To quote myself, “Family plus passive income equals the American Dream.” Having passive income coming in allows us to spend our time however we like. Passive income is our freedom from the workforce, the freedom that we can then spend with family. So if we plan on truly spending time with family, we have to heavily invest in the idea of passive income. There are many ways to achieve passive income, some of which include real estate rentals, dividends, bonds, royalties, and residual business income. I like to focus on dividends first because it is the most accessible.
Dividends are the profits that a company pays out to its shareholders. Dividends have been making people rich for well over a 100 years. I am new to the party but am working diligently to ensure that I have a huge, diversified dividend portfolio. I am 8 hours into 2021 here in Japan and already looking forward to the joy of dividends for the year. 2021 is a brand new year where some of us will continue on our journey to dividend wealth, and others will start anew. Here are some tidbits I learned along my journey thus far.
1) I never consider the money that I contribute to my dividend portfolio as being my money. As soon as my paycheck hits, I send the money to various portfolios. Say I contribute $600 to my M1 Finance account. I do not view it as “Oh, I lost $600 this month”. I consider donating to my dividend portfolio almost like paying taxes. It is a necessary thing. That way when dividends come back, you are actually surprised and you appreciate them.
2) Enjoy your dividends from time to time. Most of my dividends are automatically reinvested back into the underlying stocks. However, roughly 10-15% of my portfolio is taken in cash. Most of that cash is fed back into the portfolio, however, it feels shockingly good to have random money hit your account. Cash App is the best at this. The dividends go right onto your debit card balance. I wake up some days and have $3 deposited from a faraway company. I cannot describe the feeling. Now imagine when I am getting $20 dividend payouts. What about $200? You can see the obsession.
3) Most people at a young age aren’t investing in dividends. Most people you talk to are going for high flying stocks and huge results. Dividends are the exact opposite. But they will feel better in the long run. I still dip my toes into the high flying market, from time to time. Just to get a tiny piece of the action.
4) If investing in your dividend portfolio is completely boring, that means you are doing it right. That means you are not trying to maximize returns by constantly trading. You are not following the news and making knee jerk reactions. You are just investing in index funds and dividend-paying stocks. I am at that point where I just keep throwing money into my portfolio. I am not trading and trying new things. When a company has a major shake-up or I see a strong newcomer, I may change things up, but that is probably 1-2 times a year.
Overall, dividend investing is a way of life. In the beginning, you are not trying to get rich by dividend investing. You need to increase your income via other means like a pay raise, side hustle, real estate, or business. That extra income should be put into your dividend portfolio until eventually, you can live from the dividends that it produces. That is the goal. Hopefully, you decide to jump into the dividend community in 2021! Good luck. You can read my articles on stock market investing (here).
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https://www.pinterest.com/kingmarine/military-family-investing/Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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