Every fall season brings a new set of change and intrigue. We go into the holiday season filled with love, joy, and excitement.
We may as well also enter the season with a lot of money. To be the giving person we want to be, we need additional income outside our job—passive income.
Building a collection of income-producing assets can seem daunting, but we can start small. Once you create a foundation of knowledge, you’ll be investing in dividend-paying stocks before you know it.
Feel Special with Special Dividends
Why do you need to invest? Money divides itself into three categories of time: past (debt), present (saving), and future (investing).
Therefore, to become an investor, you must envision a future. You need a purpose to invest your hard-earned money, or you’ll falter when things get tough.
I invest to be the man I’d like to be: generous, loving, and giving. I want to help my kids secure their future and then my grandkids.
If you only want more money, you’ll find investing difficult. Once you hone in on your purpose, choosing the investing style that fits you is much easier.
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Getting started with interest. The best way to start investing is with interest-bearing securities such as high-yield savings accounts, certificates of deposit, Series “I” Bonds, and Treasuries.
Not only will you earn some interest, but you will learn about interest rates. Interest rates are the key to everything dealing with investing.
US Treasuries are the largest market in the world, so most securities correlate to them. There are many types of Treasures, including Treasury Bills, Treasury Notes, Treasury Bonds, Savings Bonds, and Treasury Inflation-Protected Securities (TIPS).
Take the time to learn and utilize these bonds because they are the heart of understanding investing. I opened my TreasuryDirect account long before investing in dividends.
Preferred Shares vs. Common Stocks
Time to purchase some index funds. Index funds are a collection of stocks you purchase as one security.
There is nothing particularly sexy about index funds, but they are necessary for capturing the stock market’s returns.
It’s an excellent idea to dollar-cost average into index funds before trying your hands at individual stocks.
Investing with index funds will teach you how to stay the distance, familiarize you with market fluctuations, and how to read the daily stock news.
Dividend Growth Investor vs. Income Investing
My favorite index funds are Total Stock Market (VTI), S&P 500 (SPY), Nasdaq 100 (QQQ), and Dow Jones Industrial Average (DIA).
The Magic of Dividend Growth Investing. Now that you understand bonds and index funds, it’s time to start earning dividends.
Dividend Growth Investing (DGI) is a subset of investing that focuses on large blue-chip dividend-paying stocks like Apple (APPL), Microsoft (MFST), and Costco (COST).
The concept of DGI is to invest in these large corporations over time as they grow their stock price and dividend payments.
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When it’s time to retire, you should have a massive portfolio that produces an enormous amount of income—the best of both worlds.
DGI differs from 401K investing because you will not need to sell shares to generate income. In fact, you should have more shares at the end of every year.
The Magic of Income Investing. If you really want to try your hand at investing, try income investing. Here, you invest in high-yield securities that pay massive dividends.
However, every pro has a con. Income products utilize leverage and are sensitive to interest rates. Remember, I said to learn about interest rates earlier?
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If the Federal Reserve changes interest rates, income products like Closed-End Funds and Mortgage REITs will see drastic shifts in price.
The key to becoming an income investor is focusing on the income. The prices will vary wildly, but your income will continue to grow if you understand what you are buying.
Building your dividend portfolio. As you can tell, there are many facets to investing. Don’t let these terms and numbers scare you away.
You need to run towards investing. There is simply no better way to beat inflation than by making passive income.
There are other ways to create passive income, such as renting rooms or creating royalties, but investing is the most passive.
Income to the Moon: Income Investing to Retirement
My wife and I earn $1,500/month in dividends. We can use this money to go shopping, eat out, or shop for Christmas presents.
We didn’t start with the information; we learned it along the way. I can tell you that our lives changed dramatically when we started investing.
The importance of time. Your time is your most valuable asset; protect it at all costs. Every dividend you receive is time back into your time bank.
Let’s say you earn $50 per hour. When you receive $50 in dividends, that is one less hour you need to work that month.
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The goal is to exchange your $8,000 work income for $8,000 dividends. It sounds impossible, but people are doing it today.
It starts with earning $50 in dividends, then $100. Enjoy every dividend you receive, and reinvest 25% to keep growing your income yearly.
Conclusion. Becoming an investor is challenging because the world wants you to spend money. Don’t worry; you’ll be spending again soon.
Once you earn $500 to $1,000 a month in dividends, you can spend $200 to $400 frivolously. That is a whole lot of money to enjoy.
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This fall, focus on the person you want to become. Can you imagine spending $2,000 on gifts for others without going into debt or working extra hours?
This is your future if you start investing today. It may take five years to reach that point, but you’ll become a different person along the journey.
Don’t focus on earning $5,000/month in dividends; concrete on the person you’ll need to become to earn $5,000/month in dividends. 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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