Thinking of using my savings to buy dividend stocks

AARRRGH

Hello all

I hope someone can offer me advice on this.

I am worried about the collapse of the euro as there appears to be no light at the end of the tunnel (if anything I think we're headed for a severe double dip recession with Ireland or Germany pulling out of the euro) so I am toying with the idea of buying divided stocks in a somewhat stable company like Johnson & Johnson or Kraft instead of keeping my money in the bank.

I am ok with taking a small loss on the shares, or getting no dividend at all, what I really want is somewhere stable to put the money.

I want to avoid gold as it is at a record high which seems like a reason to avoid it!

Am I mad?

Are there any obvious risks I'm ignoring or don't know about?

As stated, I am looking for stability rather than growth.

Thanks.

Victor

It depends on how much you want to spend and what you expectations are.

If you expect things to get worse, buying (only) shares possibly isn't the best idea. the general rules of diversity (not all eggs in one basket) and prudence (don't bet what you can't afford) come to mind.

So be careful of buying only a few shares or in one market sector and don't buy small amounts of shares where the transactions costs put you at an instant disadvantage.

willietherock

AARRRGH wrote: »

Hello all

I hope someone can offer me advice on this.

I am worried about the collapse of the euro as there appears to be no light at the end of the tunnel (if anything I think we're headed for a severe double dip recession with Ireland or Germany pulling out of the euro) so I am toying with the idea of buying divided stocks in a somewhat stable company like Johnson & Johnson or Kraft instead of keeping my money in the bank.

I am ok with taking a small loss on the shares, or getting no dividend at all, what I really want is somewhere stable to put the money.

I want to avoid gold as it is at a record high which seems like a reason to avoid it!

Am I mad?

Are there any obvious risks I'm ignoring or don't know about?

As stated, I am looking for stability rather than growth.

Thanks.

There was a v good article about currency risk and buying shares in yesterday's Money section of the Sunday Times if you can get it. Basically any American company with profits in Euroland lose out with profit translation costs with a strong dollar to euro.

another world

willietherock wrote: »

There was a v good article about currency risk and buying shares in yesterday's Money section of the Sunday Times if you can get it. Basically any American company with profits in Euroland lose out with profit translation costs with a strong dollar to euro.

important to note that it's only a paper loss so until the money's actually exchanged to dollars there's no real loss

JJJJNR

AARRRGH wrote: »

I am worried about the collapse of the euro

I want to avoid gold as it is at a record high which seems like a reason to avoid it!

Are you mad if the euro fails gold will increase in value, gold is now and will be a safe haven for a long time coming.

Victor

another world wrote: »

important to note that it's only a paper loss so until the money's actually exchanged to dollars there's no real loss

I think its a bit more nuanced than that. Let us say you have an online betting about that you put €1,000 into. Yoy play poker and "lose" €900. Are you saying you haven't really lost the money until you close your account?

JJJJNR wrote: »

Are you mad if the euro fails gold will increase in value, gold is now and will be a safe haven for a long time coming.

So, how much gold do you hold?

If the Euro drops, gold might appreciate against the Euro, but it might also drop against other currencies.

Jim2007

Victor wrote: »

I think its a bit more nuanced than that. Let us say you have an online betting about that you put €1,000 into. Yoy play poker and "lose" €900. Are you saying you haven't really lost the money until you close your account?

Assuming that you have done your homework and invested in a good solid company at a reasonable price, then it is not the same thing at all. All that has happened is that the market's short term view has changed for the worse.

But if you have just been speculating and had been buying on hunch, following the crowd etc... then it is certainly possible that there is no difference.

Jim.

RoadKillTs

Let us say you have an online betting about that you put €1,000 into. Yoy play poker and "lose" €900. Are you saying you haven't really lost the money until you close your account?

Its completely different. If you lost 900 playing Poker its gone and thats it but investments go up and down all the time so its normal to be down money at different times especially these days are markets are very volatile but if its a good investment then it can recover as Jim said.

another world

It's also likely the profits made in the subsidiary would be used again in that subsidiary so it would have no effect and if not, a good treasury department would have a hedge on it.