Dear DTA,
I want to retire early. I’m 48. By the time I’m 52, I want to be able to travel the world anytime.
-Juan L.
Hi, Juan.
We appreciate your readership. And thanks so much for writing in!
That’s an awesome goal you have over there.
It’s certainly something I can relate to.
Financial independence and early retirement is the “name of the game” for me, and it’s something I’ve designed my whole life around.
After finding myself a broke, unemployed, college dropout during the depths of the Great Recession, I turned it all around by giving the early retirement goal my every effort.
And I went from below broke at 27 years old to financially independent and retired early at 33, which you can read about in my Early Retirement Blueprint.
The concepts I lay out in that Blueprint – indeed, the concepts I regularly write about (and will share here with you today) – can be more broadly applied to almost anyone’s situation.
Since your goal is to retire just four years from now, these concepts might be particularly beneficial to you, since they tend to straddle the more “extreme” side of personal finance.
Obviously, you need to develop a budget that allows you to live well below your means.
You’ll want to start developing that immediately.
You need money to make money. And if you want to roll a large, compounding snowball that allows your money to work for you, you need to begin rolling today.
But you can’t build a snowball without snow.
That’s why it’s imperative that you start saving those dollars (or “snowflakes”) right now.
This may mean radically downsizing your housing – if you’re looking to travel often in the future, your home base doesn’t have to be large or lavish.
It may mean rethinking transportation, food, and everything else in your life.
Once you have some capital to work with (which you might already have), you have to put that to work. You have to start rolling that snowball once you collect the snow.
Now, there are a lot of ways to go about doing that.
But I’m personally a huge advocate for dividend growth investing.
It’s the investment strategy I’ve personally used to become financially independent and retire early.
My saving and investing over a concentrated six-year period of my life financially manifested into the FIRE Fund – my real-life and real-money dividend growth stock portfolio.
The Fund underpins my financial independence, early retirement, and entire lifestyle.
That’s because the five-figure and growing passive dividend income it generates allows me to pay my bills without having a job, and I can live anywhere in the world.
And I’ve used that opportunity to relocate abroad full time to Thailand; you could say I “travel” every day, since I’m around such a radically different culture all of the time.
What I’m trying to tell you, Juan, is that financial independence also means location independence.
Solving the former almost always solves the latter, setting you up to be able to travel any time you’d like.
The reason I’ve used dividend growth investing for FIRE, and the reason I’m such an advocate of the strategy for like-minded people (like yourself), is because it’s basically perfectly suited to create the ideal FIRE lifestyle (which could include travel).
It couldn’t be more straightforward.
You buy stock in blue-chip stocks that have longstanding track records of rewarding their shareholders with growing cash dividend payments, funded by the growing profits the enterprises are producing.
This is a pretty solid initial “litmus test” for business quality, automatically weeding out a lot of low-quality companies.
You can see what I mean by looking at the Dividend Champions, Contenders, and Challengers list, which is an invaluable collection of data on almost 900 US-listed stocks that have raised their dividends each year for at least the last five consecutive years.
Furthermore, those growing cash dividend payments serve as an excellent source of totally passive income, which can be used to pay your bills, travel the world, and do anything else you’d like to do.
These are just some very basic outlines I’m throwing your way.
For a more complete introduction into what dividend growth investing is all about, why it’s such a great long-term investment strategy, and how to successfully go about implementing it, thoroughly read through fellow contributor Dave Van Knapp’s Dividend Growth Investing Lessons.
Once you’re more comfortable with the investing side of things, and once you’re ready to put some capital to work, we’ve got you covered.
I take the time every Sunday to highlight a compelling long-term dividend growth investment opportunity via the Undervalued Dividend Growth Stock of the Week series.
After looking at fundamentals, competitive advantages, risks, and, of course, valuation, I present what appears to be an undervalued high-quality dividend growth stock.
These ideas are provided to the investment community free of charge!
I think your goal is admirable, and I also believe it’s achievable.
I say that as someone who once had a similar vision. And I followed through on that vision, achieving FIRE at just 33 years old (6 years after I started).
But it’s key that you get started rolling that compounding snowball as soon as possible!
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.