For many single parents, budgeting for family expenses can be quite challenging. When adding in investments for retirement, many single parents simply give up as they are strained to find the right way to invest scarce money. If you are a single parent who is considering the start to your investments and retirement planning, then you may want to consider the advantages to dividend investing.
Source of Income
Stocks that provide a solid return on your investment will typically provide a source of income by also paying out a quarterly, or semi-annual, dividend. If you invest in a company that has good foundation fundamentals, you can expect the stock price to rise which is a great way to invest for retirement. But, for single parents, the additional advantage comes by way of dividend payments which you can either use for re-investing or, even better, utilize as a source of income.
Good Return On Investment
Most companies that pay out semi-annual or quarterly dividends are companies with a good financial foundation and, typically, can weather through bad economic times or bad news that affects their industry. In the long term, and beyond your passive return by dividends, these types of stocks will rise in share price and provide retirement savings.
Beat Inflation
Dividend stocks, by their very nature, also beat out inflation rates. With inflation rates typically averaging around 3 percent each year, a stock that not only provides a rise in share price, but also pays out a dividend greater than inflation, will yield a good return on your investment. In comparison, stocks that do not pay out dividends may not rise in price easily and, by not paying dividends, it is feasible that you would miss the opportunity to obtain passive income.
As a single parent, if you find there are daily challenges in your ability to budget and save for financial emergencies, consider investing in dividend stocks. Based on these advantages alone, the dividend stock provides a great financial tool for families during stressed economic times. As always, consult your financial planner before making any decision to investment in stocks, bonds, or any other financial vehicle.
Sources:
http://www.fool.com/investing/dividends-income/2011/11/22/the-key-to-smart-dividend-investing.aspx
http://www.investopedia.com/terms/r/returnoninvestment.asp
https://www.cia.gov/library/publications/the-world-factbook/fields/2092.html