Here’s how much you have to invest to pay for Christmas with dividends
Ever wondered how much you need to invest to pay for Christmas out of your dividends? Nope, us neither – but now the Association of Investment Companies (AIC) has answered the question no one was asking.
According to the AIC, an investment pot of £5,000 yielding three per cent would produce £37.50 per quarter, or £150 a year, assuming a quarterly dividend. Not exactly a king's ransom, but enough to pay for a few book tokens…
Meanwhile, a pot of £10,000 yielding three per cent would generate a quarterly income of £75, or £300 a year. If that yield was closer to five per cent, the income would be £500 a year. That's a couple of iPads.
Value of portfolio | % yield | £ yield | Quarterly dividend | Bi-annual dividend |
£5,000 | 3 | £150 | £37.50 | £75 |
£5,000 | 5 | £250 | £62.50 | £125 |
£10,000 | 3 | £300 | £75 | £150 |
£10,000 | 5 | £500 | £125 | £250 |
Annabel Brodie-Smith, communications director at the AIC, pointed out that the best long-term gains are made by reinvesting dividends.
"[But] many investors want the income from their shares to help with living expenses.
"Our research shows that you don’t have to have a huge portfolio to generate an income which could at the very least prove helpful at certain financially stressful times such as Christmas."