Since their inception, stocks have been a great way to build wealth and make your money work for you. Traditionally, the idea behind stocks is that the longer you hold onto them, the more money you’ll earn. However, another form of stock investing is becoming particularly popular with younger generations: dividend investing.
Sure, the appeal of stock investing for long-term growth is appealing, but the idea of having a stream of passive income at your disposal in order to retire can sound even better. This is especially true with younger generations, who are more likely to want to have the financial freedom to experience life and try many different career paths — something that passive income brought upon by dividend investing can offer.
Alongside their drive for freedom, younger generations are also finding ways to utilize technology to their advantage. Because most young Americans have never grown up in a time without computers (and some don’t know an era without smartphones), they are more likely to be accustomed to technology advancements than investors in past generations. This is allowing them to use their knowledge of modern technology to become incredibly successful when it comes to making stock market decisions.
Here are the many different ways that technology is impacting the stock market, and how you can use them to your advantage.
Before computers, stocks were traded in person, handing physical documents of ownership between different brokers, or selling them for cash. While we’re certainly a long way from trading papers and documents to sell stocks, the new ways in which stocks are being traded today are radically different, and even make stock trading done 10 and 20 years ago look ancient.
While computers have been the most popular method of stock trading, new apps are entering the fin-tech world and providing a new space for investors to buy and sell. The incredible new direction that investment is heading in allows stock trades to be made directly from your phone. They also provide real-time updates on all stocks in your portfolio, so you’ll know when it’s the best time to buy and sell.
In addition to that, many financial planning apps like Personal Capital offer insights on how to best invest your money. By having an app give insights and recommendations on your investments, you can find yourself saving money that would have originally gone to financial planners investing your money for you at a fixed rate. In addition to that, Personal Capital consolidates all of your financial accounts, such as bank accounts and retirement accounts, onto one platform, allowing you to better manage your portfolios.
Investing is always a good strategy for earning more money, however, the unfortunate truth is that you cannot get your money to work for you if you don’t have enough to invest. As of, only about 52% of Americans are investing in stocks. Part of the reason for this is because stocks are often a costly investment. Popular stocks like Facebook and Amazon are often valued at several hundred to several thousand dollars. Investments in real estate, while a great source of passive income, can be even more expensive, as they require high upfront down-payments. This puts a barrier to entry on investments for many Americans living paycheck to paycheck.
However, new options for saving money are starting to appear and help Americans have extra cash ready for new investments. The good thing about saving money is that it doesn’t take much for wealth to accumulate when saving. Small amounts of cash saved here and there can be just what many people need to start their portfolio. Many Americans are finding that one way to do this is to switch to a no-fee online bank account. Because they’re free to keep money in, there’s no need to worry that you’re losing money on your savings. Furthermore, many online banks offer unique features such as automatic savings, which helps you reach your goal of saving small amounts of money in preparation for larger future investments.
Online Real Estate Investing
As mentioned previously, real estate is a great dividend investment that, if done properly, can be a regular source of passive income. Investing in rental properties or commercial real estate can often generate high-profit margins from rent payments. However, this comes with a caveat: real estate requires high upfront payments and maintenance costs, which may be frequent depending on the property, that can often cut into the profits.
Thankfully, there are now other ways to invest in real estate using new technology. Online REITs are beginning to appear that allow groups of investors to pool their money together to invest in different properties. This helps mitigate the high costs of an initial down payment and spreads them out across multiple investors. In addition, investing in an REIT means that you won’t have to worry about paying maintenance costs on properties, as those are managed separately.
Fundrise is an example of a platform that allows this to be done on a large scale. Because of the lower-cost nature of REIT investing, it allows investors to make larger purchases of properties without breaking the bank on initial investments. As such, one could buy into a multi-million-dollar commercial real estate property without being a millionaire. This would still generate a decent source of passive income from rental payments.
Another less conventional form of dividend investing is starting to become popular. Similar to real estate, website investing trades a high upfront cost with a steady stream of monthly income. The difference here is that the income generated comes from advertisements and affiliate links rather than rent. Due to the volatility of online real estate, investing in websites is riskier than real estate, as new websites pop up every day and Google’s rankings can change on the fly. However, with the right website, you could be seeing a solid stream of passive income in your bank from your website.
There are lots of websites out there, such as Flippa or Empire Flippers, that allow you to purchase high income earning websites. When purchasing a website, it is recommended that you do your research as you would with any other investment, as a poor web investment could cost you money. On top of that, decide what type of website you feel would be best for you. There are lots of options ranging from simply blogging and generating ad revenue, to running an entire e-commerce business.
As you can see, there are many great options that technology offers investors for developing high dividend yielding investments. From investment apps to new types of tech stocks altogether, skipping out on using new technology for investing could be detrimental to one’s portfolio. At the same time, utilizing it to your advantage could lead to a very lucrative investment career.