Markets are very dangerous at the moment, as anyone investing is likely to see a loss of capital but for anyone starting out to acquire knowledge to build their Snowball, your Snowball should be different from the SNOWBALL, out of adversity comes opportunity.
As prices fall yields rise and as dividends rise, the yield you buy at should gently increase over time as long as you hold the share.
When you start your journey, the amount you can invest may be limited but compound interest takes a while to make a noticeable difference so that should be treated at a positive not a negative.
If you use the above table a dividend income Snowball yielding 7% would provide a retirement income of £21,474.00. Hopefully your yield could be higher, much higher.
Note: The last 5 years earns income nearly as much as the previous 20, one reason that a ‘retirement glide path’ is such a bad idea, if you have a dividend re-investment Snowball. If your Snowball is TR it might be a very good idea.
Using the 4% rule, the retirement income would be £12,270.00
Diversification.
Currently the SNOWBALL only invests in Investment Trusts as many currently trade at discount to NAV so the yield is enhanced. The Trusts currently held are from the Watch List updated most Saturdays although as the fcast income is ahead of the plan the SNOWBALL has bought some Trusts with a lower yield as a holding outside from the Renewable sector.
IF the price rises and the yields fall, the buying yield is still locked in but the earned dividends could be re-invested into ETF’s but that problem, as there are usually unloved sectors of the market, is not in the foreseeable future.
I appreciate the honesty and openness in your writing.
I appreciate the depth and clarity of this post.
What I really liked is how easy this was to follow. Even for someone who’s not super tech-savvy, it made perfect sense.