Dear DTA,
I’m 80 years old. I simply want to make enough money in the stock market so that we can pay our rent. Looking forward to your wisdom!
-Daniel B.
Hi, Daniel. It’s a real pleasure to hear from you. We appreciate all of our readership, which is why we’re giving back through this mailbag series. We’re here to try to help our readers with any real-life questions and/or problems they might have.
First, congrats on reaching 80.
That in and of itself is an incredible accomplishment.
Second, it’s great that you’re taking the time, even at 80, to learn new things and try to better yourself.
That’s fantastic.
Unfortunately, I must be honest and forthright with you; your options are fairly limited at 80 years old.
Now, “limited” does not mean “non-existent”.
It’s just that your universe of possibilities is much smaller than it would have been at, say, 30 years old.
With that said, there’s no upper age limit in regard to investments. You can participate in the market whether you’re 20 years old or 100 years old.
The stock market is an equal opportunity money maker.
However, because time is a major factor behind the power of compounding, the stock market’s long-term benefits to you will be partially negated.
Most financial experts will probably tell someone of your age to avoid the stock market almost completely, as the risk is too great at that age to take on new investments.
Whether or not this is appropriate advice really depends on your overall means.
The key is this: you shouldn’t invest any money in the stock market that you can’t afford to lose.
This is true at any age, but it’s especially true when you’re 80 years old. That’s because you have far fewer available resources to make up losses.
But if you have some spare excess capital that you want to try to grow, the stock market is arguably the best platform for that.
I’m a bit younger than you – currently sitting at 35 years old.
But I’ve personally used the stock market to radically improve my lifestyle via the financial freedom that investing has provided for me.
I was below broke just a few years ago.
But by living below my means and investing my excess capital into high-quality dividend growth stocks like those you’ll find on David Fish’s Dividend Champions, Contenders, and Challengers list, I was able to go from zero to many zeros – my real-life dividend growth stock portfolio generates five-figure passive growing dividend income on my behalf.
That passive dividend income certainly covers my rent – and then some.
Better yet, the companies I invest in continue to hand out dividend increases regularly, which only grows my purchasing power as that dividend income grows faster than inflation.
If you check out Mr. Fish’s aforementioned CCC list, you’ll see what I mean.
You’ll find hundreds of companies on that list, many of which have handed their shareholders a “pay raise” (at least once a year) for many decades on end.
These “pay raises” aren’t only better than what most workers experience on an annual basis, but they come without any ongoing work on the shareholder’s part.
Indeed, it’s better to be part of the investing class than the working class.
But while I did what I did in just a few short years – which is a time frame that is also probably available to you – I was working all the way through, earning a middle-class income. Plus, I was spending very little of it.
I was in wealth accumulation mode. And aggressively so.
You’re in a different spot at 80 years old: your primary goal should be to hold on to whatever you have.
But, again, if you have some capital you can invest (and afford to lose), it’s tough to do better than dividend growth investing.
While the stock market is chock-full of unprofitable companies that feature highly-volatile stocks, dividend growth investing involves buying shares in high-quality companies with great fundamentals and track records of growing profit and dividends.
Essentially, it’s blue-chip investing.
I’ll go ahead and throw some names at you.
McDonald’s Corporation (MCD). Johnson & Johnson (JNJ). Exxon Mobil Corporation (XOM).
These are blue-chip stocks. They’re also dividend growth stocks.
A lot of financial experts would advise someone of your age to stay completely away from the stock market, instead putting your money in ultra-safe investments like Treasury Notes.
That’s not bad advice. And that’s perhaps what you should do. Only you can make that call.
But if you’re insistent on investing your money in the stock market, putting your money to work with wonderful businesses that reward you all along the way with growing passive dividend income (that could be used to help with that rent) is one of the best ways to do it.
Of course, if you don’t have much money to lose, and you’re struggling with rent, investing in the stock market isn’t the answer.
At that point, you should look into potentially moving into a cheaper/smaller abode and investing your capital into instruments that feature practically no volatility whatsoever.
But if you do have the capital, there are a number of resources that can help you further.
One such resource is Dave Van Knapp’s series of lessons on dividend growth investing.
This series is a collection of articles that highlight just how powerful dividend growth investing is. And then the series describes how to implement the strategy.
If and/or when you’re ready to put capital to work, I publish an article every Sunday that shares with readers a high-quality dividend growth stock that looks undervalued.
These are compelling long-term investment ideas that I think are worthy of consideration based on quality, dividend metrics, and valuation.
Based on your age, you have to be really careful with putting money to work in the stock market. That’s an aggressive move due to the inherent volatility one is dealing with when buying shares, even in great businesses.
But if you feel totally comfortable with the idea, and you have the capital, dividend growth investing is a great way to simultaneously grow your wealth and passive income over the long haul.
However, if you’re not in just the right financial position in life, Daniel, staying away from the stock market might be a better idea for you.
Either way, you’ll want to begin your move toward a better financial future right away, as time waits for no man.
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.