You will discover that there are various philosophies when it comes to investing, in fact, probably hundreds or even thousands of variations on investing styles. For our purpose of this blog we will ignore many styles and investing in non stock portfolios such as bonds and treasuries. Some people prefer stocks that considered Value Stocks; others prefer Growth Stocks and some like Dividend Growth stocks. The Dividend growth area is where I started (in reality, I was probably more like a nomad trying to find my way around in the big investing desert) Over the years I have evolved into what I like to call a Dividend Income investor. My primary focus is producing current income. I like to see the income rolling in each month. It serves a couple of purposes for me
- Produces tangible Income results on a monthly basis that I can use if I need to.
- Provides a secure platform in a declining market for me
- Keeps my results at a steady pace. – I know how much I will earn each month on a minimum amount, that is if I have $500,000 dollars invested with an average Dividend Yield of 8 % then I know that I will receive $40,000 per year or $3,333 dollars per month minimum ( If you are reinvesting that money then it will be steadily increasing) ( No, this is Not unrealistic because I am actually generating 8-10% in my own portfolios!)
- You can predict your income growth over periods of time.
If you use one of the other investing styles your focus is in other areas – you might be looking for your stocks intrinsic value to increase. You have to determine that a stock is undervalued, and then hope that eventually other investors see the opportunities that you saw and bid up the price of the stock for you to make your money. For me, all I have to do is determine that the stocks I pick will be able to continue their Dividend Payouts. If they do, using the example above, I know the minimum I will make off my investments will be $40,000 that year. Of course there could be other increases. If I am reinvesting the Dividends the income compounds, Companies could raise their dividends or traders might discover that a stock is a good bargain and drive up the price so that your investment appreciates in value.
Dividend Income Investing is suited very well for Retirees. As a retiree your income will be limited to just social security and a pension or a 401K (if you are lucky). The majority of people will receive a check for about $1,200 per month (in today’s dollars) when they retire. That’s only $14,400 per year in income to live off of ($28,000 on average for a couple). This is not comforting at all. In fact it is depressing, especially if you don’t bother to do anything about it. There is good news however, for those of you that are reading this blog you will now have the knowledge to turn a depressing situation into one that is filled with happiness and joy.
This blog will show you ways of achieving a comfortable income in your retirement years.
Already an investor with a significant amount of savings but not earning enough income from it to retire ? Well this style of investing might be something you will want to consider.
After converting one of my portfolios to the Dividend Income method this past year I doubled the income that was being generated each month. This not that difficult to achieve as almost anyone can do it. To learn how you can do it I invite everyone to follow along with this blog and we learn the ins and outs of Dividend Income Investing and how it can help you achieve not only a better retirement but maybe even retire much sooner than you ever dreamed of !