Imagine planting a tree that grows money instead of leaves. Too good to be true right? Well not quite. Let me tell you my story; how I generated my first 500$ in passive income. If you have somewhere between 100$ to 2000$ lying around that you don’t need anytime soon then you too can invest that money and generate a healthy passive income.
Disclaimer: Only invest the amount that you know you don’t need anytime soon (at least within the next 3 months).
Alright, so how do we do this?
Dividend Stocks, the oldest trick in the book!!
I know what you are thinking. As a risk averse person I too was skeptical about the stock market at first. The stock market is a jungle of numerous opportunities and risks. There are many like Warren Buffett who made a fortune in the market; however, beware if you are not careful you can very well lose a lot of money. In general dividend stocks are low risk investments with little overhead.
For starters a dividend stock is usually a stock of a well established company that distributes a small amount of their profit to the shareholders. For example if I buy 1 stock of Canadian Bank of Commerce (approximately 100$) then I am eligible to receive 4.5$ every 3 months. On top of that the stock value goes up as well over time. Maybe in 3 months the value of my stock will grow to 110$. Moreover, the well established companies with a good track record of paying dividends barely sees a downturn. Over a longer period of time the value for these stocks always goes up.
Here’s a list of some of my favourite dividend stocks in Canada
- Scotia Bank (BNS)
- Enbridge (ENB)
- Royal Bank of Canada (RY)
Investing in dividend stocks is not going to make you filthy rich overnight but it is a good way to start generating passive income. Almost every investor has investments in dividend stocks.
Start Small and grow
Start small and minimize the risk. I started my trading account with $100 with Wealth Simple Trade. I then started contributing 200$ from every paycheck I received from my day job. 3 months later my initial contribution was $1300 and my account value grew to $1900.
Be cautious as a new investor, choose an online broker that has $0 commission. I picked wealthsimple trade for this very reason.
Don’t just pick a stock in random. Research what stock to buy. Here’s couple good sites where you can research