Do you ever dream of living a rich lifestyle? Do you want to maneuver through life without worrying about money?
Anyone can achieve these dreams, but we must change our world view. You don’t reach complete financial freedom while working a job.
The truth is that freedom comes when other things perform the work for you. Yes, instead of you working hard for money, these things go and make money while you eat, drink, work, play, and sleep.
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What are these magical things? These things that produce money for you are called assets. In “Rich Dad, Poor Dad,” Robert Kiyosaki simplifies the definition of an asset as things that put money in your pocket.
The opposite of assets are liabilities; they take money from your pocket. Most people spend their life collecting liabilities.
However, if you can gear your life toward collecting assets, you can amass wealth beyond your wildest dreams.
What are the types of assets? To start collecting assets, you’ll have to study their origins. Each asset type comes from a particular region of finance and business. You must understand their true nature to build cash flow within each category successfully.
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For example, you can’t just buy any home and expect to build rental income. Studying the rental market, interest rates, and different neighborhoods is much more appropriate before purchasing a property.
I like to focus on six types of assets: dividends, interest, royalties, automated business, rents, and cryptocurrencies. I want to discuss dividends today.
What are dividends? Businesses pay shareholders dividends from their profits. You can become a shareholder by investing a small portion of money into the company, usually via the stock market.
Dividend investing over long periods can lead to capital gains and dividend increases. We call this phenomenon dividend growth investing.
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You can also invest in dividends purely for income, which we call income investing. For example, you buy $1,000 of a closed-end fund, which pays you $8.30/month as long as you own it.
Finally, you can focus on capital appreciation (rising prices) and lower dividend payouts when you invest in index funds. Index funds are a great way to keep pace with the stock market while receiving small dividends to reinvest.
Why are dividends special? Dividends are the most passive of our different asset classes. Once you determine your investment strategy, you simply need to automate your stock purchases.
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Every few months, you can check your portfolio for any anomalies. Other than random health assessments, you’ll just collect your dividend payments.
Dividends are special because they can change your life. You’ll understand the feeling when you receive your first $20 dividend payment. Most people work one hour to get $20, while you receive it directly to your checking account.
As you begin to build your dividend income, you’ll see the world in a different light. I used to buy tons of video games at $60 a pop.
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Now, I always ask what dividend stocks I can buy with $60. How can I convert this cash into more cash? It becomes addicting to create more cash flow and get bigger dividend payouts.
Living your best life with dividends. So how does life with dividends look? I’ll give you a peek inside my and my wife’s $1,000/month dividend portfolio.
I live in San Diego on a tight $50/day budget. It’s pretty easy to stay inside the confines of these spending limits.
However, I don’t include my Dividend Debit Card income in my budget; it’s all off the books. Therefore, any dividends I receive, I can spend how I choose without guilt.
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Currently, I have $190 in my Dividend Debit Card balance (Cash App)—all from dividends. I tried to take a screenshot, but it wouldn’t let me because of security reasons.
I have another $100 in dividends coming in the remaining nine days of the month. So, I’ll have close to $300 in dividends to buy whatever I want.
The best feeling ever. The scary part is that there is nothing I want to buy. That’s when you know you are living your best life—when you don’t have any spending urges.
My wife and I worked hard to become debt-free and destroy credit card debt. Now, we can sit on cash without any shopping impulses. When we do spend some money, we do it for the right reasons.
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For example, I can take a buddy out to dinner with my $300 and not worry about spending the cash. It doesn’t count against my daily budget or monthly savings.
Your life sounds boring. Yes, it may sound boring to keep a budget and save your dividends for later. It doesn’t sound fun living under the control of our budget; however, living a measured life is true freedom.
How much stuff do you really need? What is more crucial, accumulating things or building experiences? What do you want to leave for your children’s future?
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Receiving dividends has allowed me to create my own freedom while building generational wealth. I can transfer my dividend portfolio to my kids through a trust or estate. I can enjoy them and pass them along, unlike a job.
Conclusion. What does being rich look like to you? To me, it is driving a nice Ford Focus while having hundreds of thousands of dollars in the bank.
Not only is this money sitting there, but it is also paying me monthly. Plus, I have other assets paying me, such as rental rooms, rental houses, and book royalties.
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My wife and I are living our best life while simultaneously building a nest egg for our children. We don’t worry about money on a day-to-day or month-to-month basis. Paychecks are a time to celebrate adding more dividends to our portfolio.
You, too, can live your best life with dividends and passive income, but you’ll need a change in mindset. If you only want to consume (spend), producing (invest) will be hard.
If living on a budget, enjoying your time in the park, and finding great deals is boring to you, don’t worry; America will take your money.
If becoming rich by living below your means and preparing your kids for the future sounds good, then dividends can be part of living your best life. 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
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