In my previous article, “Top 5 – Easy Passive Income Ideas,” I mention Dividend Paying Stocks as an easy passive income idea. In this article, we will expand upon Idea #3 – Investing in Dividend Paying Stocks
“If you’re going to invest in stocks on any type of regular basis, then you should consider …investing in those that earn dividends. Otherwise, what’s the point?”
Buy Dividend Paying Stocks
Buying dividend paying stocks, and only those that pay dividends, is a strategy that is similar to IBC (#5 below), but it differs in two important areas. 1) You are not likely to be a professional stock broker or fund manager who (one would think) has a better chance of “beating the market.” But then, even professionals can’t do that, which is why you really need to re-think your strategy in the first place. And, 2) You can’t borrow against your asset value.
My Baby Needs Braces!
Wall street doesn’t exist to make you rich, quite the contrary. Further, the technology that exists today is far beyond what anyone had ever imagined. Not only can you purchase your own stocks and bonds, now you can do it from the comfort of your own home. There’s no need for the old brokerage houses that used to call you to recommend this or that stock, which, when that happened, usually left me wondering if they truly were recommending XYZ stock, or did they just need to pay for a new set of braces for their kid.
Either way, it really doesn’t matter because there’s always something – stronger, faster, and better. Unfortunately, there is, shall we say, “other” technology that will always outperform your home software version and it has the ability to make trades in a micro, no wait, nano seconds, faster than yours, thus pushing up your price by even fractions of pennies, and earning the “house” the arbitrage difference – always. So, what can an investor do?
Well, as far as “beating the market,” it is probably best to just sit down and realize that you never will. But, you may be able to use the market in your “favor.” You “could” be a disciplined investor, think long-term, and just deposit a set amount each month and only buy stocks that earn you dividends. Personally, that has been my strategy for a while now. And, now that I’ve read Anthony Robbins’ book, “Money, Master The Game,” I know this is the strategy for me – moving forward. Robbins’ book has only confirmed what I already knew, but here it is in black and white. All his interviews with experts in the field will tell you, it is extremely hard to “beat the market.” Many have tried, many fail, and many continue to fail – so, why beat your head against the wall?
“If your stocks don’t earn dividends, what you have is poo-poo.”
~Kevin O’Leary, Shark Tank
Yes – Why should I try to beat the market? Many people are fooled into thinking they can beat the market – all they need is to buy the best, the latest, the fastest, and the most bells and whistle software that money can buy, learn it, and implement it without realizing that Wall Street always has, and always will have – just – one – better.
Day Trading Anyone?
If you know that, and you still want to do that type of work day in and day out – Great, that’s up to you. But, don’t be fooled into thinking that if you spend time on “trying to beat the market,” you just might on a consistent basis.
Alternatively, for those realists out there who do have J.O.B’s, careers, or other money making “interests” other than day trading, or daily arbitrage, etc. just take a moment, catch your breathe, and realize that it’s not set up that way. So, why even waste your time? A more purposeful thing to do, and certainly less aggravating, is just invest a set amount that you have decided upon, have it automatically funded or transferred into your brokerage account, and just keep accruing dividend paying stocks. There are plenty of good dividend paying stocks to choose from, and you can check the payout history to verify what has been paid out in the past. Although past history is not a guarantee of future dividends, it will give you some insight into the company based on past performance.
One good example of a dividend paying stock is EQR, Equity Residential. I’ve held this stock before, and have since re-invested. They do give out very nice dividends that do grow over time. But, I don’t realize them. I have mine set to be re-invested, and over time, I do expect it to grow by itself even if I never add to it again. Although the amounts are in small increments, it is, in reality, providing me with residual income even if from a “one-time investment.”
Of course, an even better investment strategy is #5 in my Top 5 article, the Infinite Banking Concept, or IBC, for short. For those who may not know what IBC is, I do recommend reading “Becoming Your Own Banker: Unlocking the Infinite Banking Concept” by Nelson Nash. His book is below. You may also read more information on this blog as there are additional pages and posts regarding the IBC strategy.
For now, and getting back to this strategy on investing in only dividend paying stocks, this strategy provides you with yet another way to earn residual income from little effort and/or little invested rather than trying to beat the market with short-term plays. For this reason, I have rated it one of my Top 5 ideas to gain easy passive income.
That’s it for now! I welcome your thoughts, your best investment ideas, any stock picks you may have, and why! Your comments are always welcome!
To Your Success!