A guide to FIRE: Financial Independence, Retire Early 🏖️

[Raul (Ann Onymuz)]

I’ll be good tomorrow

[SebReitz]

If that’s ambitious largely depends on your age/how long you’ve been working already.
I’m aiming for the age of 45 realistically.

[Eden]

FI is my goal but not necessarily RE.

I’d like to be there by 50 but it’s looking unlikely, but biggest issue is not having a house

[hookedinvesting (@hooked_investing(IG))]

GME on leverage?

[Raul (Ann Onymuz)]

Hot air

[BramblerJohn (John)]

My target is 7 years.
There is some great blogs to read, including my own…

The Lazy Way 2 FIRE

FreeTrade is part of my journey, but I have much more ambitious plans to get me there

[weenie]

Interesting read, first time I’ve seen such diverse and different investments (and platforms) in a FIRE blog.

What are you investing in in Freetrade to bring in the divi income?

[BramblerJohn (John)]

That’s a tough one.
I joined FreeTrade for the Dividend income and then this last year has been crazy.
I have ended up with a load of growth stocks, riding the wave/bubble.

My portfolio is heavily leaning towards tech, renewables, hydrogen and EV’s

That said I have tried to buy some dividend stocks:
TRIG
Bluefield
Foresight Solar
GreenCoat wind
Pennon
JLEN environmental
Nextenergy solar
Atlantica
Polar capital holdings
Iron Mountain
Rio Tinto
Ferrexpo
Knot offshore
Enterprise Prosucts

[weenie]

Thanks for sharing - I hold 6 of those, just adding to them to slowly build up the dividend payouts.

I’ve got some REITs too but not with Freetrade as I can’t buy them in my ISA yet - Supermarket REIT, Target Healthcare REIT and AEW UK REIT which all have decent yields.

[BramblerJohn (John)]

All of the above have great yields. I’ve also got AEW, though it has gone into Plus so I can’t add to it until I upgrade.
I have a small amount in REITs but nothing significant yet. It’s been a hard year to know where to put REIT investments. I’ll have a look at yours.

[SebReitz]

I’m liking topical REITs. High-streets and also offices seem to be vanishing in the longterm , so I’d not go anywhere near business REITs.
I’m holding warehouse and data center REITs instead.

[Jonny]

I think AMT is a good shout if we’re talking about future proof REITs

[SebReitz]

Thanks, that looks really interesting and wasn’t on my radar!

[safe]

I am going to explain why that does not work:

1. Dividend stocks: let’s say you invest 10K a year. The average dividend yield is 4%. Dividend stocks don’t grow that much so let’s say they grow 2%. Let’s say you grow your portfolio 6% every year and invest 12K for 35 years. Ok, you end up with 1,414,078.23. You need a good job to consistently pay 12K a year and if you are on an average, you can forget about buying a house.
2. Again, you are focusing on dividend growth rather than stock growth
3. OK, fair enough
4. And then a pandemic happens, or a 2008 repeat, or Brexit, … Dividend aristocrats have suspended dividends. Good luck if you were hoping for those dividends
5. See point 1.

Everybody who si young should invest in growth stocks to relatively quickly grow capital. I was lucky that my stock picks are rising but on the other hand I missed out on a few. When I got started with investing, I bought lots of these dividend companies, and diversified the hell out of my small portfolio. I realised that that was holding me back and gradually I reduced to 2 companies (and since yesterday 3 because I put a punt on AMC). With my portfolio value, 2 companies is good but I will expand later on. What I want to say: if you want capital growth, buy growth stocks, if you want to keep your wealth relatively stable, use dividend stocks. I can imagine myself getting all kinds of stable stocks when I retire, but at this point in my life, I need to grow capital.

[weenie]

@safe

And then a pandemic happens, or a 2008 repeat, or Brexit, … Dividend aristocrats have suspended dividends. Good luck if you were hoping for those dividends

It depends on what you’re invested in and how diversified your portfolio is.

At the accumulating stage, all dividend income will be reinvested = next time, more dividends paid out, rinse and repeat.

The majority of my dividend income comes from investment trusts and only one of them cancelled their dividend in 2020 (for 4 months before reinstating it). The capital value was hit in March but has pretty much recovered.

I’d say that your two company (now three) is a lot more at risk to the likes of pandemic, 2008 or Brexit - if one doesn’t do well, that’s 50% (or 33%) of your portofolio affected.

[Eden]

@weenie

It depends on what you’re invested in and how diversified your portfolio is.

I agree with this. It depends what your invested in. The small number of dividend stocks I do have only one of them cut their dividend and I didn’t buy them just for their dividend anyway.

@weenie

At the accumulating stage, all dividend income will be reinvested = next time, more dividends paid out, rinse and repeat.

This as well. I’ve seen articles that describe how bad dividend focused stocks are but they never calculate in reinvestment. They assume you’re not going to but assume in the other calculations that the other guy be it a fund manager or owner of a company is going to. Doesn’t make sense.

That’s not to say dividend stocks aren’t worse, just depends on your goals.

@weenie

The majority of my dividend income comes from investment trusts and only one of them cancelled their dividend in 2020 (for 4 months before reinstating it). The capital value was hit in March but has pretty much recovered.

This is a good point going back to diversification. Some trusts for example are focused of decent growth with a stable dividend and have always paid a dividend because they hold back some cash to ensure that stability through downturns.

[Cameron]

@Eden

That’s not to say dividend stocks aren’t worse, just depends on your goals.

This is the thing, they aren’t better or worse - they are just a company policy that shouldn’t really impact your investing decision:

Dividend Irrelevance

I see a lot of focus on dividends among new investors on Freetrade. While dividends are great I wanted to make a thread covering why it makes no sense to focus on dividends when making investment decisions (unless the company’s dividend policy is negatively impacting growth/unsustainable). Hopefully this can be helpful point of reference. This is referred to as Dividend Irrelevance There is a Freetrade thread on a video by Ben Felix that very neatly explains this, if you don’t want to read a l…

If you love Alphabet (for example) but you want a stable income, don’t ignore them because their policy doesn’t align with your goals. Just sell 3% of your shares each year - boom same outcome.

If you love AT&T (for example) but you don’t want income you want growth you can just reinvest their dividends.

Focus on the total return (which long term is driven by future earnings), that’s ultimately what matters.

[weenie]

It is very much about each individual’s investing decision.

@Cameron

Just sell 3% of your shares each year - boom same outcome.

Psychologically however, I know for a fact that I struggle with selling so there is comfort in getting income being paid out.

A balance of both is what I hope to achieve.

[BramblerJohn (John)]

Hi Weenie,

Are you…

Quietly Saving

[weenie]

Hah, yes that’s me - I try not to use this forum to blag more readers for the blog but thanks