Reader Mailbag: “My goal is to build wealth and freedom so I can pursue traveling and movie producing!”

Dear DTA,

Hi. My goal is to build wealth and freedom so that I can pursue traveling and movie producing!

-Randy G.

First, what’s really great here is that we have a lot in common.

I, too, had a big goal to build wealth and freedom in my life.

More specifically, I wanted to become financially independent before 40 years old so that I could retire from my job extremely early and live live on my terms.

This goal was laid out just before turning 28 years old.

Well, I quit my job at 32. And I became financially free at 33 years old, whereby my passive income covers my core personal expenses in life.

How did this happen?

I like to say it was simple but hard.

Simple because the path is fairly straightforward; hard because it’s not easy to follow the steps necessary day in and day out.

I’ll tell you how straightforward it was.

I first had to live way below my means.

This involved setting a strict budget and tracking every penny in and out.

I knew that I had to save at least 50% of my net income in order to become financially independent within an appropriate amount of time (i.e., before the traditional retirement age).

In order to accomplish that, I made some radical changes in my life.

I moved from a state with less economic opportunities, higher taxes, and a higher cost of living (Michigan) to a state with more economic opportunities, lower taxes, and a lower cost of living (Florida).

Once in Florida, I became even more aggressive.

I moved to the cheapest apartment I could find along a bus route that allowed me to get to work by bus. That’s because I sold my car, relying on the bus instead.

Regular restaurant visits were cut in favor for eating sandwiches at home.

Cable was canceled. My cell phone was downgraded to the absolute basics.

So on and so forth.

Once these changes took shape, I began to save more than half my net income.

This resulted in a ton of excess capital.

But capital doesn’t do one much good if it’s just sitting there, not earning an attractive return.

After researching every available option out there, I settled on dividend growth investing as the investment strategy to help me reach financial independence at an early age.

This strategy falls in line with what I was just saying about this whole plan being simple, as buying and holding shares in wonderful businesses that reward their shareholders with growing dividends is certainly not a stretch.

In fact, it’s just about the only investment strategy that truly makes sense to me.

After all, one of the main missions for any company is to turn a profit and increase its profit. And a publicly traded company is owned by shareholders. It thus follows that the shareholders deserve their fair share of that profit. And as profit grows, so should that share.

Dividend growth investing is really logical when you think about it.

And it shouldn’t be a surprise that many dividend growth stocks are blue-chip stocks with brands that are household names.

Just check out David Fish’s Dividend Champions, Contenders, and Challengers list to see what I’m talking about.

Mr. Fish’s list contains invaluable information on more than 800 US-listed stocks that have paid an increasing dividend for at least the last five consecutive years.

These stocks make for a wonderful backbone to your plan because the ever-growing profit they tend to generate can fund ever-growing dividends. And that’s a fantastic source of truly passive income.

My own experience bears this out.

I’ve been regularly investing my savings into high-quality dividend growth stocks, building the real-life six-figure dividend growth stock portfolio in the process.

This portfolio generates five-figure dividend income that is totally passive and continues to grow without any ongoing work on my part.

It’s totally passive because I don’t have to do anything to collect it.

I don’t have to call up any of these companies and ask for my money. It just shows up in my account.

And it continues to grow organically as these businesses increase their profit and dividend payments to shareholders.

Better yet, that growth tends to outpace inflation by a large margin, meaning my purchasing power is also increasing year after year.

I mentioned we had a lot in common.

Well, it’s not just the pursuit of more freedom.

You’re interested in traveling and producing movies.

I can’t say much about movies, but I can tell you that I recently moved to Southeast Asia.

The major financial benefits and additional opportunities for meeting like-minded people over here were too much to pass up.

So I’m also using that economic freedom to see other parts of the world.

See, being financially independent means you’re also often geographically independent.

If you can solve the economic side of it – which I’ve given you a lot of helpful information on – you should be able to solve the second part of your quest.

That means if you “build it, they will come”.

If you build the passive income, those opportunities – traveling the world, making movies – will come.

But it doesn’t stop here.

I’d also recommend reading through fellow contributor Dave Van Knapp’s dividend growth investing lessons.

These articles collectively serve as a fantastic resource that can help open your eyes to just how powerful the dividend growth investing strategy is.

And then if/when you’re ready to put your own capital to work (once you’ve right-sized your lifestyle), I personally highlight an undervalued dividend growth stock of the week each Sunday, with every stock being a compelling long-term investment idea that I present to the investment community… for free!

Time is of the essence.

Living below your means and investing in high-quality dividend growth stocks at appealing valuations for the long haul is a fantastic way to achieve your dreams, but it won’t happen by itself.

You have a treasure trove of information here.

It’s now up to you to take action.

I wish you luck and success.

Jason Fieber

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Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.