Investing in the stock market can be a very good source for one of our multiple streams of income and financial stability. I’m not here to advocate day trading; some do well, but it takes time and effort (and risk) and I’m looking for a more passive stream of revenue. What I do recommend is a buy and hold method of investing focusing on dividend paying stocks. Now there are of course always risks when dealing with the stock market, so please do your research before investing. Yes, you will have to do a little work (work now so you don’t have to later, remember) When looking for your first few stocks you will have to do some research to be sure they are a sound company and have a history of increasing their dividend yield. Afterwards you will want to be sure you continue to add (buy additional shares) on a monthly basis and just like compound interest you will start to see your money grow with little work on your part.
Of course with any passive income stream you want to have a handle on the costs, as that will eat away at the money you make. So you need to consider how you will be investing in stocks as there are fees with any method you end up choosing. The aim is to keep them at a minimum while still getting the level of service you require.
DRiP’s are one way to start out slowly investing your money, especially if you don’t have a lot to start with. It stands for Dividend Reinvestment Program and it is a way for you to buy stock with a company directly. The main point of it is you can start the program typically with a little bit of money (sometimes as low as $10) for nominal to no fees. Then when its time for the company to pay its dividends they are automatically reinvested for you at no charge. The other beauty of the program (and play on the name) is your ability to ‘drip’ in additional funds by setting up an automatic investment, where they will take a set amount out of your bank each month and buy additional stock. This too can be a very low amount and allows you to put aside some money each month towards your future. Get a bonus or tax return and want to invest a little more? Sure, you can buy additional shares anytime with most programs. Most of the time these programs are direct with the company you are investing in, but lately to make it easier on them there are now third party agents. These agents or brokerages can come in handy as they allow you to have DRiPs with multiple companies under one account, but it could also increase your fees.
Buy and Hold.com
BuyandHold.com is an online brokerage I have used in the past when I was more heavily investing. The beauty of Buy and Hold is they take the concept of DRiPs and apply it to the entire stock market. Meaning it doesn’t matter if the company itself has a DRiP program or not, they still will reinvest your dividends and capital payments from non dividend paying stocks. They also do not have minimums like most brokerages and allow purchases of fractional stocks (so you are buying by dollar amount not quantity of shares) which makes it a little easier. Like a DRiP you can also set up for automatic monthly investments and spread the dollar amount across a number of stocks you wish to purchase. You are also welcome to buy additional shares at any time.
What’s the catch, you say? Well, there is a small one. To keep costs down (a purchase or sell is only $2.99 per transaction) you place your order and the trade is made at the next ‘window’ not real time. So you may not get that great price it’s at at that exact time. They do have 3 windows a day and for the mentality of ‘buy and hold’ and ‘dollar cost averaging’ then this is not a deal breaker. They do offer real time trades if you wish for $15 each (I reserve this for a sell if needed). All this for $6.95 a month (which includes 2 window trades) which is great for keeping your costs down. I mean with most online brokerages you would be paying about $20 for those 2 trades, this way you will see returns on your money much faster. If you plan on doing more than 5 trades a month they also offer a $15 a month unlimited window trade option.
Just a note, there is no affiliate plan for buyandhold.com (I don’t even hold stock in them). I don’t get paid if you sign up. I just really liked the service 🙂
So it’s just like niche marketing: you want to research your companies for long term growth and dividend payments (keyword research). Purchase your stocks in a low fee account (setting up your site). Continue to drip in money automatically and reinvest your dividends (monetize your site). Be sure you diversify your stocks so you can make money in most climates (same with your niches). Once it’s all set up, you let it run on automatic while checking on it from time to time and modifying as needed.
This is especially useful for those of you younger ones out there. Time is a powerful friend in the stock market and the younger you start the better off you will be later in life and the earlier you can retire (ahh if only I could go back knowing what I do now). Just putting $20-$50 aside each month (or week) can turn in to tens of thousands for you when you are ready to start a family or the kids college fund (unless you put in a new kitchen, another story). But you are never too old to start, so stop thinking about it (or if you haven’t maybe you should) and put a plan into action.
What about you? Are you ready to start an investment program? Let me know your thoughts!