How I’d invest £350 monthly in dividend stocks to afford a Ferrari

Yesterday, I was walking down the street when something incredibly beautiful happened Ferrari growled through. I wouldn’t say I’m a materialistic person, but I stopped and thought it would be great to have your own car. One way in personal investment that I can try and make this a reality is to regularly invest in dividend stocks to increase profits. That’s what I mean.

Establish some ground rules

I think allocating £350 a month can be done to achieve this goal. Living in central London, I’m pretty sure I’ll be surprised how much I can cut back on expenses by not eating out as much, or actually walking to places.

Ideally, I’d like to put this £350 into a Stocks and Shares ISA on payday so I don’t have it lingering in my main account, giving me an inflated view of how much money I have to spend!

In an ISA, I can receive dividend income without paying the associated tax. This is an added bonus and can make a big difference when it comes to profits in the coming year.

Finally, there is no point in aiming to be rich or buy a nice car without considering what it looks like. For me, I want to try and have a £100,000 pot.

How I execute the plan

At FTSE 100 The yield from dividends on shares is 3.84%. For FTSE 250it is 3.28%. This gives me a useful benchmark to use when trying to think about real returns.

However, there are stocks that yield more than 10%. Although I feel that trying to aim for this result is very risky, I believe that it can produce greater than average results.

From my calculations, I aim for a 6% dividend yield from a collection of six to 10 stocks. But surely £350 split between this number of shares is not enough money? For one month, yes. However, I invest every month. Over time, I’ll have a fairly large amount in each company, as well as a variety of overall risks.

When I talk about risk, I’m mainly referring to the potential that one stock I have a dividend cut, or fall on hard times. If that’s the case, I’ll stop investing in that part and go for a new one.

The correct number is possible

If I stick with the plan, after 15 years I will have a pot above £100,000. Obviously, at this point, I could just sell all my stocks and buy a car. But I would also be surprised if, next year, the dividend payment alone will be more than £6,100.

Therefore, I can use this money to rent a different car, and not sell the investment pot money in my ISA.

Ultimately, I give myself the ability and freedom to make those choices through the long-term approach I choose today.