Investing the Right Way

Investing is about setting targets. Of course, when one invest, the goal is to eventually make money.

But not everyone who set out to invest makes money. In fact, many people lose money. And very often, this is the result of not returning to their target set out in the beginning. 

So how do one set targets when investing? First, you got to ask yourself, what sort of investor are you? A conservative or an aggressive one? Are you investing for a stable income every month or investing for capital growth? 

Once you have established the above, you can start to plan your investment portfolio accordingly. 

For me, I am a conservative investor who is looking for a stable income to supplement my regular paycheck every month. How much am I looking at? I intend to hit $12K a year in dividends. But I set myself a preliminary goal - that is to hit $6K a year first. 

This is equivalent to $500 a month. To me, that is a lot and will go a long way towards alleviating my monthly expenses. 

Sometimes such "mini-targets" may mean nothing to you. You may wonder how effective is a $500 a month when the cost of living is so high nowadays? But if you return to my first post, I mentioned that the best way to get rich is to keep your day job. This extra $500 functions as pocket money which supplements your monthly income. So lets say you earn $3K a month, this $500 earn is a huge boost, entirely in cash and tax-free.

So how does one go about to achieve this $6k a year? I invest in high yield dividend stocks. These stocks must yield at least 4.5% in dividends. Actually, I target a 4.5% yield for blue chip stocks and at least 6% for Reits. 

On an average, I hope to achieve a 6% yield on a $100k portfolio. That will allow me to receive $6k a year or $500 every month. 

If you invest wisely, you can certainly hit this milestone quickly. Currently, I am at the $70k mark. I intend to hit $100K by the end of this year. 

I will go into details the stocks that I own in my next post. Huat ah!