How To Invest Your First $5,500 TAX PROTECTED

Investing Your First $5,500 TAX PROTECTED!

Thanks for visiting the Financial Investor, I Made A Video Covering How To Invest $5,500 or Less.

The Video is Here.

 

Video Below!

 

It is important to begin Investing, but prior to investing always do the following;

#1 Pay Off High-Interest Debt First (Anything Over 5%) School Loans, Credit Cards, Etc. 

#2 Create Your Rainy Day Fund at least 3-6 Months of living expenses. This will cover the essentials (Shelter, Food/Water, Utilities).

 

 

Broker: Bank of America’s – Merrill Edge

Link: https://www.merrilledge.com/cmaoffer

Bank of America’s Merrill Edge is a great place to start I listed some of their perks below, but you can always look around and decide on another on your own.  Just make sure the broker your investing through provides the following account in the next section.

  • 300 FREE TRADES FIRST 90 DAYS!
  • $0 Annual Fee
  • $0 Minimum Investment
  • ** Retirement Account! **
    $0 Stock Trades & ETF Trades IF YOU HAVE $50,000, Checking, Savings, Investment Accounts.

 

There are other brokers out there as well, check out my Investment Brokers Page.  There are other brokers that offer commission free ETF’s that allow you to get your account started and begin trading FREE!

 

 

Account: Self Managed Roth IRA

Video Of Me Starting My Roth IRA

After taxed dollars are contributed to Roth IRA, You can withdraw your contributions at anytime without penalty.

At 59 1/2 you can withdrawal your Capital Gains, Dividends, InterestTAX-FREE.

If you withdraw prior to 59 1/2 you will pay a 10% penalty on your earnings and then get them taxed.

You can also leave them in the account to continue to grow & pass the account off to your spouse or children.

 

I love the idea of a Tax-Free Retirement with a Roth IRA,  The beauty of the Roth IRA is that all account growth. It’s a combination of Interest, Dividends and Interest and it’s 100 % tax free.  I don’t plan on staying in my current tax bracket I want to go Up, Up, Up!  Who knows if “Universal Health Care” becomes a thing where we pay 50% to federal income tax, so I will opt to choose a Roth IRA.

 

 

Basic Investment Terms: Dividend & ETF

A Dividend is a sum of money paid regularly monthly or quarterly by a company to YOU its shareholder.

This means your getting paid monthly or quarterly for just having your money invested!

 

A Exchange-Traded Fund(ETF) is a fund traded on stock exchanges, similar to a stock.  An ETF holds multiple assets such as stocks, bonds, commodities and currencies.  An ETF gives new investors diversification while only investing their first $5,500 or less.

 

 

My Thoughts:

As a new investor Getting Paid Monthly with Dividends gives you a warm fuzzy feeling you’ll learn to appreciate and you won’t have to Pay Taxes on ANY of it meaning you’ll be able to reinvest your dividends to compound month to month year after year!

Then once you have your base diversification with an ETF, you can begin reading and studying how to hand pick individual stocks and can begin investing into individual ones.

 

 

The 5 Hand Picked Dividend ETF’s

Now how to invest your first $5,500? Take a look below at these hand picked Dividend ETF’s!

DPM: Dividend Payout Per Month

DPY: Dividend Payout Per Year

Using example numbers, below is how much you would receive if you invested $1000, $2,500 or full $5,500 per year into your Roth IRA.

This does not take into account if you enabled DRIP and re-invested your monthly dividend payouts back into the ETF.

OUSA: O’Shares FTSE US Quality Dividend ETF

This is Shark Tanker Kevin O’Leary’s ETF which holds 600 of the largest publicly-listed companies within the US—and weighted by three 3 factors: high quality, low volatility, and high dividend yield. The fund attempts to capture higher yield while attempts to capture higher yield while mitigating holding risks. OUSA places a 5% cap on any one constituent at each quarterly re-balance on each security to avoid under-diversification.

Price: $30.74
Expense Ratio (Annual Fee): .48%

Price To Earnings Ratio (P/E): 22.41
Price To Book Ratio (P/B): 4.06
Avg Yield Over Past 12 Months: 2.06
Year To Date Change: 13.93%

 

 

SCHD: Schwab U.S. Dividend Equity ETF

SCHD is a market-cap-weighted fund whose selection universe only includes firms with a 10-year history of paying dividends. Within that universe, SCHD uses fundamental screens (cash-flow to debt ratio, ROE, dividend yield, and dividend growth rate) to build its portfolio.

Price: $48.87
Expense Ratio (Annual Fee): .07%

Price To Earnings Ratio (P/E): 20.68
Price To Book Ratio (P/B): 5.12
Avg Yield Over Past 12 Months: 2.86%
Year To Date Change: 14.63%

 

 

DHS: WisdomTree U.S. High Dividend Fund

DHS has the most comprehensive portfolio in the US high-dividend yield segment. While the fund differs from our benchmark, its biases may appeal.  DHS somewhat overweight in energy and telecoms at the expense of tech and healthcare, and carries a slight mid-cap tilt. The fund is easy to trade, with small spreads for retail investors and excellent underlying liquidity for those dealing in bulk.

Price: $70.83
Expense Ratio (Annual Fee): .38%

Price To Earnings Ratio (P/E): 23.4
Price To Book Ratio (P/B): 2.83
Avg Yield Over Past 12 Months: 3.11%
Year To Date Change: 7.8%

 

 

DVY: iShares Select Dividend ETF

DVY offers easily traded exposure to the US high-dividend space that skews toward smaller firms paying consistent dividends. The fund’s dividend yield is, in theory at least, sustainable: DVY’s methodology has a robust sustainability screen, designed to ensure companies pay steady and rising dividends by using five-year dividend growth, payout ratio, and payment history criteria.

Price: $95.40
Expense Ratio (Annual Fee): .39%

Price To Earnings Ratio (P/E): 25.63
Price To Book Ratio (P/B): 2.61
Avg Yield Over Past 12 Months: 3%
Year To Date Change: 10.07%

 

 

VIG: Vanguard Dividend Appreciation ETF

VIG focuses on dividend growth, and it’s one of the most popular ETFs in the US total-market segment by assets and liquidity. The fund selects firms that have increased their dividend payments for the past 10 years, and market-cap-weights its holdings.

Price: $97.80
Expense Ratio (Annual Fee): .08%

Price To Earnings Ratio (P/E): 23.63
Price To Book Ratio (P/B): 4.18
Avg Yield Over Past 12 Months: 2%
Year To Date Change: 16.11%

 

 

Ending Notes:

I won’t tell you which specific ETF you should invest in ultimately it’s your choice!

I think each of them have their own positives and for the long term, non of them are a bad choice because your capital appreciation will go up over time and you’ll get paid monthly dividends.

 

 

I Hope You Enjoyed This Article.

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I want to know what’s on your mind and get ideas on how you are planning on investing in your future.

 

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Thanks For Your support,
Financial Investor

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