Growth vs Income Investment
Investing is a tricky business when you are looking in from the outside, but once you make the plunge. Well, things start taking on a new image. As I was starting this journey, I didn't remember a single things of all the things that I used to know and I just decided to start very slow and very conservatively. I started with savings account with a "High" yield, which means to say they are 2%, in order words negligible. If anything I should probably buy bread and sell it few months down the road it appreciates faster than that.
There are also the mutual funds that I purchased, but they were based on a profile of someone who was deeming to be risk adverse and seeking mostly income (dividends) out of the investments. However, now I have learned a little bit more and realized that goal won't be achieved with such exposure.
My new Investor profile is "Alea Jacta Est" I will start investing that which I can afford/willing to lose and I will invest it in the following manner, 75% growth and 25% income. I will, nevertheless, keep some money in those savings account, in order to have some cash accessible, in case life....
The growth portfolio will hold stocks and bonds for which potential is deemed to increase over time. They will mostly be stocks in technology sector, as The oracle of Omaha says invest in things you understand and emerging market. The main characteristic of those kind of holdings is that they are subjected to a lot of risks and fluctuate a lot with the market.
The income portfolio itself is different in that of the growth as it doesn't expose to much risks, and provides a certain amount of payouts. The stocks that I intend to purchase will have a history of the following (well, at least. because, of course the more the better):
1. Dividend increase of 7% over the last 5 years
2. Consistent payout of dividends of the course of the same time frame.
The income portfolio will be setup with a DRIP (Dividend Re Investment Plan) approach, which means, the dividends will be reinvested into it, in order to take advantage of the power of compounding growth.
In light of this recent decision I have now opened an account with QUESTRADE which is one of the low cost platform available in Canada.
Let me go take risks and watch the money grow and growww....