Go Darke

Light thinks it travels faster than anything but it is wrong. No matter how fast light travels, it finds the darkness has always got there first, and is waiting for it

Personal finance

Spending free money

What should I do with my dividends?

I don’t think there is necessarily a right or wrong answer to this. This is largely personal preference. Some people like to reinvest it in the thing that gave them the dividend, be that more of the same company or more of the exchange traded fund or whatever. You can even use that money to buy yourself something nice (and shiny). Cue the sound of every financial adviser and FI(RE) enthusiast sucking air through clenched teeth. But really, fuck ’em. Its your money.

I can only tell you what I do…

I like to have a visual representation of the dividends I have accumulated so far over my life time. If you buy more of the same or blow it on stupid shit I find I lose that feel good sense of satisfaction that comes from being incredibly austere. Ha. Trading and investing is mostly about psychology and I like that tiny hit of dopamine I get from seeing my dividends separated out and working independently from everything else. Free money making more free money. There is something incredibly gratifying in watching that happen, for me at least. I suppose it depends on how your brain works…

New york skyline.jpg

No matter where my dividends come from, it all gets dumped into my trading account and from there I will always buy the same (relatively boring) Property Exchange traded fund. Some brokerages have wicked (and evil) charging mentalities (so be careful here, you may want to let your dividends pile up a bit before committing yourself to a purchase lest you dilute your purchasing power with fees)

I will ONLY use dividend to purchase this fund and so the running total is always more or less what I’ve earned in dividends, less expenses, and plus or minus whatever profit or loss the fund has made so far.

So why a property ETF? Well… I wanted something that was a little bit asymmetrical to normal equity, in so far as property has its own schitck and doesn’t necessarily track the stock market. (also) When I decided to start doing this property was in a deep dark hole and relatively cheap which made it even more attractive, that and in terms of a balanced portfolio I was a little lite on property generally. But really you could do anything with your dividends…


You could even buy some venture capital or penny stocks or crypto or even cattle futures[1] should you feel so inclined. If the route you’ve chosen fireballs in spectacular fashion, well, its only dividends…  and theoretically, it could turn into something amazing. Unlikely sure. But the percentile chance is not zero.

I like to separate my investor brain from my trading brain, or even I suppose my speculative brain, so this isn’t really my thing. Dividends fall solidly into my investment ideology and so (generally speaking) I try and do reasonable and considered things with this money. But that’s not say you should do what anyone else does, as long as you accept personal responsibility for your decision and appreciate that you’re taking on substantive risk with less established asset classes.

[1] These are all things that I don’t really understand appreciate and so they tend to occupy the bottom tier of things I would throw money at.