“I have just begun to invest. My plan is to fund an early retirement.”

Dear DTA,

I am excited to subscribe to your services. I have just begun to enter the trading and investment arena, and I’m eager to learn how to make successful trades in the market. My plan is to raise capital to fund an early retirement. I want to generate income and invest in further ventures.

-Hakeem R.

Appreciate you writing to us, Hakeem. And thanks for subscribing. We’re here to provide a ton of value to the investment community, so it’s our wish that you learn from all of the content so as to become a better and more informed investor.

It’s actually because our ongoing desire to genuinely help investors that I’m writing to you today.

Your goal to fund an early retirement is a goal that plenty of people out there share.

[ad#Google Adsense 336×280-IA]That’s because most people either don’t like their job or are actively disengaged while working.

I was one of these disengaged people not too long ago.

I spent my entire career in the automotive industry, working for a variety of luxury automotive dealerships as a service advisor.

I made decent money (I probably averaged somewhere around $45k/year across my career).

But I also worked a silly number of hours per week (50+ hours/week). Plus, the job was incredibly stressful.

Perhaps worst of all, my employer controlled my destiny.

That was never more clear than when I was laid off back in 2009, back when major auto manufacturers were either at risk of claiming bankruptcy or actually filing for it.

Broke and jobless at 27 years old, I decided to turn it all around.

Fast-forward to early 2016, the passive and growing dividend income from my real-life, real-money dividend growth stock portfolio started to cover most of my core personal expenses, rendering me essentially financially independent at only 33 years old.

Now I’m in control of my own destiny.

And you can be in control of your destiny, too.

But fear not, as nothing I did is a secret. In fact, I’ve shared my “blueprint” to early retirement with the world.

The first thing is obviously developing a budget, or a savings plan.

You said you want to raise capital. Well, the first place to start is your own lifestyle.

Figure out what expenses can be cut. If it’s not totally necessary, you should think about getting rid of it.

Once you have your savings down to the bare essentials, you should then look into increasing your income.

As I noted above, my day job never paid much. So I basically took on a “second job” by writing, which helped boost my income and propelled me that much faster toward my long-term financial goals.

Perhaps more importantly, I’ve been able to help fellow investors also reach their long-term goals (which is what I continue to do to this day).

Although I never made substantial money (even after factoring in the second income source), many people probably wouldn’t be comfortable with the lifestyle I’ve lived and continue to live (I spend very little money). The more you earn and the less you spend, the more you can save. The difference between your earning and spending is your savings rate.

And it’s really your savings rate that’s the key to raising capital and being able to retire as early as possible.

It’s then time to put that raised capital to work by, as you said, making successful trades in the market.

However, you should mentally replace the word “trades” with “investments”.

Growing your wealth and income in the stock market would be incredibly difficult to do if you’re constantly trading in and out of stocks.

Time in the market isn’t only much more effective than timing the market, but it’s also much easier.

I know of no successful trader who was able to correctly time short-term trades over a long period of time and multiply their wealth and income many times over.

But I know of many successful long-term investors who put capital to work with wonderful companies and let those investments compound for them over long periods of time.

Take your pick: Warren Buffett, Peter Lynch, Benjamin Graham, Walter Schloss.

Now, that doesn’t mean long-term investing involves never selling stocks.

But it does mean that you should generally plan to hold your investments for long periods of time, letting the supreme powers of compounding and time work to your benefit.

The investment strategy that I personally chose to build my wealth and income – which brought about financial independence in my early 30s – is dividend growth investing.

Dividend growth investing encapsulates the ideas I just espoused on.

This investment strategy simply involves buying wonderful businesses that routinely pay out increasing dividends to shareholders, dividends which themselves are just a portion of the growing profit the business is generating.

After all, it doesn’t make much sense to invest in a company that isn’t generating increasing profit.

And as a shareholder – a part-owner of a publicly traded company – you deserve your rightful share of that growing profit.

Growing dividend payments are, in my view, the “proof in the pudding”.

Don’t tell me about growing profit. Show me.

So it’s a very intuitive investment strategy. It simply makes sense at a high level.

And many of the highest-quality dividend growth stocks out there are blue-chip stocks that have been busy building wealth and passive income for investors for decades.

Think names like Johnson & Johnson (JNJ), Exxon Mobil Corporation (XOM), and PepsiCo, Inc. (PEP).

You can find more than 800 US-listed dividend growth stocks via David Fish’s Dividend Champions, Contenders, and Challengers list, which lists US stocks that have paid out increasing dividends for at least the last five consecutive years.

This growing dividend income could fund your early retirement.

Just for perspective, my portfolio generates five-figure dividend income on my behalf, and I don’t have to lift a single finger to earn it.

That’s because companies like Pepsi are out there selling products to billions of people all over the world. And I earn a very small slice of all that profit. It’s a very sweet arrangement!

Dividend growth investing isn’t just intuitive and tangibly rewarding, it’s also fairly easy to learn.

For example, fellow contributor Dave Van Knapp put together a series of “lessons” on dividend growth investing that demystifies the entire investment strategy from start to finish.

Once you’re investing money on an ongoing basis, I also provide actionable and valuable long-term dividend growth stock investment ideas every Sunday, as part of my undervalued dividend growth stock of the week series.

I think you’ll find that, in the end, “early retirement” might not even be the goal you’ll end up shooting for.

I could just live off of my passive income and watch TV all day.

But once you’re free to do what you want to do, rather than what you have to do, you’ll see that a whole world of opportunities open up. As such, you’ll probably go on to make more money than you ever thought possible, as real passion often is rewarded.

However, that new world will only open up once you’re truly ready to see it, Hakeem. And that vision requires being flexible and free enough to take on those new opportunities.

That means you need to start saving and investing today.

I wish you luck and success.

Jason Fieber


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.