It is time for another Q&A session with Dividend Warrior! In this post, I shall explain how I managed to build up my dividend portfolio. It is gonna be a long post.
2002 to 2008: Poor student and NSF
During my NS days, I served in a stay-in unit, so I was able to save up a few thousand dollars. During my undergraduate days, I did some part-time tuition to support myself. I managed to save up a little. I was bonded and so the government paid my school fees. I graduated from University in 2008 and started work immediately with no education loans. My starting take-home pay was decent, around 3k/month. I started saving like mad because I came from a low-income family and I really want to achieve financial freedom as soon as possible. I am tired of being poor during my childhood and teenage years.
Since young, my parents have told me horror stories about the stock market. They told me people were committing suicide due to stock market losses. They told me to put my money in a bank account and earn interest from it. I think they were freaked out by the Asian financial crisis in 1998 and the dot.com bubble bust in 2000. At that time, I shared their concerns and fears. Therefore, I was so glad that I was safe and sound when the sub-prime crisis hit the world in 2008 year end. I was having my popcorn and watching the carnage from the sideline as Lehman Brothers collapsed and AIG was on the verge of collapsing too. Banks were receiving bailouts. The stock markets were crashing hard.
2009 mid-year: Market Bottom
In 2009, the US automobile industry was going to collapse too. The H1N1 virus struck the world. Governments all around the world were trying desperately to pump money into their dying economies. People were losing their jobs. Global markets reached a bottom.
By this time, I managed to save up around $50k. I also received my first pay increment and bonus. Being cash-rich, I felt good about myself. However, there was a problem. The inflation rate (4% - 6%) was increasing way beyond the almost non-existent bank interest rates. My money was losing value fast! I started to look for alternative investment products from the banks. I went to UOB and got myself an insurance-investment product. This product pays me 6% over a period of 6 years, capital protected. This product was a combined effort between NTUC and UOB. I plonked my $50k hard-earned savings into it. I continued my hardcore saving habit. No vacations, no car, no house, single.
2009 year end: Doing the unthinkable
I started reading financial blogs, forums, websites and books. All these finally triggered my first foray into the stock market. Starhub was my very first stock. My mom almost strangled me to death upon knowing my investment.
But I held on to my belief. I knew it was risky, but I felt the dividend investing method really suits me. My aim is to go for quality dividend stocks and REITs for stable passive income. No S-chips!
2010 - 2012: Powering on
Between 2010 and 2012, there were the Japanese Earthquake/Tsunami/Nuclear fallout and Euro Debt Crisis/Drama/Saga. I kept adding, tweaking and strengthening my portfolio during dips. I think my portfolio has finally stabilised this year. I am satisfied with the performance of my core holdings. I am so glad I started on this dividend investing journey. Unfortunately, I should have used that $50k in 2009 to buy more dividend stocks. T T
This experience taught me to be "Greedy when others are Fearful". My $50k policy will be maturing in 2014. So, that is something to look forward to. I will probably invest half and save the rest.
So, what will you do if you have a lump sum of $50k? Comment below. ^^