facebookShould a young investor (mid 20s) look into income generating assets like high dividend yield equity and REITs? Or should we focus more on growth/value stocks? - Seedly

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Anonymous

22 Jan 2020

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REITs

Should a young investor (mid 20s) look into income generating assets like high dividend yield equity and REITs? Or should we focus more on growth/value stocks?

I guess the biggest headache is what to do with the dividends especially when my capital isn't that huge (10-20k). Reinvest also difficult because of high commission cost. Take out to buy bubble tea also feel bad because you don't get the power of compounding. LOL HALP

Discussion (10)

What are your thoughts?

Elijah Lee

Elijah Lee

09 Jan 2020

Level 18Β·Independent Financial Advisor at Phillip Securities (Jurong East)

Hello young investor,

You have time on your side. Don't feel rushed to go in first. $10K-$20K in capital will allow you to diversify over 2-3 shares, and a 4% yield is still a very respectable $400-$800 a year. I won't expect you to reinvest the dividend. Just save it. Instead, focus on increasing your value at work so that you can boost your earning power. With that, you will have more capital to invest.

Also, work on improving your knowledge and read up and research more. Have a watch list. Read reports. Form your own opinion. The preparatory work you do, will go a long way to the point when you have more capital and are ready to invest more.

Whether or not you should focus on dividend or growth stocks will be entirely up to you. To start, I can suggest getting your feet wet by buying one growth and one dividend stock. Then you can see which type of stock you prefer. It might be that you don't mind having both. There could also be the case where you cannot stomach the volatility of growth stocks. Only by starting, will you understand yourself (and also, the fact that your money is "in the game now", so to speak.​​​

Hi there!

As a young investor, time is on your side - which is a big plus! As the saying goes, time in the market is more important than timing the market.

Being able to take a long term view on things, commission costs are not too big of a deal. Make steady contributions by allocating a certain portion of your income and reinvesting dividends.

Personally, I'm a huge advocate for dividend growth investing because:

  1. It suits my financial goals of passive income

  2. Gives me clarity on which companies to invest in and which not to

  3. Historically, dividend companies outperforms growth companies as a whole

I've a 12-minute video documenting my 2020 dividend growth portfolio and why it works for me. Check it out here!

Hope this helps :)

Billy Ko

Billy Ko

13 Jan 2020

Level 11Β·Financial Analyst at REPE Firm

I think that's what proper portfolio allocation comes into place. Given how time is on your side, an...

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