Get Started Investing Newsletter

What we’re chatting about this week…

Umm. Where exactly do ETF dividends go?

If you’ve only just started investing, you might wonder - do ETFs pay dividends? And if they are made up of tens or hundreds of different stocks, how do I actually receive this money?

The short answer is yes - ETFs can pay dividends. However, it depends on the underlying assets within the fund. An ETF, or Exchange-Traded Fund, is a type of investment fund that consists of a collection of assets like stocks, bonds, or commodities. If the assets within the ETF generate dividends, those payments will make their way to your portfolio. Essentially, you'll receive the same amount of dividend as if you owned the underlying assets directly.

But, dividends from ETFs are not distributed immediately. Instead, they first go through the 'cash component' of the portfolio. This process occurs because of the irregular frequency of dividend payments from the underlying stocks. ETF providers collect and pool these payments before distributing them to investors.

Typically, dividend payments from ETFs occur on a quarterly basis. However, this can vary between ETFs. As always, to find out the specific payout frequency for a particular ETF, refer to the product page on the issuer's website. Don’t forget, we’re not alone in our investing journey either - join the Equity Mates community in our Facebook Discussion Group or ask us your questions at equitymates.com.

How do you build a beauty empire from a garage?
Sophie and Maddy continue their founder series this week with an epic guest - Kate Morris - the Founder and Director of Adore Beauty and Glow Capital.

In this chat Kate talks about her journey building an online beauty retailer before the world knew it was ready for one and her advice to other entrepreneurs who want to get started (just do it!).

Question from the Community

Should I invest my emergency funds?

What do you do with that pool of money that allows you to tackle emergencies without taking on debt? Should you invest it?

At Equity Mates, our general rule of thumb is to have access to three to six months of expenses in cash. Then if anything happens - unexpected expenses, lose your job, your car breaks down - you’ve got a buffer to get you by for a little bit.
Everyone is different, but here’s our three rules for our emergency fund:
1. That money should be easily accessible.
2. It should be stored in a low risk environment.
3. Out of sight and out of mind (so you don’t spend it!)

Our thoughts? The best combination of these factors is a high-interest savings account. Interest will help you beat inflation, but it isn’t as risky as peer to peer lending, and it’s more accessible than the stock market.
Listen to this episode to hear Bryce and Alec compare their approach!