I spent 20 years in the workforce, not knowing what to do with my money. I thought that my 401 (k) was my emergency fund, and I believed that putting money in a standard savings account was enough.
I was wrong on all accounts, and my family suffered because of my ignorance. Our household dealt with much more stress because I did not have the information.
Luckily, in 2019, I got my act together. I became a dividend investor, and my family got roommates and paid off our debt. We were even able to retire in 2023.
The Importance of Treasuries
My takeaway from this experience is that everyone should learn about dividend investing as early as possible. A dividend portfolio is the crown jewel of one’s career, even beyond career accomplishments.
Your career versus a dividend portfolio. I had a pretty successful career in the United States Marine Corps; I retired as a Master Gunnery Sergeant (E-9) after 24 years of faithful service.
My military pension is a wonderful bonus prize for the years I worked. However, I wish I had invested in dividends for those 24 years.
As it stands, my military pension pays me $9,000 per month, and I earn $2,100 monthly from dividends. If I had started in 1999 instead of 2019, I could have had a massive dividend portfolio.
I say this because I want everyone to start dividend investing today; dividends are your actual career goals. When the dust settles, all that matters is how much passive income you earn from your various investments.
Retirement vs. Financial Freedom
Ultimately, it doesn’t matter what career, profession, consulting, business, or freelance gig you choose to perform—it all comes down to growing your dividend portfolio.
“The Millionaire Fastlane” calls this your money system, and Robert Kiyosaki calls it portfolio income. You can call it what you want, but it’s vital to know before entering and exiting the workforce.
Retiring on dividends. Building a dividend portfolio is so important because you can use the dividends throughout your lifetime. That’s right; you can actually touch your money when you need it most.
Before investing in dividends, you must open an emergency fund inside a high-yield savings account. In your working years, it needs to be enough to cover a significant emergency that could happen to your family.
Most homeowners can predict an air conditioner breaking or a car that needs fixing. Therefore, their emergency fund would have at least $5,000 to $10,000. The long-term plan is to have one year’s worth of expenses.
The In-Debt-ured Servant 2
After building an emergency fund (it may take a year), you’ll need to have a daily operations account. Daily operations are for mini-emergencies that you know will happen eventually.
Some of these crises include car registration, high utility bills, school pictures, field trips, dental issues, medical copays, moving costs, and termite infestations. The list can go on forever.
These smaller issues are the true wealth destroyers, so we must prepare for them early. I like to have at least $5,000 on hand to prevent myself from dipping into my emergency fund.
You’ll also need to participate in your 401 (k) if your employer has a match. You can also contribute around $7,000 per year to a Roth IRA. Investing in a Roth IRA will give you tax-free dividends when you turn 59 ½.
Finally, on to the dividends. You can start investing in dividends once you have a solid financial foundation. Don’t worry if it takes you five years to get everything in order; you’ll be leveraging the power of compounding to speed up the results.
The 100-Year Mortgage is Coming
Once you understand money and how it works, you can prevent most emergencies from disrupting your investing career. For instance, this is what I did when I retired.
Retiring in 2023 was a massive shift in income and priorities for my family. I simply turned off my automatic investing and prepared for the craziness. I slowly added back my investments, and now I invest even more than when I was working. I understand money.
Now that you have your emergency fund, daily operations account, and 401 (k), you can truly start to prepare for the future. These other accounts are here to protect your lifestyle; dividends are here to make your dream a reality.
The most difficult part of dividend investing is finding enough money to invest every month. For this, you must become creative. The more people you serve, the richer you become. You serve people by adding value.
Where Should You Save Your Emergency Fund?
The fastest way to pay off debt, build an emergency fund, and start investing for dividends is to get a roommate. Most people do not believe in this method, so I’ll move on.
Some other ways to generate income are trading options, starting a business or side hustle, or working more hours. You can also get a promotion and invest the difference in income.
The goal of dividend investing. So, why become a dividend investor if it requires you to work harder and leave your comfort zone?
The reason to become a dividend investor is to understand money and passive income. Let’s explore the idea of “understanding money.”
America Will Never Let You Rest
Let’s say you get a $10,000 bonus from your job. Most people will use this money to purchase something they need around the house, like furniture or repairs. I understand this mindset as I have four homes.
But what if you truly understood how to grow your wealth? Say you invest $2,000 in treasury notes, $2,000 in index funds, $2,000 in McDonald’s (MCD), and $4,000 in Pimco Dynamic Fund (PDI). Your money is compounded in various ways for the rest of your life.
Let’s say you build a dividend portfolio that pays you $1,000 per month (account size around $150,000 at 8%) at age 25. That would be enough to retire at age 65 if you only reinvested 25% of your dividends.
New Year’s Passive Income Resolution 2024
More importantly, when things get tough, you can rely on your dividends to save the day. Even if you had to put some money on a credit card in a pinch, you know that your dividends could help you quickly repay the debt.
How to start with dividends. I don’t have much time left, but luckily, I just finished a series on how to retire on dividends.
- Retiring on Dividends 101: Preparing for Passive Income
- Retiring on Dividends 102: Dividend Growth Investing (High Yield)
- Retiring on Dividends 103: Dividend Growth Investing (High Growth)
- Retiring on Dividends 104: Income Investing (Closed-End Funds)
- Retiring on Dividends 105: Income Investing (Preferred Shares)
- Retiring on Dividends 106: Income Investing (Dividend ETFs)
I am pushing this information to my two boys. My oldest is in the process of joining the Air Force. I will help him achieve his $1,000 monthly portfolio early in life. Can you imagine going through life with $1,000 in passive income?
Conclusion. I want everyone to understand what is at stake—your livelihood. The 401 (k) experiment failed miserably because most people cannot save.
Santa’s Bringing Closed-End Funds for Christmas
Even worse, people no longer stay at the same job for 30 years. Companies cannot afford to match 401 (k) contributions anymore; it’s a nightmare.
Pensions have gone away, and social security is losing money every day—what are you going to do about retirement? You can take matters into your own hands by learning to invest for dividends.
Frankly, I make more money than I can spend because of dividends. I simply receive dividends almost every day.
But I keep investing because I do not know what the future holds for my kids. I want to ensure I have enough passive cash flow to support their needs. I will pass on the information as soon as they can consume it.
We can control our financial future, but it requires hard work and knowledge—no one will read us the book aloud. We must find the book, read it, and take action. 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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