Wednesday, September 23, 2015

Dare to buy on Dips

I like to attend stock market seminar, not because of want to find out the market tips as many of investors like to do but to learn from the speaker what's the method of making profit and his view on current market trend.

As usual, at one of the stock market seminar I attend recently, someone ask the speaker what's the stocks worth to buy and what's the speaker's current portfolio. The speaker shares a list of stocks to audience, and I know, many people will get confuse by the list. In fact, investment in stock market is very personal, how can one follow exactly other person's portfolio? As someone may like to speculate in high risk stock, some prefer dividend stocks, some prefer growth stock, some prefer mix of it, so, someone's meat may be other person's poison.

For me, market dips is an opportunities, as I like to buy more when opportunities arise. This is one of the way I used to build wealth for retirement, see my previous post at: Road to be a Millionaire. However, if you like to speculate for fast money, this is not the method for you. Ideally, the target can be achieved by investing in stocks with consistent dividend of 6 to 7%, the other 6 to 7% just come from capital gain is good enough!

Another way of calculation, if one need $4,000 a month for expenses, how much principal is required? Just take $4000 x 12, so one year is $48,000. Just take $48,000  ÷ 6.50% (assume your dividend income is 6.50%) = $738,461.53, meaning if one can accumulate for this amount, basically, $4,000 of free cash flow per month is not a problem, and my method is using stocks market timing to achieve this.

One need to do simple home work to find out the good stocks with consistent dividend of 6.50% and above. If your investment objective is for dividend income, then the current market dips is an opportunities for your to accumulate high dividend stocks at good price. Don't worry about the market price, it will rebound, and if that happen, it's the add on bonus!