Anyone who can set aside 250 euros a month for their own retirement has gigantic potential. Especially if you start your investments early and can still use the interest and compound interest effect for yourself in the long term, you will be able to retire rich.
Possibly with passive income, if you set the right course for this goal. How does that work with 250 euros a month? A great question!
So today let’s take a look at how I would now invest 250 euros a month in order to retire rich and with a maximum passive income. There are quite a few switches here that you should know as an investor.
ETF: market-wide and designed for dividends!
First, I would take a larger portion of this monthly sum and always invest it in passive funds. How much? Well, that might be a matter of taste. However, I would prefer to invest 60% of the money in low-cost passive funds. Although I would also split this amount of 150 euros.
For one, I would invest more of the money in a market-wide ETF. The MSCI World or the S&P 500 seem to be solid, market-wide opportunities that have long-term returns between 7 and 9% per year. With these options, you can therefore focus on increasing value and effectively building up your wealth. Something that is naturally important to a richer retirement.
I would also focus directly on dividends and generating passive income here, with quality naturally playing a greater role. My favorites on a passive fund basis would therefore be REIT ETFs on the one hand. In other words, low-cost passive funds that cover the area of real estate investment trusts, i.e. real estate. This can add a lot of quality income to your portfolio. Or a very, very selective selection of high-dividend ETFs. With words like “select dividend” or “high yield”, the risk always has to be appreciated. Such passive funds are often very cyclical.
In general, I would choose all passive funds, including the market-wide ones, in the distributing variant. I think that by bundling a well-diversified, market-wide ETF and an income ETF, you can get a lot closer to your goal.
Smaller part: dividend quality!
On the other hand, I would put a smaller portion of the monthly savings amount of 250 euros aside and in due course and when it has become more, put it in high-quality dividend stocks. For example, if we assume the remaining 40%, that would be around 100 euros a month. Every six, seven or eight months you could use this money to build a smaller, higher dividend position.
Which names are relevant here? Well, the group of particularly reliable distributors should be relatively familiar to Foolish investors. Dividend Aristocrats can also potentially be suitable for this goal. However, it is important as an investor to pay attention to the quality and sustainability of the dividend. With this part of the money you should try to improve your passive income quality and make it more constant. Yes, possibly a little higher.
Also, cheap undervalued dividend stocks can rise in value over the long term. Or if they keep growing. Accordingly, this could also be a measure that will increase your wealth over the years. And not just your dividend income.
Retire rich with passive income!
Retiring rich with 250 euros and thereby generating a passive income does not have to be two separate things: For example, if you invest part of the money in market-wide ETFs, invest a further part in high-dividend passive funds, taking into account the quality, and too good The last individual, high-dividend investments made, can achieve the goal. The rest is up to you. Just like finding out if my path could be yours too.
The post How I would invest € 250 today to retire rich & with passive income appeared first on The Motley Fool Deutschland.
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