The PR coordinator for IAC, Justine Sacco, recently got fired for a tweet in which she belittled AIDS and further relied upon a racial stereotype to make her joke. As seems to be the case when someone slips up and says something dumb on Twitter, there is an outpouring of “outrage” from other Twitter members that eventually leads to the person getting fired (as an aside, you can read about the Justine Sacco saga by clicking here).
That’s an important trend observation to be aware of in the workplace—there is no real sense of “equity buildup” in which being an employee for an extended period of time grants you some slack for error. A single slip-up (especially if it draws the attention of the public at large) can destroy your money-earning capacity.
These moments are constant reminders about power and being at the mercy of others to generate your livelihood. When you are an employee, your earnings power is fragile in that you are relying on the good graces of others to be able to continue earning a living. But if you own 1,000 shares of Wal-Mart, you are going to get your $470 dividend check no matter what you decide to spout on Twitter. You can be a complete goofball and be socially undesirable in all of your interactions with others, but if you have spent twenty years building up a 10,000 share position in Chevron stock, you are going to collect $40,000 in cash dividends, you are going to get that money independent of what other people think of you. It’s a tremendous safety valve to introduce into your life.
Of course, job loss is not necessarily the domain of gaffes exclusively. In the past five years, Bank of America, Procter & Gamble, PepsiCo, and Caterpillar, just to name a few, have laid off at least 5% of their workforce. While you are generating money from your labor as an employee, you want to spend your time trying to decrease your dependence on an employer to generate some money.
A lot of times, this stuff is put in binary terms—you either have enough to retire or you don’t, but that does not mean you cannot benefit from the places in between. If you spend twenty years accumulating a $300,000 portfolio yielding 4.5% and you find yourself out of work for whatever reason, you at least have $1,125 coming your way each month to work with as you figure things out. Ask anyone who has lost their job if having $1,100+ per month would make things easier than having nothing.
In many ways, investing is the act of preparation for self-sufficiency. The further down that road you get, the more autonomy you will over your own life. In the realm of dividend investing, each step can be measured in terms of the autonomy it provides. A $15,000 investment into BP stock just bought you around $750 towards an autonomous life. With each investment you make, you are reducing your reliance on labor alone to provide for your food, shelter, and basic needs. All of these firings, layoffs, bans, and other terminations of employment remind me of how fragile the relationship between employer and employee truly is, and if that makes you uncomfortable, the most intelligent thing that you can do is start purchasing ownership stakes in assets that organically generate income in their own right so you can finally free yourself of the reliance upon others.