first post here. It will probably be quite long, but I hope to provide all the relevant details to get specific answers.
I have never been active in investing: on one hand, I never encountered the topic, on the other hand I never had in-depth discussion with my parents. I was the "put money in the bank, and leave them there" kind of guy.
Recently, however, I started diving into the subject prompted from what I consider "good life ideas" from the Mr. Money Mustache blog.
My objective is to reach "financial independence" or "early retirement" as in: I have a stream of income which is good enough to sustain myself even if I were not to work (in reality, I just want to quit my current job and have time to pursue other interests, which might lead anyway to a job).
I am Italian. I live in France and work in Switzerland. I have no idea where I might be next year: most likely in another place in Europe (likelihood > 99%).
I already own an apartment in a big city which gives me 1350 euro/month (before taking away expenses and taxes, I started renting it last year so I don't have clear numbers on this).
I have monthly expenses around 1000/1200 euro (all included, but excluding pension fund and health insurance...those 2 are subtracted by my company before giving me the money, so I don't even consider them as expenses, they are just money I never see and over which I have little control. Plus, given the benefits they give, I am not looking to change them).
My salary (order of 6000 CHF/month) right now goes fully into my bank account.
First order approximation, I am living off my rent and not touching the salary money.
One of the things which is clear about myself is that I am a low-risk investor + I am a lazy investor (I don't want to check my investments once a day...more like once a month, maybe). On the other hand, given the plan I came up with so far (read next section) I don't see the advantage of having a financial adviser managing my money.
My plan so far:
After some reading, it seems to me that the best strategy (as in: the best for me, of course) is to invest in dividend-paying entities. In particular, I think I want to approach this in 2 steps:
- First: buy some stable/low-risk ETFs that pay dividends, in order to start seeing results
- Second: do my own homework, and look for stocks of companies with good track records of dividend paying in order to create my "personal" diversified portfolio (the typical suspects here are Coca-cola, J&J and similar companies)
Question 1: How do I start? or "the broker" problem
Right now, the only thing stopping me from starting this plan is that I am quite confused when it comes to "how to start".
Option 1 would be to use the investment tools that my bank offers (UBS); I could buy stocks/ETFs directly from the bank and there would be no need to transfer money around. On the other hand (not considering fees, right now) I don't understand what would happen the moment I will move to another country: can I transfer my ETF shares without incurring in fees? Notice: I asked this to my bank but I spoke to a person with poor English skills, so I am not sure she understood what I was asking, because her suggestion was "open an account with a French bank, since you live there" (???).
Option 2 would be to use an online broker such as Interactive Brokers. They seem to be available in Europe and, as far as I can understand, there should be no problem in case I move to another country (except that I have to notify them, I guess).
Could you please provide some insight about this? I am planning to talk again to my bank (hopefully with another adviser), so if you have any ideas about questions I should ask, please let me know.
Also: what kind of insurance do I have about the money I send to the broker? if I have my money with a bank, they are "guaranteed" up to a certain amount. Does something similar exists for brokers or should I just trust their reputation?
Question 2: What criticism do you have for my plan?
I have been reading quite a bit about dividend investing around the web. To me it seems like a solid plan, once a person has a clear goal in mind and long-term perspectives. However, there are 2 issues I have with it:
a) it seems "too good to be true", in some sense. What kind of critiques do you think are appropriate for such investment plan? If you had to play devil's advocate and try to convince me that this is a bad idea, what would you say? :)
b) most of the material I found is US-based. While I managed to differentiate quite clearly what will work and what will not work for me (being based in Europe), do you have any insight/suggestion that I should look for, when considering dividends in Europe?