Living off dividend income can be a great goal to strive for in retirement. Expenses are often lower during your retirement years, and generating $50,000 in annual dividends can help you live comfortably.
And while that is not a small amount of dividend income, generating that much in the future may not be as daunting of a challenge as it appears to be. Here’s a look at how investing $50 per week can help fund your retirement years.
Investing in growth is the best option to build up your portfolio
Dividend stocks can be safe options for investors on a fixed income who need stability. But if you’re looking at an investing period the spans decades, then growth stocks can be a much better option for you. That’s because while there might be volatility and bad years along the way, that should balance out over the long term.
A great example is the performance of the Invesco QQQ Trust (NASDAQ: QQQ), which gives investors exposure to the top 100 nonfinancial stocks on the Nasdaq Stock Market. The tech-heavy fund includes big names such as Apple, Microsoft, and Amazon. Over the past 10 years, its total returns (including dividends) have totaled 407%. That averages out to a compounded annual growth rate of 17.6% — well above the long-run average of the S&P 500, which is close to 10%.
The fund is a good place to invest, especially if you’re unsure of which stock(s) to put your money into. It can simplify your investing strategy, making it easier to set aside money every week into the fund.
Getting your portfolio to $1 million is the key
Before you can rely on dividend income, you first need a fairly large portfolio balance. And you can build it up over the years by investing just $50 per week (assuming minimal or no commission costs).
This chart shows you how, over a period of 30 years, investing $50 every week could grow your portfolio to more than $1 million.
Chart by author.
Assuming a 15% annual growth rate (on average), a $50 per-week investment could grow to a value of more than $1.5 million after 30 years. And it would take a little more than 27 years for it to hit the $1 million mark.
Averaging such a high growth rate may be challenging, but even if it’s not quite that high, you could still end up close to or over $1 million. And with a growth-focused fund such as the Invesco QQQ Trust, you can maximize your odds of achieving those kinds of returns without having to take on much risk in the process.
The next step is to invest in dividend stocks
If you get your portfolio to $1 million or more, you’ve accomplished the hard part. Once you’ve got a balance that high, you can put it to work by investing it into high-yielding dividend stocks. During your retirement years, you’ll likely want to move away from growth stocks anyway, and into less volatile investments. And the higher that balance gets, the less of a dividend yield you’ll need to generate some significant income.
If, for example, your portfolio gets to a value of $1.5 million, you could invest in a fund or multiple investments that yield an average of 3.3%. At that rate, you could generate $50,000 in annual dividends. With a lower portfolio balance of $1 million, you would need to target an average yield of 5%.
Invest early and often for the best results
Amid inflation and rising interest rates, it’s not an easy time to find money to invest in stocks. But if you can find a way to cut $50 per week out of your budget to invest into a diversified fund such as the Invesco QQQ Trust, it can pay off in droves for you later in life.
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TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
