Dear DTA,
My goal is to beat the market and make more money for survival, needs, and retirement. It seems impossible to make enough money by simply working, no matter how many jobs I have.
-Kathy P.
Hi, Kathy.
Thanks for writing in to us.
We greatly appreciate our readership, which is why we give back by responding to inquiries just like yours.
I’m reaching out to you as someone who has taken advantage of, and greatly benefited from, everything I’m sharing with you today.
This isn’t token personal finance information that’s meant to be a template. These are high-level concepts that can radically change your life.
So I will share something with you right at the outset here.
You’re absolutely right that working at a job is pretty much the least attractive and least efficient way to make money.
The best way to do it is to have your money work for you.
You want your money to make you more money.
Money is a compounding machine that never eats, rests, sleeps, or gets sick. It works 24/7, 365.
And the more it compounds, the more it can compound. It gets better at replicating and growing itself the more it does so. It’s really wonderful.
But you have to put it in your side, which is where all of the following information comes in.
These concepts are free. But they’re worth so much.
First, please check out my Early Retirement Blueprint, which is my guide to help anyone achieve their early retirement dreams.
You need money to make money. Your money can’t work for you if you don’t have any of it. This guide helps cement some of the best practices and habits necessary to first have the money.
Once you have a little capital, you can really get cranking.
Now, there are a lot of ways to go about it. Everyone has a different opinion on investing.
But I’ll tell you that I’ve used dividend growth investing to get to where I am.
And since I went from below broke at 27 years old to financially free at 33 years old, I’d say it’s a very effective strategy.
This strategy basically involves buying equity in world-class businesses that are routinely growing their profit and sharing that growing profit with their shareholders, via growing dividends.
Those growing dividends, once you have enough of them, can pay your bills in life, rendering you financially free.
You can find almost 900 examples by checking out the Dividend Champions, Contenders, and Challengers list, which has compiled invaluable data on more than 800 US-listed stocks that have paid rising dividends each year for at least the last five consecutive years.
You’ll notice many blue-chip stocks on that list. Many household names.
That’s because it generally takes a great company to maintain growing dividends for years on end.
A lengthy track record of dividend growth acts as sort of a “litmus test” for business quality, which makes this such a fantastic way to really home in on investing in only the best companies in the world.
I’ve used this strategy to build my FIRE Fund, which is my real-life and real-money dividend growth stock portfolio that generates the five-figure and growing passive dividend income I need to cover my bills.
Indeed, I’ve simply bought stock in great companies when their shares were trading at appealing valuations.
And that allowed me to build six-figure wealth that pays me quite a bit of passive dividend income just to wake up and go about my life.
There are a lot of Americans who get up and go down to jobs they don’t like in order to make the kind of money I make without lifting a finger – because my money is working for me.
And since this is dividend growth investing we’re talking about, that passive income is highly likely to rise year in and year out – without me doing anything.
In fact, I log numerous dividend increases every single month, which is constantly improving my purchasing power. Inflation protection is built right into this strategy.
But if you think I’m just some random guy whose experience has been a fluke, keep in mind that Warren Buffett himself invests in many of these same stocks via the common stock portfolio he oversees for Berkshire Hathaway Inc. (BRK.B).
Now, Warren Buffett is, as far as I know, the most successful investor of all time, who’s absolutely smashed the broader stock market over decades.
So if you’re looking to beat the market, as you say you are, dividend growth investing is tough to ignore.
Moreover, Ned Davis Research has actually put out research showing that dividend initiators and dividend growers (i.e., dividend growth stocks) greatly outperformed an equal-weighted S&P 500 index since 1972.
That shouldn’t be a surprise since the S&P 500’s total return, including reinvested dividends, is significantly higher than its price change alone over the last 50 years.
Reinvested dividends, simply put, account for the vast majority of the stock market’s total return over the long term, and that’s only amplified when dealing with higher-yielding stocks that are regularly growing those dividends.
Of course, there’s more to it than randomly selecting dividend growth stocks.
That’s why we’ve put together a phenomenal set of articles that are designed to teach anyone the ins and outs of dividend growth investing and what it is, why it’s such a great way to invest for the long term, and how to successfully implement it.
These articles make up fellow contributor Dave Van Knapp’s Dividend Growth Investing Lessons.
If you decide to use this strategy to your benefit, too, I personally highlight a compelling dividend growth stock idea every Sunday via the Undervalued Dividend Growth Stock of the Week series.
Money can work harder and better than you can, Kathy.
It wants to work for you. It needs to work for you.
So let it do so.
There’s no time like today to start letting your money work for you.
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.