Stock Market Investing 107: Back to Basics

As the New Year approaches and the threat of more lockdowns looms, I thought I’d go back to the basics. The stock market may not have the same trajectory that investors seek. Most of us see stocks only going up—something that might be changing. 

A choppy stock market that is trading sideways is still an opportunity for us to profit. Dividends may be the most significant source of gains for the next few years. The bull market has raged since 2010, so inflation and interests may be the end of an era. We shall see.

Build the mindset of an investor. I wrote the Stock Marketing Investing 101 series (101, 102, 103, 104, 105, 106) over a year ago. I was still young in my investing career, as I had about $42,000 invested. 

Debt-Free? So, What’s Next?

The best thing about writing is that every day you are a different person. We learn something new daily, so we can never write the same document two days in a row. That is why our past works are so valuable—you can’t replicate them. 

So my Stock Market Investing 101 series stands as a testament to a young investor understanding the market from his point of view. Over the past year, I have read an additional 70+ books that have made me wiser to the overall investing landscape. I want to return to the original Stock Market Investing series for other young investors to consume. 

I wrote “Build the Mindset of an Investor” during another choppy market period. Inside the article, I review the principles of being an investor vice a trader. Let’s check some of the basics.

Stocks vs. Bonds: Is 60/40 Still Effective?

Investing for Dividends. When we buy dividend-paying stocks, we can look at a long history of past performance. Investing for capital gains, you are taking your best guess at the future of a young company. You can read more in “Dividends vs. Capital Gains” and “Dividends vs. Capital Gains 2.” I also have a great series called “Investing for Dividends” (101, 102, 103, 104, 105, 106).  

Buy and Hold. Investors buy for the long term. Traders attempt to turn a profit by short-term gyrations in the market. Even if you turn a profit, you are left looking for the next trade. This cycle continues every day or week. It can become very stressful. 

My 60-Day Pre-Retirement

Buy-and-hold dividend investors are investing for income. They watch as their dividends slowly grow over the years. My dividend portfolio started with a payout of $0.03 in June 2019 and paid me $620 in November 2021. 

Getting started. Having a lot of information is excellent, but you also have to start somewhere. Yes, you can start without a lot of money. I wrote the How to Start Dividend Investing series (101, 102, 103, 104) to break down the process of investing for dividends.

How much do I need for retirement? The best question to ask yourself is, “How Much Money Do I Need for Retirement?” By money, I mean cash flow. Say you need $3,000/month on top of social security; that’s where your passive income can assist you. 

You can build a dividend portfolio of $3,000/month or split it with other sources such as rental income, crypto interests, or an automated business. Planning starts now, and the younger you are, the better. 

How to FALL into Investing

Retirement Planning. As we invest, we look towards the future—this puts us in the best possible mindset. It sounds good to try and pick the next company that soars like Amazon, but it’s more realistic to invest in McDonald’s (MCD).

If you don’t know anything about planning for retirement, I have a couple of short guides called “Retirement Planning for the Average Person 1 + 2.” These will help you form the right long-term mindset as you begin your investing career. 

Conclusion. If you let them, dividends will play an essential part in your life. I love receiving dividends, as there is no feeling quite like the emotions of “free money.” You can be having a crappy day until you receive a $40 dividend. It’s hard not to smile when you have “guilt-free” money in your inbox. 

Let dividends be your lighthouse during retirement. Don’t get lost in an ocean of consumer advice. You have everything it takes to become a great dividend investor; you only need to believe in yourself. Good Luck!

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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. All Right Reserved Military Family Investing