We are moving into unknown times. The stock market is in flux, interest rates are inching upwards, the job market looks good on the surface, and the pandemic still looms. How is a person going to survive?
Yes, conventional wisdom leads us to believe that having a job is the most reliable form of stability. Do you find this to be true? Look into your heart of hearts—do you trust your job will be there when times get rough?
Can you depend on your job to increase your salary at a higher rate than inflation? When you have a family emergency, will your job understand your situation?
The Magic of Investing
If you trust your job that much, you are in a good spot. Most of us don’t have this kind of faith in the system. So, if we don’t believe in our employer wholeheartedly, what are some other options?
Take control. Well, you can take control of your income and create your own safety net. You can increase your income every year, have an emergency income stream, and build a cash flow retirement system all at once.
Does it sound too good to be true? That’s because dividend investing can genuinely change your life. Yes, it takes a little time to understand, but investing in dividends will give you the confidence you need to survive the unknown.
A quick story. Let me tell you a short story about my month thus far. My Chromebooks haven’t handled my workflow so well over the last few months. So, I finally decided to buy a new computer.
I live overseas, so I had a minimal selection of computers at my disposal. In the end, I bought three new Mac computers: an M1 iMac, an M1 Mac Mini, and an M1 Macbook Air. In total, I spent $3,600 of money I usually invest in the markets.
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The good part is I can let my dividends replenish my supply of cash flow. I have money coming in that I can use for groceries, maintenance, or trips. It is excellent to make a big purchase but have more income for the month.
As you can see from the image above of my Well Fargo brokerage account, I have $142 of pure dividend income sitting in my account for anything that may arise.
I have even more dividends pouring into my other four brokerage accounts. I usually reinvest them, but I can wait until the end of the month to spend them. That is the magic of dividends—you can choose your own adventure.
Dividends are life-changing. Dividends are life-changing because you take control of your life and ownership of your income. If you want more income, buy a business development company stock. Want more growth? Buy a hot dividend-payer like Costco (COST).
Wouldn’t it be nice to have a $1,000/mo income stream entirely separate from your day job? How would paying your groceries all from dividends change your life?
Don’t Gamble with Retirement 5
A safety net. Dividends provide you with a huge safety net, but not because of the income they provide. The power of dividends comes from the knowledge of living on passive income. Once you understand the concept of investing to buy your freedom, you immediately start working towards that end.
There are three steps to living on passive income, and they are straightforward. The hard part is shifting your mindset to living a life free of consumerism and materialism.
The safety net of dividends is that you understand this simple rule: Wealth equals excess income versus expenses.
The complete mindset. You see, investing for dividends isn’t just adding income to your bottom line; it is changing your mindset. Let’s take an example of how dividends can change your life.
Let’s say your family lives comfortably on $7,000/mo of income. You read my article “Let Dividends be Your Lighthouse through Retirement” and decide to start investing.
First, you’ll invest a little chump change into your dividend account. However, once your dividends start becoming more significant, say $10, you’ll begin to feel the magic.
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You think, “Wow, I can buy some McDonald’s with my dividends this month.” Then you’ll realize that the more you invest, the more your dividends will pay you. The art of dividend investing will hook you.
You will start to cut expenses, pay off liabilities, and generate more passive income from royalties and rents. Your quest will consume you but in a good way.
You’ll realize that the more passive income you have, the more time with family you can create. You will expose the truth about the workforce—you only need to work until you have enough passive income to set you free.
Your lifestyle is the safety net. Dividends aren’t the safety net; your lifestyle brings you security. Living below your means, creating passive income streams, and adding value to others guarantee your safety and security.
The Average Millionaire has 7 Streams of Income
Dividends are the gateway drug to living on passive income. The $7,000/mo you once lived on now becomes $4,000/mo. And you increase your passive income to a total of $10,000.
We call that $6,000/mo difference ($10,000-$4,000) cash flow, and it makes the world go round. You can use that cash flow to reinvest and build even more cash flow. It’s pretty scary how fast of a process it is to generate cash flow.
Getting started with dividends. I write about dividends and investing almost every day, so I have a lot of resources. I recommend the article “The Best Way to F.I.R.E.” because it talks about three different types of investing.
Next, I recommend “Infinity Investing,” “How to Retire on Dividends,” and “Unfair Advantage.” These books will give you a much larger perspective on investing.
7 Reasons Dividend Growth Investing is For You
Conclusion. Dividends will save your life. This means that by adding dividends to your routine, you will work less, spend more time with family, and learn how to create money. In short, dividend investing can make you happy beyond your wildest dreams.
My wife and I are about four years away from living entirely on passive income. We have already had a month where we made $900 from dividends. I cannot even fathom how much dividend income we will have in four years.
We dream of sitting on our porch and drinking coffee. We don’t have a care in the world because we have dividends coming in daily. We are within arm’s reach of this goal, and it feels good!
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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
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