Happy Monday! So I’m back again talking about my favourite topic – building a dividend income stream. This time, it is all about the numbers. How I am building that £1,000 a month dividend income stream which will support us when we reach our early retirement goal. Building this passive income stream will help us to achieve that goal. But it is a long term aim. We will need to save and invest a LOT in-between now and then. Financial freedom is such a big dream of ours, so building this dividend income stream is so important to us.
How do we intend to build a dividend income stream?
Firstly, I invest within a stocks and Shares ISA. I have mine with Hargreaves Lansdown as I found it the easier platform to navigate. I would recommend them, though obviously there are other options available 🙂 the reason why I invest within an ISA is because of the tax benefits. Anything I invest within that tax wrapper is sheltered from having to pay tax on it. So any dividends I receive, plus any growth from the stocks and/or funds that I have are protected from having to pay tax on them. Win!
The next aspect of building this dividend income stream is time. And, at the moment, time is on our side! It should help in creating more wealth than we can actually save. How? Because of compounding. Every single dividend income payment we receive at the moment is re-invested back into shares/funds. That then creates more income and the cycle continues. The more time passes, the bigger these dividend income payments should be [that’s the plan anyway!] and so then re-investment will buy even more and so on. That’s how the rich get richer! And we are starting at the bottom 🙂
Another part of building this dividend income stream is consistency. We have to be consistent with our savings. There is no point saving lots one month and then nothing the next. After all, slow and steady wins the race! So the plan is to invest £700 minimum from now until we reach this goal. £700 each month is a big chunk of our household income, so it is not always that easy!
However, in my monthly aims post every month my savings/investment target is £700 and this is why. Yes, I would like it to be more but unless I figure out a way of making a lot more income, then £700 is the most we can stretch to, at the moment. If you buy something from The Frugal Cottage shop, or support me on Patreon, that would help 😉 I provide up-to-the-minute updates over on my Patreon so make sure you join me over there.
Why £1,000 a month?
I have sat and worked out our minim expenses for early retirement and £1,000 would cover most of it a month. Yes, we wouldn’t have a luxurious lifestyle but it would be a start! This is assuming we have become mortgage free and have very little outgoings. Obviously, if we could get to more than this, then fantastic! However, building a £1,000 a month dividend income stream on our [fairly] low incomes will be difficult enough. So I don’t want to dream too big and be disappointed! If we reach this and still have some time, then we might change the goal. Who knows 🙂
If this sounds like something you’d be interested in doing, then come and join me in a live workshop about how to start investing. It is an hour long workshop where you will get all the information and skills to start investing and building your own dividend income stream.
So there we have it! My plan to build an £1,000 a month dividend income stream. I will keep you updated – monthly through my dividend income posts and in real time over on my Patreon. It’s going to be a long journey but I am excited 🙂
Have you started investing to receive a dividend income? I’d love to hear from you!
Follow me on:
Facebook | Twitter | Instagram | Youtube | Pinterest | Patreon
PIN FOR LATER:
Hi. Good luck with all of this. Hope you don’t mind me asking, but I’m wondering what your timeline is? How many years are you planning on investing £700 a month before you reach your goals?
Nearly 20 years still to go!
Given your 20 year timeline, is there a reason for investing via ISAs rather than also making use of the tax advantages of a SIPP ?
I imagine because they can access an ISA at any time but can’t access a SIPP until 55. That being said I don’t understand the fixation at this point on dividend income as opposed to straight growth of the funds within the ISA. It’s the overall value of the ISA that’s going to determine whether they can retire at 50 or not
You right, she should be focusing on growth stocks, 80% to 90% in growth equities, for 20 years timeline.
Morning,
Just wanted to say I really enjoy this blog. Out of all the FIRE style blogs out there I definitely rate this top.
I’m wondering though if you could run through the mindset of dividend investing either in response or in a post – We are following a similar path to you (although we split our savings into respective ISAs) and I’m struggling with the question of dividends vs growth ETF. I appreciate that the companies you invest in should grow as well, but do you think that your overall portfolio value is potentially stymied by focusing on income rather than growth?
I love the idea of building up the monthly dividend stream as you are, but I’m edging towards growth funds for 10-15 years and then gradually moving into dividend funds and stocks. Interested in your thoughts 🙂