Starting out investing

kabibiio

Hello, I have been thinking of getting into investing for a while now. I am very interested in dividend paying stocks as I love passive income. Now I am not really starting early as I am 23 years old and have very limited knowledge.

I live in Europe and my income is not very high. I earn aproximatly $9k per year. Now after all the expenses and everything I am not left with much to invest, and I think investing $50 monthly in those stocks would not do anything good. I try to do anything on the side to earn any extra money but I cant get much.

I would like to hear your opinions

Superscrooge

My advice would be to read some of the respected financial blogs to gain a bit more knowledge before you dive in. A good place to start is https://www.monevator.com or https://www.sensibleinvesting.tv

Buying individual shares can be risky unless you have sufficient cash to buy a good selection of diverse shares. A better, lower risk solution for someone in your position would be to invest in a low cost index tracker and reinvest the dividends, perhaps set up a monthly direct debit to invest what you can afford. Fidelity have a good selection of low cost trackers, but there are others.

Remember stock market investments are medium to long term investments, so you need to be thinking in terms of investing for at least five years.

Whatever you decide I wish you the best of luck, Investing in equities can be frustrating at times, but can also be very rewarding.

kabibiio

Hello, thanks for the reply. I havent really been looking into indexes.

I have been reading a lot about compounding investing, but I cant really find where could I start with this, I only find explainations of this so now I understand it pretty good.

AndyT678

So having read a lot about compounded investing which you now understand pretty good you want to find dividend paying stocks to generate a passive income on $50 per month?

It feels like a fairly confused strategy to me. Perhaps if you gave us some more details it might help. This is a UK based site and some of us have heard of this "Europe" place you mentioned. If you could narrow it down a bit someone could probably give some more specific ideas although I think I'd start with some cash savings.

kabibiio

Im not saying to generate $50 per month, but that I would be able to invest that much wich is not much at all. I have abour $3k saved so far.

Basically I would like to hear what are some of the best compound interest assets to invest into?

Linton

kabibiio wrote: »

Im not saying to generate $50 per month, but that I would be able to invest that much wich is not much at all. I have abour $3k saved so far.

Basically I would like to hear what are some of the best compound interest assets to invest into?

Compound interest isnt anything to do with the particular assets, its all to do with what you do with the interest/dividends. If you choose to re-invest in the original investment then you are making use of compound interest. Even if your investment doesnt produce dividends or interest any profits it retains internally work like compound interest.

AndyT678

If $3,000 is all you have in the world I'd put that in a bank account. In the UK you'd get 5% guaranteed, risk free interest and with your level of earnings it would be tax free too.

If you really want dividend paying stocks how about this http://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0000YWPH or something similar?

My third suggestion is that you "invest" the $50 per month into acquiring some skills\training\knowledge\experience that enables you to get a better job. You'll get a much better return on investment by increasing your income to $50,000 than by buying some stocks whilst earning $9,000.

panter

As superscrooge says, you could invest as little as 25GBP per month into a so-called index tracker (you may also need to put £100 in initially). For example, a FTSE all share fund will own shares in every company quoted on the London Stock Exchange, so your investment is spread across many many companies. The "accumulation" version of such a fund will automatically re-invest the dividends - so you will be compounding.

You can buy these low cost tracker funds via platforms such as Fidelity or Hargreaves Lansdown. Check out their websites.

You say you are in Europe, so you may need to look for the equivalent in your own country.

kabibiio

AndyT678 wrote: »

If $3,000 is all you have in the world I'd put that in a bank account. In the UK you'd get 5% guaranteed, risk free interest and with your level of earnings it would be tax free too.

If you really want dividend paying stocks how about this or something similar?

My third suggestion is that you "invest" the $50 per month into acquiring some skills\training\knowledge\experience that enables you to get a better job. You'll get a much better return on investment by increasing your income to $50,000 than by buying some stocks whilst earning $9,000.

Well, where I live in Europe its not like this...even highly skilled programmers make about $400 more as I do so its not so much of investing in skills. I am rather trying to start my own business but failing miserably.