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Kenneth Lou

Co-founder at Seedly

07 Jun 2019

General Investing

Should Beginner Investors choose: Value Investing OR Dividend Investing?

Discussion (12)

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Adrian Goh Jun Wei

07 Jun 2019

Product at Nodeflair

Depends on definition of beginner!

What I did as an absolute beginner during NS (even after reading investment books) is to park 100-200 bucks of my allowances into the ETF RSP by DBS. It feels safe and you can understand how DCA (Dollar cost averaging) really work!

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Dividend investing.

The idea is this. For all the stocks in the world, there is always the possibility of going bankrupt, with the difference being how remote it is. Also, all stock prices can go up or down. For a beginner, they may not pick the right stock, or handle the emotions that comes with it. Even for stocks which has an average compounded growth rate would have at some point in time, suffer a huge blow to their prices.

The idea of dividend investing can be seen as

: in the worst case scenario, the stock price stays stagnant, the dividend received would have meant capital can be recovered in X no. of years. Also, don’t neglect to factor in tgethe intangibility of feeling a little bit more secured, knowing that the investment is unlikely to go bust.

Once the beginner is more experienced, s/he can go on and move towards fast growth stocks.

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I would pick Value Investing for beginner.

Get a ETF which reinvest the dividend distribution.

You save on commission charges and you dont have to do anything most of the time, just rebalance your portfolio every 3-6 months. More time for yourself, less time looking at your portfolio. Let the ETF do the compounding, you are paying them management fees!

With dividend investing, you have to reinvest every quarterly(depends on the distribution), which incur commission charges and your time. Imo dividend investing is more suitable when you are retiring due to the additional cash flow.

Dividend stock tend to be more stable, which isn't what you need at this point of time. You need your portfolio to grow and compound.

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Why not both. But best way is to determine your risk appetite first. As growth stocks are subject to volatility and high uncertainty. There is no better way and good bloggers like Kyith and AK74 have achieved a high level of income through dividend investing. Unless u know a business very well and its moat. Your proposition for growth stocks should vary proportionately.

Goh Kah Kiat

08 Jun 2018

Editor-in-chief at Risknreturns.com

I personally started with value investing (or more like growth investing) before moving to a more hy...

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