On hearing about dividends we often tend to imagine about an easy and relaxing life without having to slog to earn money, but the reality is far from imagination. Usually this is not the exact situation as far as dividends are concerned. Dividends can certainly fetch you a lot of money but when you have a large stock of investments for which you may have a handful of returns. In this edition we shall traverse through the bitter and better truth about the dividends.
Generally dividends are small sources of funds. There is a need to emphasize on the term small, for if you have planned for these dividends to be the only source of income for your retirement you should have a big amount of money invested to solely depend on this. Not only that, you also have to trim on your expenses early on for e.g. in order to achieve a return of around 10% within a year, you should have an investment amount of no less than $500K.
Getting into debts and trying to get out of the same clutches of financial complications has been a common phenomenon in US. Many have chosen debt settlement companies as a mode of debt relief, but even then dividends do not make much sense as far as investing is concerned. The option of dividends is used mostly by novice investors who have little or no understanding about the stock markets. Although it is not impossible to have high yielding dividends, it is advisable to have alternative investments to fall back upon.
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