Today is the first day I will start to document my dividend-income investments. Since the end of 2011 I have been constantly saving money, watching the stock markets, and trying to find the right income stocks that would allow me to preserve the value of my money.
While I slowly and very
cautiously entered the booming stock markets, the Fed and ECB set their
base rates to historical lows of 0.25% and 0.50% respectively. In this
low-interest environment and with real estate prices currently exploding, I very soon came to the conclusion that there
are currently no better asset classes available than stocks.
At the same
time, at current market highs, there is the risk that new investors buy into the market at already high price levels. Therefore timing is everything. That is why I still have a very high cash
reserve at hand to invest in case of any price drops.
My investment strategy is to invest in mostly mature markets, with a particular focus on Germany as my core and home market, the US, and Singapore.
As passive income in Germany is taxed by 25% above a certain threshold, my after-tax yield is lower than that of other investors. It is harder to gain in wealth and benefit from compound interest. Still, I consider dividend investing as the best instrument for building up a capital stock and withstanding the low-interest environment.
As can be seen in the table, I am aiming a >5% pre-tax return. In order to maintain this return, I complement investment grade stocks with some high-yield instruments. Expected dividends for 2014 are EUR 522 in total. That is not much, but as the Brits say: "Many a mickle makes a muckle". Assuming I invested all cash reserves, my current monthly dividend would be EUR 150 on average. That sounds better.
Yet, I think market prices are too high. So I am waiting for further price drops to invest. Lets see what effect Bernanke's statement will have on the markets in the coming days.
Wunderbar!!! ^^
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