Dear DTA,
I would like more insight on owning the right stocks. I want to retire early and live my dream. My dream is to enjoy myself with friends and family.
-Ulric R.
Hi, Ulrich.
It’s always a real pleasure to hear from our readers. Thanks for writing.
Your dream sounds wonderful.
I must say, I have a similar dream.
And I’m living it.
How?
Well, let’s dive in. I believe that sharing how I made my dreams come true can and will help you make your dreams come true.
My Early Retirement Blueprint is explains much of it.
It’s a step-by-step guide that just about anyone can follow to their early retirement dreams.
This explains the fundamental lifestyle choices I made in order to go from below broke at 27 years old to financially free at 33.
There’s a lot of high-grade information in there. And it’s all free, Ulrich!
Now, it comes down to two big aspects.
First, saving.
Then investing.
It’s really that simple.
Simple doesn’t mean easy, of course.
But if you want it – if you really want it – early retirement can be had.
The saving will likely require some lifestyle adjustments.
This could involve downsizing your home, choosing to use public transportation, eating out less, and trimming fat wherever necessary.
No matter the choices you eventually make, you’ll first need to start budgeting.
That means tracking every penny.
You can’t trim fat if you don’t know where the fat is.
Early retirement will require you to save a large percentage of your net income. The higher the savings rate, the better.
Not everyone wants to retire in their early 30s like I did. But I can tell you that I routinely saved more than 50% of my net income.
Maybe that’s a bit much for you. Depends on how fast you want to get there.
I would recommend a net savings rate of 25% as a start.
That’s about five times the US average savings rate. It’s necessary to be much higher than average, because many people are unable to ever retire.
If you can get over 25%, that would be even better.
Once you start to save your money, you’ll need to intelligently invest it.
The investment strategy that allowed me to reach the “promised land” is dividend growth investing.
Please take the time to read through fellow contributor Dave Van Knapp’s Dividend Growth Investing Lessons.
This series teaches the A-Z of DGI.
Dividend growth investing is a fantastic long-term investment strategy that’s perfectly designed for early retirement.
For example, you can take a look at my FIRE Fund.
That’s my real-life, real-money early retirement dividend growth stock portfolio.
It generates the five-figure and growing passive dividend income I need to cover my essential expenses in life.
I don’t need to sell any stock to pay my bills. I live off of dividends only.
And that’s really the key behind this strategy.
The last thing you want to do is start to slowly sell off an investment portfolio that you worked hard to build. I would never want to put myself in a position where I might run out of investments to sell and thus money to live my life.
Early retirement is wonderful. But it would be a lot less wonderful if I had to worry about stock market gyrations.
Fortunately, I don’t have to worry at all.
Stock prices go up and down every day the market is open. But dividends generally only go in one direction – up!
Of course, that’s only true when we’re talking about high-quality companies.
Investing in low-quality companies means low-quality dividends. And these low-quality dividends can be cut or eliminated, reducing your passive income.
However, many of the best dividend growth stocks out there are blue-chip stocks.
That’s because it’s nigh impossible to run a poor business while simultaneously paying out growing dividends for decades on end.
To see what I mean, peruse through the Dividend Champions, Contenders, and Challengers list.
That list contains invaluable information on more than 800 stocks that have raised their dividends each year for at least the last five consecutive years.
You’ll notice many household names. Again, these are blue-chip stocks.
Global companies with some of the most well-known brands out there.
You know them by name.
McDonald’s Corp. (MCD). Apple Inc. (AAPL). Johnson & Johnson (JNJ).
Just some examples here, Ulrich.
When you work hard for your money, you want to make sure you put it to work with great businesses that reward with you with your fair share of growing profit.
Once you find yourself ready to invest your savings, I have you covered.
I personally highlight a compelling high-quality dividend growth stock idea every Sunday.
These ideas pass a stringent test for quality and valuation.
I only share my findings once a stock passes multiple hurdles that include fundamental analysis, competitive advantages, risks, and valuation.
These ideas are shared for free via the Undervalued Dividend Growth Stock of the Week series.
We aim to provide some of the best information and tools out there. I genuinely want to help people.
However, it’s ultimately up to you, Ulrich, to take those steps. It’s up to you to save and invest. Your dreams are waiting.
There’s no better day than today to get started.
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.