I was recently talking with someone from the Columbia, MO area that had built up a net worth of $2,000,000 across fourteen properties that generated for him an income of nearly $200,000 per year, which works out to over $16,000 per month. He occasionally reads the site here, but has found that dividend investing through common stocks doesn’t fit his personality too well because the amount of income generated is way too low for his liking. I get it—if someone has $100,000 at their disposal, they may want more than $3,000 in introductory income. With a $2,000,000 portfolio that consisted of stocks like Exxon, Coca-Cola, Colgate-Palmolive, Johnson & Johnson, and Procter & Gamble, … Read the rest of this article!
The more I study investing, the more I realize that one initial impression that I had about the stock market in general, and index funds in particular, turns out to be wrong: When I would look at index funds that returned 10% over a particular period, I initially assumed that most of the stocks delivered returns similar to that 10% mark—I figured most would clump together in the 8% to 12% range, and sure, you’d have a few outliers.
The more I dive into understanding stock market returns, the more I realize that there are often very focused “magic stocks” that are responsible for most of the results. For instance, when you look … Read the rest of this article!
Any investment that you would sell, upon encountering some adversity, is not worth holding no matter its long-term total return potential. There are plenty of stocks with great long-term characteristics—John Deere & Co. and its 12.5% annual compounding rate come to mind—but based on your individual profile, it could be a disastrous investment. It lost something like 75% of its stock market value during the last economic recession. Some people are not equipped to tolerate those kinds of losses. Other people save $5,000 per month, have fifty stocks in their portfolio, and could see John Deere’s $1 billion annual profits even during the worst of the recession, and power through the capital loss … Read the rest of this article!
When I graduated from Washington & Lee, the English department gave me a questionnaire to fill out that asked what improvements could be made to the teaching in the department to make it better for future generations of W&L students. In my answer, I stated that I wished there were courses that focused exclusively on the writings of Franz Kafka and Charles Dickens.
I had a special affinity for Kafka because his writing was exceptionally creative when it came to demonstrating how easily things that appear to be immutable (e.g. unconditional love) can quickly transform into something ugly the moment you cease to provide value. How can you top the opening line to … Read the rest of this article!
I wanted to a post in which I walked through the psychological side of investing where I could explain what it means to be a long-term dividend investor that focuses on profits rather than share price, and what ought to be going through your mind as you build wealth if this style suits you. I know ‘holding forever’ isn’t a style that fits the temperament of everyone, but I wanted to share the thought process for those of you interested.
For today’s lesson, we are going to go back in time ten years to 2004. At the time, McDonald’s was the most dominant fast food chain the world, much as remains the case … Read the rest of this article!