If you are lucky enough to have a lump sum to invest into the stock market then there are a number of options to choose from.
But perhaps the first question you need to ask yourself is “why am I investing in the stock market”?
You could be investing for long-term capital growth, you could be investing to generate income or you could be doing a little of both.
In this article we will concentrate on investing for income.
With interest rates at all-time lows, putting your £10,000 in the bank is likely to yield less than 0.5% in interest, unless you are willing to lock up your capital for a year or more – but even then you will have to search hard to find any institution paying much over 1%.
So, putting your money in the bank could generate less that £50 in interest over the year. Inflation dropped to 0.5% in August, down from 1.1% in July, so your interest income would be wiped out by inflation meaning the spending power of your £10,000 after one year is…. £10,000!
So where else can we look for a higher level of return?
Over the past few months a lot of people have been looking at their finances and ways to top up their primary income.
Those on furlough have seen a drop in their monthly income, which in many cases has been offset by reduced spending on fuel, commuting and that daily Chameleon Cold-Brew Vanilla Coffee with extra syrup.
For many, a side-hustle or “gig” job is a way of boosting income. But others, including those reading this blog, have been looking at investing in dividend paying stocks to supplement income.
We have also been spending time on looking at revising and building our dividend income portfolio.
Here we are. Autumn has made an appearance, and 2020 is fizzling out like a wet firework.
I read a joke recently, it went something like this…
“Turns out when that interviewer asked you 5 years ago where you saw yourself in 5 years, you were wrong!”
Heading into 2020 no-one expected 6 months of lockdown, millions of people on furlough (most of us didn’t even know what the word meant), billions wiped of investment portfolios, and that mobile phone shops would barricade their doorways and ask us to sanitise our grubby hands before touching their latest smartphones!
Some of us sat on our rears watching Netflix, some crammed in as much online training as possible, so of us pulled our hair our whilst home-schooling and some of up started making friends with cockroaches incase they became our only companions.
It’s now September, and as we stare down the barrel of another lockdown, it’s high time the Amateur Investor resurfaced…