,000 is a little low for me; I am probably more comfortable with $35,000 a year, which could easily fund my living expenses as well as travel money. But in any case, having $25,000 a year would easily let me retire or semi-retire. I could get into consulting, or tutor college students part-time, write a book(s), or pursue a more fun full-time job.

It sure beats working for a living.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s